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Liability claims – how far back can I go?

Prescription is the period of time during which a person can take legal action against another person to claim compensation for damage suffered. Once the prescription period has expired, it is no longer possible to take legal action against the person who caused the damage.

It is therefore particularly important to know the limitation period applicable to an action, and to be able to identify its starting point, at the risk of missing the opportunity to obtain damages.

There are several situations in which a liability claim can be made.

Here are a few recent concrete examples:

  • An action against a chartered accountant who had made an error in drafting an employment contract, resulting in a loss of over €40,000 for the company,
  • An action against a real estate agent who had rented out 21 apartments to destitute people, resulting in a loss of several hundred thousand euros,
  • An action against a recruitment firm that had accepted an assignment it knew or should have known was not feasible, resulting in a loss of several thousand euros.
prescription action justice temps sablier

The general limitation period for contractual liability is 5 years(article 2224 of the French Civil Code).

In other words, this is the time limit within which you must take legal action to hold the person who caused you damage liable (and not the time limit within which the action must be completed).

This limitation period begins to run “from the day when the holder of a right knew or should have known the facts enabling him to exercise it”.

In concrete terms, in the case of our liability action against a chartered accountant, the statute of limitations begins to run from the Court of Appeal’s ruling making the company’s conviction final (Cass. Civ. 1ère, June 29, 2022, no. 21-10.720).

So, even though the mistake was made 8 years ago, and the Court of Appeal decision has just been handed down, the action is not time-barred.

ATTENTION: in certain areas, there are shorter limitation periods.

For example, the one-year statute of limitations applicable to transport law.

Also, be aware that a clause in your contract may reduce the limitation period, under certain conditions.

If you believe that you have suffered financial or moral damage as a result of a fault on the part of a third party (partner, customer, supplier, etc.), we can examine together whether it would be appropriate to take legal action to obtain compensation for this damage.

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The strength of company negotiation: three negotiation themes to adapt the law to your company’s needs

Company agreements have recently been given primacy over other agreements that may be concluded at higher levels, and sometimes even over the law.

This primacy comes into play in many areas, three of which seem particularly interesting for negotiation in your company.

The main advantage of company negotiation is that it enables you to adapt the law to your company’s real needs.

With the primacy of company agreements, you can, for example, put in place within your company a specific mechanism for organizing working hours, adapted to variations in your company’s activity.

It is therefore important to seize this opportunity and negotiate directly within your company, especially as company negotiations are open in particularly important areas, in which we invite you to enter into negotiations, whatever your workforce and whether or not employee representatives are present in your company.

  • Company negotiations on the organization of working hours

If there is no industry-wide agreement on the organization of working hours in your sector, you can sign a company-wide agreement that sets out the terms and conditions of such an arrangement.

If a branch agreement already exists, the company agreement can replace it with guarantees that are at least equivalent, but it will take precedence over the branch agreement. We’ll just have to be more careful when drafting it.

This can take several forms:

– It can vary the working week between high and low periods and organize compensation between these periods in the form of rest days;

– These agreements may limit weekly working hours;

– These mechanisms are particularly useful for organizing and smoothing the counting of overtime: a reference period is determined, and a limit of hours is set. Time worked in excess of this limit will constitute overtime, and must be settled as such.

Example: for an annual arrangement of working hours, this limit is set at 1607 hours.

The total number of hours worked by the employee should be calculated, and any overtime worked in excess of the maximum weekly limit set by the agreement and already recorded (paid or recovered during the year) should be deducted. The remaining hours in excess of this limit will be paid to the employee at the end of the reference period.

This system allows overtime to be recorded over a given period rather than every week, so that overtime payments can be adapted to variations in company activity.

If an employee works a lot of hours in a given week, but less in the following week, the average overtime hours will result in less or no overtime being recorded.

This means you can arrange your working hours to suit your needs or the pace of your business, regardless of the number of employees working in your company.

If you are faced with highly variable working periods, we strongly recommend that you make use of this possibility and negotiate working time arrangements within your company.

  • Company negotiations on compensation

You can also decide to set up specific bonuses within your company, which can also be set up through a company agreement.

While these bonuses can also be set up through a unilateral commitment on your part, setting them up through negotiation allows you to obtain the agreement of employees or their representatives, and also to discuss the concrete implementation of this bonus, its calculation and payment procedures.

