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Cancellation of the employment contract during a corporate mandate: employment contract suspended or resignation?


Legal watch

Publication date

28 June 2022

An employee hired by a company in 1970 became its Chief Executive Officer in 1990. He signed the minutes of the Board of Directors appointing him as a corporate officer, stating that he was “waiving the benefit of his employment contract and no longer being remunerated under it“. In 2014, he was revoked from his position as Chief Executive Officer, and the company deduced that he had resigned from the employment contract when the minutes were signed in 1990 and that he no longer had any link with the company. However, the employee maintained that this signature only suspended his employment contract and that at the end of his mandate, he became an employee of the company again. As such, he applied to the Labour courts to obtain judicial termination of his employment contract to the detriment of the employer.

The question is to know whether the mention in the minutes manifested a clear, serious and unequivocal will of the employee to terminate his employment contract, pursuant to the case law rendered under article L1237-1 of the French Labour Code, or whether it only resulted from the non-cumulation of the functions of corporate mandate and the functions of employee.

In a decision dated March 18, 2022 (Cass. soc. n°20-15.113), the Social Chamber of the French “Cour de Cassation” recalled that the employment contract of an employee invested with a corporate mandate exclusive of any subordination link is, in the absence of any contrary agreement, suspended during the time the mandate is exercised. On the other hand, if the person concerned is in a situation of legal subordination to the company, if his or her duties as an employee are clearly different from those as a corporate officer and if a separate remuneration is paid under the employment contract, the employee may combine a corporate mandate with an employment contract. This was not the case in this instance, as the principle was that the employment contract was suspended during the term of office. However, as the employee had declared that he was giving up his employment contract, had he thereby cancelled the suspension and resigned?

For the “Cour de Cassation”, the wording in the minutes is equivocal in that it can be considered as the sole application of the principle of non-cumulation of the corporate mandate and employee. Thus, it does not imply a waiver of the principle of suspension of the employment contract.

The position of the “Cour de Cassation” may seem questionable in view of the wording of the minutes, and calls for caution in order to ensure that the situation legally corresponds to the will of the parties.


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