The French Labour Court regulates disputes between employers and employees and the Commercial Court governs disputes between companies, right?  Wrong.  The Fontainebleau Employment Tribunal has just ordered one employer to pay another damages.

The matter pits branches of the well-known distribution companies DHL and Arvato against each other.  Between January 2000 and April 2009, DHL stocked and shipped DVDs for a production company.  In the early part of 2009 DHL learnt that it had lost that contract to Arvato with effect from 1 May of that year.  DHL’s site at Montcourt Fromonville was used exclusively to service the contract with the production company.  Pursuant to Article L.1224-1 of the French Employment Code, the French equivalent of TUPE, DHL therefore asked Arvato to take over the site along with the 82 employees based there.  Arvato refused.

DHL could have referred the matter to the Commercial Court.  Commenting on its decision not to do this, DHL explained, “Up until then, all disputes arising between successive employers had been settled in the Commercial Court but there have always flawed decisions.  Therefore, we wanted the debate between the parties to be heard by the Labour Court instead”.  A brave assertion, especially if your company appears regularly in the Commercial Court!  An urgent application was lodged and in February 2009 the Fontainebleau Employment Tribunal referred the case to a panel of judges in Meaux to decide whether it could hear such employment claims.

The Parisian Court of Appeal held that the Employment Tribunal did indeed have jurisdiction to hear the matter.  Relying on Article 66 of the French Civil Procedure Rules, the Court noted that “the contracts which were at stake were employment contracts” and were therefore within the jurisdiction of the Employment Tribunal.  Additionally it took the view that the case was indeed, amongst other things, an employment dispute, even though the action was primarily directed against another company.

Not your average case

The case was therefore referred back to the Fontainebleau Employment Tribunal, which finally made its decision on 20 September this year.  Its decision is an important landmark in this case.

In the meantime, DHL had closed its Montcourt Fromonville site.  As a result of the closure, 79 employees lost their jobs, the cost of which was born by DHL which had had to engage its social plan.

Arguing that this was “a case of employee dumping”, DHL applied to the Tribunal for an award of over €4.1 million in damages and interest corresponding to the costs it had incurred by engaging its social plan.  The Employment judges held that the employees constituted an “independent economic entity” for the purposes of Article L.1224-1 and that the function carried out by them under the production company contract was “identical” to that which was subsequently carried out by Arvato.  Therefore the employees should have automatically transferred to Arvato on 1 May 2009 and the Court highlighted the fact that DHL had wrongly been “forced to bear the cost” when they did not.

The case is still ongoing as Arvato has appealed against the decision.