Adopting this bonus system by means of an agreement means that employees are involved in determining the terms and conditions of this bonus, and more generally feel integrated into the decision-making process relating to the company’s development, and increase their motivation to participate in the company’s evolution.

Various bonuses can be set up in this way: target bonus, productivity bonus, seniority bonus, etc.

Here again, the introduction of bonus payments by company agreement enables you to adapt the law to your company’s real needs.

For example, if you want to build loyalty among your employees, you could decide to set up a seniority bonus to be paid from the second year of effective presence within your company, and thus motivate your employees to stay with your company for the whole of this period and even beyond.

  • Negotiations on the organization of work in your company

You can also use company-level negotiations to organize specific working arrangements tailored to your business.

At company level, for example, you can adopt an agreement on telecommuting within your company.

In this area, too, the company agreement takes precedence over any agreement concluded above it.

In this agreement, you can set out the conditions under which your employees can telework, and the operating procedures for this special organization.

It will also be necessary to strictly define the terms and conditions for calculating working time for employees teleworking.

Here again, it’s a good idea to be able to implement work organization methods adapted to your company, such as telecommuting, rather than having unsuitable standards imposed by the legislator or social partners at branch level.

Company-level negotiations are of vital importance, especially for smaller companies.

It enables you to tailor the law to your needs and requirements, and avoids having inappropriate standards imposed on you in relation to your workforce, for example, or in relation to the specific conditions of your business or the working methods you have implemented within your company.

Although company agreements take precedence in many areas, we must remain vigilant with regard to the articulation of standards in labor law, which remains a complex subject to grasp.

We strongly recommend that you use this leverage within your company, with the support you need to deal with the particularities of employment law.

Naturally, DESRUMAUX AVOCATS is at your disposal to help you implement negotiations within your company.

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Unpaid overtime: conditions and obligations

An employee may be required to work more than the weekly hours stipulated in his employment contract, at his employer’s request. However, payment for overtime worked must be increased.

Overtime bonuses

The rate of overtime pay is defined by the company’s collective bargaining agreement. It must be at least 10%.

In excess of 220 hours’ overtime per year, the employee is entitled to time off in lieu. However, the company may stipulate a different ceiling in its collective bargaining agreement.

If the company’s collective bargaining agreement does not stipulate the conditions for increasing overtime pay, overtime must be increased in accordance with article L. 3121-36 of the French Labor Code:

  • 25% for the first 8 hours ;
  • 50% for overtime in excess of 8 hours.

Alternatives to overtime pay

A company’s collective bargaining agreement may provide for alternatives to overtime pay.

It can be :

  • Compensatory rest in lieu of overtime pay;
  • A fixed-rate agreement: This is particularly the case for managers who regularly work more than 35 hours a week, so overtime is included in their fixed-rate agreement.

Furthermore, the employer is not obliged to pay overtime worked by the employee if the latter has done so of his own accord. In this case, the employer will have to prove that the overtime worked by the employee was not at the employee’s request, and was simply at the employee’s will.

What are the employer’s obligations?

Employers are obliged to mention overtime worked by their employees on their pay slips. Failure to do so may result in prosecution for the offence of concealed work, and the payment of compensation to the employee equal to 6 months’ salary.

The employer must be able to justify all overtime hours worked by the employee.

What recourse does an employee have for unpaid overtime?

An employee who has not been compensated for overtime, despite an attempt to reach an amicable agreement with his employer, may take his case to the Conseil de Prud’ hommes within 3 years. The employee may request payment of unpaid overtime and claim damages from the employer.

Despite the employer’s serious failure to pay overtime, the employee may decide to terminate his or her employment contract with the company.

He can ask the judge to dismiss him without real and serious cause by taking action to terminate his employment contract, or to terminate his employment contract by court order, which will have the same effect as a dismissal without real and serious cause.

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Sale of a business: formalities to be complied with

Every year, several thousand businesses are sold. The sale of a business is the transfer of all the elements that can be seized, such as furniture, equipment and seizable parts such as the brand name or clientele, etc. Everything related to your field of activity. A cession de fonds de commerce (sale of business assets) is a way of selling off a company. Instead of selling shares, it involves selling off all the company’s assets. This action is strictly regulated by French law. There are certain operations specific to the sale of a business that must be complied with, or the transaction will be cancelled.

