French Employment law - Employee's Golden Hello: it can be subject to a condition of presence (c. cass. May 11th , 2023 n° 21-25.136)

In a decision of May 11th , 2023 (n° 21-25.136) published in the bulletin, the social chamber of the Court of Cassation approves the legality of a Golden Hello (or arrival bonus) and its condition for a partial refund in the event premature resignation.

Pursuant to Articles L. 1121-1 and L. 1221-1 of the Labor Code, and 1134 of the Civil Code, in its version prior to Order No. 2016-131 of February 10, 2016, the Court of Cassation affirms that a clause agreed between the parties, the purpose of which is to retain the employee whose employer wishes to ensure long-term collaboration, may, without causing an unjustified and disproportionate attack on the freedom to work, make the acquisition of the entire arrival bonus, independent of the remuneration for the employee's activity, on the condition of the latter's presence in the company for a certain period after its payment and provide for the reimbursement of the bonus to the pro rata to the time that the employee, due to his resignation.

Consequently, the Paris Court of Appeal violates these texts which, in dismissing the employer's request for reimbursement of the arrival bonus on a pro rata basis, holds that the employer could not validly make the definitive granting of the initial bonus paid to the employee on the condition that the latter does not resign, and this, on a date after its payment, since this condition, which had the effect of setting a cost for resignation, infringed the freedom of work of the employee.

Analysis and advice for employees receiving a golden hello

In its judgment of May 11, 2023, the Court of Cassation puts an end to the indecision on the practice of "golden hellos".

The golden hello is an arrival bonus paid to a new employee when he joins a company.

This arrival bonus is used as a recruitment tool to attract talent.

The "golden hello" is generally conditional on the employee agreeing to stay for a minimum period in the company.

If the employee leaves the company before the due date, he may be required to repay part or all of the premium received.

Although this practice is widespread, it had been the subject of debate as to its repercussions on the employee's freedom to resign.

Some saw here an alienation of the salaried worker, incompatible with the principles of labor law.

Moreover, this “golden hello” phenomenon was treated in a heterogeneous way by the different jurisdictions.

The Paris Court of Appeal had in fact dismissed the employer's claims, arguing that the reimbursement, even partial, of the arrival bonus would amount to attributing a cost to the employee's resignation, thus undermining the freedom to resign of the employee.

In its judgment of May 11, 2023, the High Court overturns the judgment of the Paris Court of Appeal by applying the fundamental principle of "pacta sunt servanda", according to which agreements must be respected.

This decision brings an important clarification as to the conditions of validity of these clauses and the possibility of reimbursement of "not fully acquired" bonuses by employees, even when the bonus has already been paid.

Employees who receive a golden hello are strongly advised to provide that the amount of the indemnity is theirs and/or to limit the duration for which the employees undertake to remain in the company in return for payment of the bonus. of arrival.

To read all the article, please click on the link below

https://consultation.avocat.fr/blog/frederic-chhum/article-48185-french-labour-law-golden-hello-it-can-be-subject-to-a-condition-of-presence-c.-cass.-may-11th-2023-n-21-25.136.html

Source

c. cass. 11 mai 2023, n° 21-25.136

https://www.courdecassation.fr/decision/645c9453e48085d0f84a357b

Frédéric CHHUM avocat et ancien membre du conseil de l’ordre des avocats de Paris (mandat 2019-2021)

CHHUM AVOCATS (Paris, Nantes, Lille)

e-mail: chhum@chhum-avocats.com

www.chhum-avocats.fr

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