Failure by the employer to resume payment of wages within one month of unfitness does not entitle the employee to compensation in lieu of notice

Cass. soc., July 5, 2023, n°21-25.797

Can an employer’s failure to resume payment of wages within one month of dismissal for unfitness be punished by payment of compensation in lieu of notice?

The Court of Cassation answers in the negative, contrary to the lower courts.

For the record, article L.1226-4 of the French Labor Code stipulates that :

• In its 1st paragraph: if, at the end of a period of one month from the date of the medical examination to resume work, the employee declared unfit has not been reclassified within the company, or if he/she has not been dismissed, the employer shall pay him/her, from the expiry of this period, the salary corresponding to the job held by the employee prior to the suspension of his/her employment contract
• In its 3rd paragraph: in the event of dismissal for non-occupational unfitness, the notice period is not served and the employment contract is terminated on the date of notification of the dismissal: no compensatory indemnity is due.

In this case,

• An employee was declared unfit for work on April 18, 2014, for reasons of non-occupational origin.
• He was dismissed for non-occupational unfitness and the impossibility of redeployment on June 6, 2014.
• The employer did not pay him his salary at the end of the one-month period following the declaration of his unfitness, i.e. between May 18 and June 6, 2014.

The employee brought an action before the industrial tribunal, claiming that his failure to comply with article L.1226-4 al. 1 entitled him to compensation in lieu of notice.

The lower courts upheld his claim – while ruling that the dismissal was based on a real and serious cause – and ordered the employer to pay the corresponding back pay for the month in question, as well as compensation in lieu of notice, as a penalty for the failure to recover wages.

They thus consider that the payment of compensation in lieu of notice (in principle not due following dismissal for unfitness) constitutes a sanction for any type of breach by the employer of its obligations, whereas such a sanction had previously only been accepted in the absence of serious cause for dismissal.

In overturning this decision, the Cour de cassation, after recalling article L.1226-4 al 3, noted that the employer’s failure to meet its obligation to resume payment of wages did not justify the introduction of a new exception to the principle of absence of entitlement to compensation in lieu of notice.

This ruling reiterates the opinion of the Advocate General, who considers that it is exclusively the final imputability of the termination that determines the eventual payment of compensation in lieu of notice.

Thus :

• If the termination was caused by a breach of contract by the employer, and the employee’s failure to carry out the notice period is attributable to the employer : compensation in lieu of notice is due, since without this breach, the notice period could have been carried out (Cass. Soc., April 13, 2022, no. 21-10.525; Cass. Soc., May 30, 2012, no. 10-20.106: for judicial termination),
• If the termination is linked to the employee’s physical inability to perform his work, then compensation in lieu of notice is not due, as the employee is unable to perform it.

In the light of this decision, the unfounded nature of the dismissal remains the only exception to the non-payment of compensation in lieu of notice following dismissal for unfitness.