Steps to take before selling a business

Care must be taken if the business is located in a business protection zone. It is possible that the Mairie has a right of pre-emption to acquire the business. From a legal point of view, the town council has a right of pre-emption, a regulation linked to the transfer of a business, which will only apply in the event of the transfer of a company, even if the business will be entrusted to different hands. If this situation concerns you, you will need to send a previous declaration of transfer to the mayor. The mayor will then have 2 months to inform you whether or not you wish to become a buyer. It is advisable to be cautious before starting a possible sale with a buyer for your business, and to write a letter of intent. This letter gives you the advantage of defining the limits of your negotiations with the potential buyer. Once negotiations have begun, you’ll need to sign a confidentiality agreement, so as to preserve sensitive data and your expertise.

What data must appear on the deed?

As in the case of a business donation, the deed of sale must include certain mandatory details. The following items must be included in the deed of sale, whether drafted or notarized:
  • The price of the property determined with the buyer for your fund.
  • The former owner of the land, i.e. the first name and surname, and the date in the deed according to the owner who bought the land.
  • Type of deed (authenticated deed or private deed)
  • The purchase price of the business by the seller. If the seller has set up the business, this action must be stipulated in the deed of sale.
  • Balance sheet of benefits and pledges: official document issued to all interested parties from the Registrar to the Commercial Court, providing information on rights and contracts concerning the business.
  • Balance sheets for the last three years, showing sales.
  • The parties to the commercial lease If you occupy commercial premises as a tenant, the deed of assignment must specify the duration of the lease and the date; the address and name of the assignor and lessor must also be noted. You must also notify the lessor of the assignment.

What to do after selling your business?

Once the sale of the business has been completed, 3 steps must be taken: the sale of the business in the case of a voluntary transfer. Moreover, these formalities are not considered to be transposable, particularly in the case of a pledge of a business or a collective procedure. What’s more, in addition to your standard obligations and formalities, you’ll probably have to carry out additional formalities with specific organizations or other people. If you have submitted a sign or trademark for your business, and you wish to sell it with the business, you will need to take steps with the INPI (Institut National de la Propriété Industrielle).

Tax return

Within one month of the date of the sale of your business, you must register it, in particular by the buyer. You must declare it to the tax department responsible for the purchaser. If the value of the business exceeds 25,000 euros, registration fees will be payable.

Reporting a business transfer to the CFE

Another formality is to declare the business sale to the Centre de Formalités des Entreprises. The buyer will then be able to make all the necessary administrative and legal declarations in the same place. The buyer also has the option of applying to the local commercial court (greffe) to register the business.

Informing third parties

In order to inform all creditors of the sale, a deed must be legally published within 15 days of the date.
  • To be published in a JAL or legal gazette
  • To be published in the BODACC (Bulletin Officiel des Annonces Civiles et Commerciales) by the Registrar of the Commercial Court.
The validity of the publication for the transfer of a business is based on the fact that it must include the required information. These include: the date, the first names, surnames and domicile of the previous and current owners of the business, all documents relating to the registration, the registered office and nature of the business, the breakdown between intangible and tangible assets, the sale price, and the choice of domicile with regard to the commercial court for the establishment in question. In short, selling your business is a complicated and time-consuming process. You now have an overview of the steps to follow, but it is often advisable to contact a notary or a lawyer regarding the sale of your business.
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Non-competition clause – Employment contract

When an employer includes a non-competition clause in an employee’s employment contract, it must be ensured that the clause allows the employer to unilaterally waive the clause, subject to a period of notice.

Recently, the Cour de Cassation considered that if the employer unilaterally waives the non-competition clause inserted in the employment contract but the employee objects, the financial consideration provided for in the non-competition clause is due… (Cass. Soc. March 29, 2017, n°15-27.078).

In other words, if the non-competition clause does not provide for unilateral termination by the employee, the employer must obtain the employee’s agreement to waive it. If the employee refuses the waiver, the indemnity provided for in the clause is payable.

If no financial compensation is specified, the employee may claim damages.

The French Supreme Court has ruled that the employer cannot impose a waiver of the non-competition clause without the employee’s agreement.

