Cumulation of Employment Contract and Social Mandate

Extract

[...] His employment contract is successively transferred to the SA and then to the SAS Maison Drucker. In 1999, an amendment to his employment contract provides a ten-year employment guarantee and a contractual severance pay equivalent to 24 months of gross salary. In 2007, he is dismissed for economic reasons and files a lawsuit with the labor court to contest his dismissal and claim the indemnities provided for by the amendment. Procedure : The Court of Appeal in Amiens rejects the employee's request for payment of the severance pay provided for by the amendment to the employment contract of June It estimates that, at the time of the conclusion of this amendment, the interested party exercised the functions of general manager and held a majority shareholder position. [...]

[...] In the absence of a formal designation to these functions, the appeal court could not conclude that the amendment should be subject to the procedure for regulated conventions and, consequently, deprive it of effect. The Court of Cassation therefore sends the case back to the Rouen appeal court for a new examination. Sens/value/impact : This judgment recalls several fundamental principles in the matter of cumulation between social mandate and employment contract : Requirement of formal nomination of the general manager : In accordance with the article L. [...]

[...] Cumulation of employment contract and social mandate : The cumulation is only possible if the manager exercises technical functions that are distinct from his mandate and remains subject to a subordinate relationship. The absence of formal recognition of the quality of general manager made it superfluous to apply the rules relating to regulated agreements. Procedure for regulated agreements : Article L. 225-38 of the Commercial Code impose that any agreement concluded between a public limited company and one of its managers be subject to the approval of the board of directors. [...]

[...] In this case, the Court of Cassation recalls that this requirement only applies if the quality of manager is legally established at the time of the conclusion of the contested act. In the absence of proof of a regular appointment, the argument based on the non-compliance with this procedure could not justify the automatic annulment of the amendment. This judgment therefore fits into a constant jurisprudence aiming to to secure the relationships contractual relationships of company managers and to to avoid any confusion between the status of employee and social mandatary. Class Notes Lack of legal basis: we need to better motivate. [...]