Our clients are often surprised by the absence of an intra-group mobility clause in the model employment contracts that we draft for them. In other words, a clause that would enable them to transfer an employee from one subsidiary to another, sometimes abroad, where and when needed by the group and the development of the employee’s career. Indeed, not only is this not possible but it is especially important to know how to resist the appeal of such a clause. We explain why by recounting the experience of Clarisse, head of human resources for a Paris-based group.
Her group had just taken over a company situated in Lyon. This company’s employment contracts contained a mobility clause stating “Mr. X accepts in advance his transfer to any other establishment or subsidiary situated in mainland France.” Senior management wanted to bring all the support functions to the group’s head company situated in Paris. Some employees in the Lyon subsidiary were hostile to this transfer, while others had already agreed to the move. Can Clarisse rely on the mobility clause set out in their employment contracts to handle both refusals and acceptances?
The simple answer is no, she can’t. Here is the advice that we were able to give Clarisse.
Don’t succumb to the temptation
Intra-group mobility involves much more than a change in the place of work. It entails changing the employer, which cannot be imposed on the employee. It is for this reason that clauses anticipating mobility between subsidiaries are, legally speaking, null and void (Court of Cassation, labour division, 23 Sept. 2009, N° 07-44.200). It’s as if they had been written in invisible ink. The fact that the employee had signed his contract does not affect the situation in any way whatsoever. If he refuses the change, the company will be obliged to maintain the status quo. Citing this refusal in a dismissal procedure (so for fault) would expose the company to being sanctioned on the grounds of dismissal without real and serious cause. The best advice is, therefore, to act as if the employee had never consented to intra-group mobility.
Think about formalizing termination should the issue of mobility arise
Intra-group mobility is still possible but only with the employee’s agreement. This requires a three-way mutual agreement (employee, initial company and new company) that will involve the termination of the first contract (with the Lyon subsidiary, in Clarisse’s case) and the signing of a new contract (with the holding company in Paris).
Be warned, however. It will not suffice for the employee to accept his transfer without signing a tripartite transfer agreement, in other words without formalizing the termination of his former contract. Indeed technically speaking, this would mean that the initial company would have “dismissed” the employee… without a dismissal letter. So the company would expose itself to the risk of sanction for dismissal without real and serious cause (Court of Cassation, labour division, 26 October 2022, n° 21-10.495, Société SICAE; in this case, it was the employee who had asked to be transferred!).
Nullity can be contagious
In Clarisse’s case, mobility between establishments situated in France (perfectly legal) was combined with intra-group mobility (forbidden). In this case, it was the entire mobility clause that became inapplicable. It was as if the illegal provision (mobility between subsidiaries) had contaminated the legal provision (mobility between establishments). It was, therefore, impossible to break down the clause and apply only part of it (Court of Cassation, labour division, 14 December 2022, n° 21-18.633, SAS Sunpower Energy Solutions France).
So, now that you’ve read this article, will you still be asking us to include intra-group mobility clauses in the model contracts that we draft for you?