How industrial tribunals lead companies to bankruptcy

THE ECO SCAN – To counter the reluctance of bosses to hire, the Prime Minister announced on Tuesday that industrial tribunal damages will be capped.

To boost hiring in VSEs and SMEs, Manuel Valls announced on Tuesday that the indemnities decided by the industrial tribunal will be capped for dismissals without real and serious cause. The employers’ organizations explain that the employers tremble at the idea that the high sums demanded by the industrial tribunal endanger the very existence of their TPE. “It is one of the important causes which leads small businesses to bankruptcy”, comments Yves Lelièvre, president of the General Conference of Consular Judges of France, a body representing judges of commercial courts.

“These measures make the maximum cost of dismissal predictable. But it all depends on the ceiling ”, nuance Isabelle Ayache-Revah, associate lawyer at Raphaël Avocats. Thus, this ceiling will make it possible to save some of the companies sued by industrial tribunal: “Often the amounts of the convictions have no connection with the financial situation of the company, which can be fatal for them. Especially since the amount due is non-negotiable and must be paid immediately, ”explains Yves Lelièvre. A company can therefore easily find itself in default of payment and in the obligation to dismiss the rest of its employees.

The Hellin company, which has been manufacturing wooden furniture in the north of France since 1862, lost a large market six years ago. Its turnover fell by 53%. Jean-Loic Ghillebaert, the boss, therefore laid off seven of his 20 employees: no choice! Four of the seven dismissed employees then attacked him at the industrial tribunal on the grounds that he did not specify in their letter of dismissal the impact of the drop in turnover on their position. In 2012, Hellin was therefore ordered to pay them 61,000 euros in damages, the equivalent of two years of earnings. “The industrial tribunal tried to knock us out,” Jean-Loic Ghillebaert told the. He then asked for the staggering of the payments. Result: a bailiff came to empty the company’s accounts. “This hard blow disgusts us to be a business leader and employer in France,” he had fumed.

Contested reason for dismissal

In 2012, 180,000 claims were brought before the labor courts. For 96% of them, these cases were brought at the request of an employee. The employees’ appeals before the labor tribunals are essentially made in the context of the termination of an employment contract and their main request aims to contest the reason for dismissal. When the decision settles the dispute, it is for three quarters of the cases in favor of the plaintiff. Unfortunately, “labor courts practice too little conciliation: 6% of cases only”, had launched, Minister of Finance before the senators responsible for examining his bill on Growth and Activity in early May. Case processing times, on average 15 months, vary according to the nature of the decision rendered and the body that issued the decision.