Be careful when drafting your non-competition clause. Article written by Maître Ingrid Desrumaux, Avocat au Barreau de Bordeaux, Droit Social et Droit des Affaires – Updated on April 21, 2017
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Automatic termination of a fixed-term employment contract

Employers may only use fixed-term employment contracts in certain cases governed by law. Similarly, fixed-term contracts can only be terminated in certain specific cases. This study focuses on the most common type of termination : automatic termination of a fixed-term contract , i.e. on the date agreed in the fixed-term contract.

What formalities must the employer observe?

Unless provided for by contract or agreement, the employer is not obliged to observe a notice period. The situation is different if the employee is ” protected “. In this case only, the employer must notify the labor inspector one month before the end of the employment contract. The contract will only be terminated if, and only if, the labour inspector has previously established that the employee is not the subject of a discriminatory measure (Article L. 2421-8 of the French Labour Code).

Does the employer have to pay a ” termination indemnity” in the event of automatic termination?

Principle : the employer is required to pay a ” end-of-contract indemnity (also known as “indemnité de fin de contrat“) indemnité de précarité “) designed to compensate for the precariousness of an employee’s situation when he or she becomes unemployed (article L. 1243-8 of the French Labor Code). Exceptions : The employer is not required to pay termination compensation in the following cases (article L. 1243-10 of the French Labor Code): – seasonal jobs : these are jobs that are normally repeated every year, on more or less the same fixed dates… the employer must meet certain specific conditions in order to use them; – jobs in sectors where it is common practice not to use open-ended contracts : in legal terms, this is . jobs in use ” : some examples of sectors of activity : audiovisual, hotel and catering, leisure and vacation centers, etc. : here again, the employer must meet certain conditions in order to use them; – jobs related to grape harvesting : the term “grape harvesters” is used. vendanges ” contract for preparation, harvesting and storage. It meets specific requirements (maximum duration of one month, etc.) ; – jobs created as part of ” employment measures ” (e.g. professionalization contract); – youth employment for a period limited to school or university vacations ; In addition, termination benefits are not payable in the following cases : – if the contract continues as an open-ended contract ; – if the employee refuses to accept a permanent employment contract (CDI), even though the employer offers the same or a similar job, with remuneration at least equivalent to that offered under the fixed-term contract ( ): if the employee hired on a fixed-term contract refuses to renew his or her fixed-term contract, this does not entail the cancellation of the end-of-contract indemnity, unless the contract expressly provided for the renewal of the fixed-term contract from the outset, and the employee refuses); – In the event of early termination of the contract due to the employee’s initiative, gross misconduct or force majeure. NB : Temporary work : at the end of their assignment, temporary employees are entitled to an indemnity at the end of their contract, unless they are immediately hired on an open-ended contract by the user company. The same applies if the temporary employee accepts a promise of employment after the end of the assignment, even if he or she received this offer before the end of the assignment (Cass. Soc. October 5, 2016, n°15-28.672). Example : a temporary employee is hired for a two-month assignment from January 3, 2017, i.e. until March 2, 2017. If the user company offers him a permanent contract on February 25, 2017, and he accepts it on March 3, 2017, the temporary employee is entitled to the precariousness indemnity.

How much is the end-of-contract indemnity?

Principle : the end-of-contract indemnity corresponds to 10% of the total gross remuneration paid to the employee throughout the term of the fixed-term contract. The indemnity must appear on the last pay slip issued to the employee, and of course be paid at the same time as the last salary. Exceptions : It is possible for this amount to be higher if, moreover, it is provided for by a collective agreement. Similarly, the indemnity may be limited to 6% by collective bargaining agreement or company or establishment agreement, in return for professional training, which may take the form of a skills assessment outside actual working hours. In this case, as the employer, you must offer the employee concerned individual access to this training. The employee has three years to request payment of this termination indemnity, in accordance with current statute of limitations.

How do you calculate the amount of severance pay?

To determine the annual remuneration on which the termination indemnity is based, we use the “gross salary” of the employee. gross salary “This includes all other sums in the nature of wages, such as extra pay for overtime, night work, vacation pay, benefits in kind, certain types of bonus, etc.

What is the applicable system for severance pay?

Termination payments have the status of wages. It is therefore subject to social security contributions and income tax. Article written by Maître Ingrid Desrumaux, Avocat au Barreau de Bordeaux, Droit Social et Droit des Affaires – Updated on March 31, 2017