LeXcom Law firm

1. A works council gathered on February 21, 2007, in order to be informed by the employer about the company’s 2006 annual accounts. On April 25, 2007, the works council formally appointed an outside accountant for assistance in the review of the 2006 accounts, even though the company’s shareholders meeting supposed to approve the 2006 accounts was called for only a few days ahead, on May 10, 2007. The employer challenged such appointment (as well as the financial cost thereof), based on the fact that (i) the outside accountant should have been appointed at the time the accounts had been provided to the works council, (ii) the works council had been provided with all the information related to the annual accounts during the meeting on February 21, 2007 and (iii) the two-month period between the communication of the accounts and the appointment of the outside accountant proved that such appointment had been made too late. The request filed by the employer against the ruling of the Paris Court of Appeals was rejected. In its decision, the French Supreme Court holds: “although the right for the works council, when invited to review the company’s annual accounts, to appoint an outside accountant (whose fees are to be borne by the employer) is to be acted upon when the accounts are transmitted to the works council, it does not result from the provisions of articles L.2325-35, L.2325-36, L.2325-37 and L.2325-40 of the French Labour Code, interpreted in the light of the European Directive n°2002/14/CE dated March 11, 2002, which provides for a general framework for the information and consultation of workers within the European Community, that the appointment of such accountant must take place during the information meeting during which the annual accounts are presented to the works council”. Neither the contents of the February 21, 2007 meeting, nor the very short period between the appointment of the accountant and the shareholders’ general meeting invited to approve such accounts are valid reasons to limit the right for the works council to be assisted by an outside accountant for the understanding of the accounts and the assessment of the company’s situation. The decision of the Paris Court of Appeals was thus confirmed, i.e., “the appointment of the outside accountant took place at a reasonable period and not too late.”

2. On December 6, 2006, a company’s central works council appointed an outside accounting firm for the review of the company’s 2006 annual accounts and the 2007 budget. On March 6, 2007, the economic committee of the central works council decided to include in this mission the analysis of the company’s pay policy. In a letter dated June 5, 2007, the outside accountant requested the communication of various documents from the company, which refused. Through summary proceedings, the Paris Court of Appeals ordered that the company provide the outside accountant with the documents requested (Paris Court of Appeals, June 16, 2008). Before the French Supreme Court, the company claimed that there was no obviously illicit tort (“trouble manifestement illicite”), since (i) it was not proven that the documents requested were necessary for the understating of the company’s accounts, (ii) the information requested, related to the age, gender and annual gross remuneration of each employee belonged to the employee’s personal situation, so that the accountant’s request was tantamount to a trespass to the employee’s private lives and (iii) the outside accountant could not validly demand the communication of documents that did not exist and were not legally mandatory. The request filed by the employer was rejected. The French Supreme Court indeed held: “the outside accountant appointed by the works council may, as part of a mission that is necessary for the understanding of the company’s accounts and for the assessment of the company’s situation, be provided with all the documents that they see fit”. The Supreme Court further considered that, on the one hand, the initial judges were not expected to check whether the documents requested were necessary for the performance of the accountant’s mission and, on the other hand, the outside accountant, who is bound by a confidentiality and secrecy duty under article L.2325-42 of the French Labour Code, may not be objected that the documents requested are confidential. The Court last stated that the judge may order the communication “not of one summary document but of data, which incidentally the employer did not claim did not exist”.