What is a dismissal for economic reasons?
Verified 15 November 2024 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Labor
An economic dismissal is a dismissal made by an employer for one or more reasons unrelated to the employee.
It results from deletion or conversion of employment or a amendment, refused by the employee, of an essential element of the employment contract. These elements are evaluated at the company level.
They are in particular as a result of the following economic causes:
- Economic difficulties
- Technological change
- Reorganization of the company necessary to safeguard its competitiveness
- Termination of the company's activity.
Please note
Economic difficulties, technological changes or the need to safeguard company competitiveness are assessed at company level.
If it belongs to a group, these causes are assessed at the level of the sector of activity common to the company and to the other companies of the group located in France.
Economic difficulties arise when the company undergoes a significant change in at least one of the following economic indicators:
- Decrease in orders or sales
- Operating losses or deterioration of cash flow or gross operating surplus
- Any other factor which may justify economic difficulties.
A drop in orders or turnover is significant when, compared with the same period of the previous year, it reaches a certain duration. This time varies depending on the size of the company.
The introduction of a new technology may justify an economic dismissal.
Example :
The adoption of a manufacturing method by digital printing replacing a screen printing method.
The reorganization of the company may justify an economic dismissal if it is necessary to safeguard its competitiveness.
Safeguarding the competitiveness of the company must make it possible to anticipate economic difficulties by taking measures to avoid more substantial redundancies.
Example :
The reorganization is justified by a significant loss of customers and markets.
The cessation of activity of the company may justify an economic dismissal.
Please note
The termination of the company's activity due to the employer's fault cannot justify an economic dismissal. For example, the cessation of a company's activity as a result of the company's misappropriation of funds to pay down a personal debt.
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Definition of economic motive
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