Employment contract under foreign law executed and terminated in France: how to manage conflict of laws? – Employment and HR

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In a decision dated December 8, 2021, the Court of Cassation (Court of Cassation) confirmed that when the mandatory provisions of French law relating to the termination of the employment contract are more favourable, they apply to employment contracts under foreign law performed in France.

In a judgment delivered on November 27, 2019, the Paris Court of Appeal ruled that an employee who had worked in France for 40 years under an employment contract governed by Moroccan law should benefit from the provisions of French law relating to the device says “deed price” (i.e. recognition of the termination of the contract by the employee for serious breaches by the employer) and the calculation of his severance pay.

These findings were confirmed by the Court of Cassation1which has strictly applied the Rome Convention of 19 June 1980 on the law applicable to contractual obligations. For contracts concluded after December 17, 1980, the law remains constant in this area with the entry into force of the Rome I Regulation of June 17, 20082. The decision to the Court of Cassation is therefore intended to apply to international contracts currently in force.

Both the Rome Convention and the Rome I Regulation provide that “a choice of law made by the parties does not have the effect of depriving the employee of the protection conferred on him by the mandatory rules of law which would be applicable to him in the absence of a choice“, the applicable law in the absence of choice meaning the “the law of the country in which the worker usually performs his work under the contract, even if he is temporarily employed in another country or
[…] the law of the country in which the establishment through which [the employee] was engaged is located
“.

Thus, even if the employer chooses to have the employment contract governed by the law applicable to his place of establishment, this choice cannot deprive the employee of the benefit of the legal, regulatory or contractual provisions applicable in terms of termination of employment. judgment place of performance of the contract when these provisions are favourable.

More specifically, the employee will be entitled to the termination of his employment contract within the framework of a “deed price“reclassified as dismissal without real and serious cause if he can demonstrate the existence of a sufficiently serious breach by his employer to prevent the continuation of the said contract3.

In this case, the Moroccan law applicable to the employment contract provided that said contract could only be terminated following resignation or dismissal. It also limited the qualification of unfair dismissal to certain faults enumerated by the Moroccan labor code such as “serious insult, any form of violence or aggression against the employee, sexual harassment, incitement to hire…”. Moroccan law was therefore less favorable than French law, since it did not allow the employee to break his employment contract within the framework of a “deed price”.

The same applies to the calculation of severance pay without real and serious cause. The employer, in application of Moroccan law, deducted from the basis for calculating the allowances the sums deducted from the reference salary for the purposes of Moroccan income tax. French law, on the other hand, provides that the reference salary must be determined on the basis of the average gross salary calculated over three months.without it being necessary to add the sum corresponding to the income tax directly deducted by the employer in the same way as the other contributions“, according to Court of Cassation. Here again, the severance pay scheme provided for by French law should be applied, so as not to deprive the employee of the French provisions which were more favorable to him.

Footnotes

1 Chamber of Labor of the Court of Cassation, December 8, 2021, n° 20-11.738

2 Regulation (EC) No. 593/2008

3 Social Chamber of the Court of Cassation, June 25, 2003, n° 01-42.335

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The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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