The threat to competitiveness may arise from the foreseeable deterioration of the company’s sector of activity

The threat to competitiveness, which can justify a dismissal on economic grounds, may arise either from a foreseeable deterioration in the company’s competitive position within its sector, or from a foreseeable deterioration of the sector of activity itself.

A company operating in the field of educational materials for driving-licence training requested the authorization to dismiss a protected employee who had refused a change to her employment contract resulting from a corporate reorganization intended to safeguard the company’s competitiveness.

The Administrative Court of Appeal annulled the authorization to dismiss the employee, considering that the company had not demonstrated the reality of the threat to its competitiveness, which is necessary to establish the economic ground for dismissal based on safeguarding the company’s competitiveness. Indeed, the judges :

• considered that such a threat was not established in the absence of a foreseeable deterioration in the company’s competitive position within the sector of activity in which it operates; and
• rejected the argument relating to the foreseeable deterioration of the regulated educational publishing sector.

The Conseil d’État overturns this analysis:

• it reiterates that, when the company belongs to a group, the threat to the company’s competitiveness must be assessed at the level of the sector of activity shared with the group’s other entities.
• and indicated that the threat to the company’s competitiveness may result from a foreseeable deterioration :

– either in the company’s competitive position within its sector,

– or in the sector of activity itself.

Accordingly, the economic ground is established where the company’s sector of activity is deteriorating, even if the company’s competitive position within that sector is not affected.