An employee of John Deere was posted to a French subsidiary, within the framework of a contract with John Deere. The employee remained subject to the John Deere collective bargaining agreement (CBA), although a different CBA was applicable in the subsidiary. John Deere paid the employee’s salary, benefits and professional and personal expenses. The company was reimbursed these exact costs by the subsidiary.
This type of arrangement was considered in compliance with Articles L.8231-1 and L.8241-1 of the French Labour Code. These articles prohibit posting workers for profit, or any posting operation that is detrimental to the employee or to avoids the application of a CBA. Civil and criminal sanctions are attached to these articles.
The employee argued that his posting did not comply with the articles as it was for-profit. He sued the subsidiary and claimed damages and the benefit of the CBA applicable in the subsidiary.
On 18 May 2011, for the first time, the Cour de Cassation, the French Supreme Court decided that, when the subsidiary only reimburses the posted employee’s salary, benefits and professional and personal expenses, without incurring any personnel management costs, the posting is for-profit. The rationale is that the actual cost of having employees is more than the total of these outgoings and the subsidiary saves personnel management costs by having employees posted from the parent company.
What Does This Mean For Companies?
As a result of this decision, intra-group contracts involving the posting of employees to a French subsidiary must now provide for the reimbursement of reasonable personnel management costs to the entity employing the posted workers, or risk facing penalties.