“Macron Scale”: The French Cour de Cassation has (finally) decided!

The saga of the “Macron scale” seems to have been brought to an end by the two long-awaited decisions of the Social Chamber of the Cour de Cassation ruling in plenary session. The decisions rendered on May 11, 2022 (Cass. soc. May 11, 2022, n°21-14.490 and 21-15.247) confirm the legitimacy of this compensation scale for unfair dismissals.

The litigation related to the validity of the “Macron scale” was as follows: several French Labour Courts and “Cours d’Appel” refused to apply this legal compensation scale, which they considered to be contrary to article 10 of ILO Convention 158 and article 24 of the European Social Charter, which establishes the principle of “adequate” reparation of the damage suffered by an employee who has been dismissed without real and serious cause (see our Newsletters of September 2021, January 2020, June and February 2019 on this issue).

As a reminder, the “Macron scale” resulting from Article L 1235-3 of the French Labour Code introduced by the “Macron” ordinances of September 22, 2017, sets minimum and maximum amounts, expressed in months of gross salary, of compensation awarded to employees dismissed without real and serious cause, depending on the size of the company and their seniority.

This scale was challenged because of its very nature, which, according to some, necessarily prevents full compensation for the damage. The adequate indemnity was understood by the latter as an indemnity to be calculated in concreto according to the damage suffered as a result of the unfair dismissal.

It should be noted that the scale was determined on the basis of an average evaluation of damages awarded before 2017 by the “Cours d’Appel”. Moreover, as the scale is made up of a minimum and maximum amount for each year of seniority, the judge still has the possibility of adapting, within a predefined range, the amount of the compensation to make it adequate to the employee’s damage.

Opponents of the scale feared that it would make it easier for employers to consider dismissing an employee by knowing in advance what compensation they would have to pay.  The “Cour de Cassation” ruled on these different points, setting out its arguments in detail. The pattern is relatively the same in both judgments, except that in one case the employee relies on article 10 of the ILO Convention 158 to counter the scale and in the other case he relies on article 24 of the European Social Charter.

First, the High Court recalled that article 24 of the European Social Charter has no direct effect in domestic law in a dispute between individuals. Thus, the invocation of this article could not lead to the exclusion of the application of the provisions of article L 1235-3 of the French Labour Code. On the other hand, article 10 of ILO Convention 158 has direct effect.

These texts were invoked to remind the Court that the compensation must be adequate to the damage suffered by the employee. The Court specifies that the term “adequate” referred to in these articles means that the compensation for unfair dismissal must, on the one hand, be sufficiently dissuasive to avoid unjustified dismissal, and on the other hand, be reasonable to allow compensation for the unjustified loss of employment. The High Court assures that in this respect, the indemnity provided for by the “Macron scale” is adequate. To this end, it invokes two arguments: on the one hand, the exceptional situations in which the scale is set aside to allow for an even more adequate compensation, i.e. in cases of nullity of the dismissal; on the other hand, the dissuasive nature of the sums provided for by the judges’ ex officio application of the provisions of Article L 1235-4 of the Labour Code, which provides in certain cases for the reimbursement by the employer to the administration of the unemployment benefits paid to the dismissed employee, from the day of his dismissal to the day of the judgment, up to a limit of six months.

Thus, the role of the judge in this type of dispute is not to judge whether the compensation should be decided in concreto or on the basis of the scale, but to set the amount of this compensation, if any, within the range provided for in relation to the employee’s seniority. Thus, the “Macron scale” cannot be set aside except in case of nullity of the dismissal: the “Cour de Cassation” has finally decided after several years of legal uncertainty.

However, this does not take into account the report of the European Committee of Social Rights (ECSR), which monitors Member states’ compliance with the European Social Charter, which has just considered the “Macron scale” to be contrary to France’s international commitments, just as it had sanctioned similar legislation in Finland and Italy. This report, which is not expected to be made public until September, does not have any binding effect on French judges, but it could continue to fuel litigation in the courts.