In a decision of May 11th , 2023 (n° 21-25.136) published in the bulletin, the social chamber of the Court of Cassation approves the legality of a Golden Hello (or arrival bonus) and its condition for a partial refund in the event premature resignation.
Pursuant to Articles L. 1121-1 and L. 1221-1 of the Labor Code, and 1134 of the Civil Code, in its version prior to Order No. 2016-131 of February 10, 2016, the Court of Cassation affirms that a clause agreed between the parties, the purpose of which is to retain the employee whose employer wishes to ensure long-term collaboration, may, without causing an unjustified and disproportionate attack on the freedom to work, make the acquisition of the entire arrival bonus, independent of the remuneration for the employee's activity, on the condition of the latter's presence in the company for a certain period after its payment and provide for the reimbursement of the bonus to the pro rata to the time that the employee, due to his resignation.
Consequently, the Paris Court of Appeal violates these texts which, in dismissing the employer's request for reimbursement of the arrival bonus on a pro rata basis, holds that the employer could not validly make the definitive granting of the initial bonus paid to the employee on the condition that the latter does not resign, and this, on a date after its payment, since this condition, which had the effect of setting a cost for resignation, infringed the freedom of work of the employee.
1) Facts and procedure
Mr. [W] was hired as an operator on the financial markets, from January 1, 2016, by the company Tullet Prebon, whose rights are the company TP ICAP Europe.
The employment contract binding the parties provided for a clause aimed at paying the newly recruited employee an arrival bonus or golden hello of 150,000 euros.
The employee should partially reimburse said bonus in the event of resignation within thirty-six months of taking office.
The employee resigned on March 16, 2017, i.e. before the end of the 36-month period.
The employer seized the industrial tribunal on September 12, 2017 to obtain, in particular, the partial reimbursement of the golden hello bonus.
The employee, for his part, refused to reimburse the bonus because, according to him, this violated his freedom to resign.
In a judgment of September 9, 2021 (RG 19/02239), the Paris Court of Appeal ruled in favor of the employee.
The company appealed to the Court of Cassation.
2) Means
The employer criticizes the judgment for dismissing all of his requests and ordering him to give the employee a balance of all accounts without penalty, whereas:
• "does not affect the freedom to work, the clause subordinating the acquisition of the entire arrival bonus, independent of the remuneration of the activity of the employee, to a condition of presence in the company after its payment for a period agreed between the parties and providing for the acquisition of this bonus in proportion to the time spent by the employee in the company and the reimbursement of the balance in the event of resignation before the due date;
• that by deciding to the contrary, the Court of Appeal violated Articles L. 1221-1 and L. 1121-1 of the Labor Code, 1134 of the Civil Code in the wording applicable to the dispute. »
3) Workaround
Pursuant to Articles L. 1121-1 and L. 1221-1 of the Labor Code, and 1134 of the Civil Code, in its wording prior to Order No. 2016-131 of February 10, 2016, the Court of Cassation affirms that 'It follows from these texts that a clause agreed between the parties, the purpose of which is to secure the loyalty of the employee whose employer wishes to ensure long-term collaboration, may, without causing an unjustified and disproportionate attack on the freedom of work, make the acquisition of the full arrival bonus, independent of the remuneration for the employee's activity, conditional on the latter's presence in the company for a certain period after its payment and provide for the reimbursement of the bonus in proportion to the time that the employee, because of his resignation, will not have spent in the company before the scheduled deadline.
In order to dismiss the employer from all of its claims, the judgment of the Paris Court of Appeal, after noting that article 7.3 of the employment contract provided for the payment within thirty days of taking office the employee of an initial bonus of 150,000 euros and that the latter would have to reimburse said bonus in part in the event of resignation within thirty-six months of taking office, holds that the employer could not validly subordinate the definitive grant of the initial bonus paid to the employee in January 2016 on the condition that the latter does not resign, and this, on a date after its payment, since this condition, which had the effect of setting a cost to the resignation, thereby infringing the employee's freedom to work.
In so ruling, the Court of Appeal violated the aforementioned texts.
The Court of Cassation quashes the judgment of the Paris Court of Appeal without referral and orders the employee to reimburse the sum of 79,166.67 euros as reimbursement of the golden hello bonus.
4) Analysis and advice for employees receiving a golden hello
In its judgment of May 11, 2023, the Court of Cassation puts an end to the indecision on the practice of "golden hellos".
The golden hello is an arrival bonus paid to a new employee when he joins a company.
This arrival bonus is used as a recruitment tool to attract talent.
The "golden hello" is generally conditional on the employee agreeing to stay for a minimum period in the company.
If the employee leaves the company before the due date, he may be required to repay part or all of the premium received.
Although this practice is widespread, it had been the subject of debate as to its repercussions on the employee's freedom to resign.
Some saw here an alienation of the salaried worker, incompatible with the principles of labor law.
Moreover, this “golden hello” phenomenon was treated in a heterogeneous way by the different jurisdictions.
The Paris Court of Appeal had in fact dismissed the employer's claims, arguing that the reimbursement, even partial, of the arrival bonus would amount to attributing a cost to the employee's resignation, thus undermining the freedom to resign of the employee.
In its judgment of May 11, 2023, the High Court overturns the judgment of the Paris Court of Appeal by applying the fundamental principle of "pacta sunt servanda", according to which agreements must be respected.
This decision brings an important clarification as to the conditions of validity of these clauses and the possibility of reimbursement of "not fully acquired" bonuses by employees, even when the bonus has already been paid.
Employees who receive a golden hello are strongly advised to provide that the amount of the indemnity is theirs and/or to limit the duration for which the employees undertake to remain in the company in return for payment of the bonus. of arrival.
Source
c. cass. 11 mai 2023, n° 21-25.136
https://www.courdecassation.fr/decision/645c9453e48085d0f84a357b
Frédéric CHHUM avocat et ancien membre du conseil de l’ordre des avocats de Paris (mandat 2019-2021)
CHHUM AVOCATS (Paris, Nantes, Lille)
e-mail: chhum@chhum-avocats.com
https://www.instagram.com/fredericchhum/?hl=fr
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