A group of undertakings may constitute a “Community-scale group of undertakings” within the meaning of the French Labour Code, regardless of the location of its registered office. A company belonging to such a group is therefore required to offer reclassification leave to any employee facing dismissal on economic grounds.
When a French undertaking belonging to a Community-scale group contemplates redundancies for economic reasons, it is required to offer the affected employees reclassification leave. The French Administrative Suprem Court (« Conseil d’État » in french) held, that this obligation applies even where the parent undertaking of the group has its registered office outside France (French Administrative Suprem Court, 7 November 2025, N° 493158)
Reclassification leave must be offered within a Community-scale group of undertakings
In cases of economic redundancy, the employer must offer employees either a employment security scheme(CSP – Contrat de sécurisation professionnelle in french) or reclassification leave.
These mechanisms are mutually exclusive: the CSP is offered only in undertakings not subject to the obligation to provide reclassification leave.
Reclassification leave must be offered (French Labour Code, Art. L. 1233-71):
- in undertakings or establishments employing at least 1,000 employees;
- in undertakings referred to in Article L. 2331-1 of the French Labour Code, namely those required to set up a group works council, where the combined workforce reaches at least 1,000 employees;
- and in undertakings falling within Articles L. 2341-1 and L. 2341-2 of the French Labour Code, i.e., undertakings of a Community-scale dimension or belonging to a Community-scale group of undertakings, which must set up a European Works Council insofar as they employ at least 1,000 employees in total.
This latter category was at issue in the case examined by the French Administrative Suprem Court.
Under Article L. 2341-2 of the French Labour Code, a company belonging to a Community-scale group of undertakings is one forming part of a group—within the meaning of Article L. 2331-1—which employs at least 1,000 employees within the EU or the EEA and includes at least one undertaking employing at least 150 employees in at least two EU or EEA Member States.
The difficulty stemmed from the reference to Article L. 2331-1. That provision, relating to the group works council, adopts a control-based definition of a group, consisting of a parent undertaking and the undertakings it controls within the meaning of Articles L. 233-1, L. 233-3 (I and II) and L. 233-16 of the French Commercial Code, or an undertaking and those over which it exercises dominant influence. The text expressly requires that the parent undertaking’s registered office be located in France.
However, in the case before the Conseil d’État, the employer was a French subsidiary of a Swedish group employing fewer than 1,000 employees in France, with its registered office in Stockholm.
Article L. 2331-1 was therefore not applicable. The employer argued that it was consequently not required to offer reclassification leave to employees dismissed for economic reasons. Its redundancy plan provided solely for the CSP, and the French Labour administration authorities (Dreets– Directions régionales de l’économie, de l’emploi, du travail et des solidarités) refused to approve it.
The headquarters of the Community-scale group do not need to be located in France
The issue before the Conseil d’État was whether the reference, in Article L. 2341-2, to a group “within the meaning of Article L. 2331-1” imports all of the conditions of that provision —including the requirement that the parent undertaking’s registered office be in France — or whether it refers solely to the control-based definition of a group.
The High Administrative Court adopted the latter interpretation. The employer’s redundancy plan should therefore have provided for reclassification leave.
Accordingly, an undertaking must offer reclassification leave where it belongs to a group that:
- employs at least 1,000 employees within the EU or the EEA;
- includes at least one undertaking or establishment employing at least 150 employees in at least two EU or EEA Member States;
- is composed of a parent undertaking and the undertakings it controls within the meaning of the Commercial Code;
- and whose parent undertaking’s registered office does not need to be located in France.
French Administrative Suprem Court, 7 November 2025, N° 493158