Paid Leave: Can the Employer Impose the Fifth Week During an Economic Closure?

You own a small building in Mulhouse and rent premises to a company. Suddenly, the company announces that it is closing for two weeks for economic reasons and that it is attributing this closure to its employees' paid leave. These employees, who had already exhausted their first four weeks, find themselves without salary during this period. They then claim partial unemployment benefits. The company refuses. Who is right?

This seemingly innocuous question goes to the heart of the employer's managerial authority. The Court of Cassation, in a judgment of 10 December 1993 (No. 88-42.652), ruled: the employer can impose the fifth week of paid leave during an economic closure, without being required to pay partial unemployment benefits, provided that the employees have retained their usual salary. A decision which has been authoritative for more than thirty years.

To understand what this means for you – whether you are a business owner in Thann, an employee in Mulhouse or a landlord – let us delve into the details of this case and its practical implications.

The Facts: A Story That Happens Every Day

In December 1986, the company Rexroth-Sigma, based in Mulhouse, experienced economic difficulties. To adapt, it decided to close its doors from 26 December 1986 to 4 January 1987. But rather than resorting to partial unemployment, it attributed this closure to the balance of its employees' paid leave, drawing on their fifth week of annual leave.

However, several employees had already exhausted their first four weeks of leave (the "main leave") and some had even made individual commitments for their remaining leave. They therefore had no leave days available to cover the closure. Consequence: they received no salary during these days, but the company did not register them for partial unemployment either. The employees then brought the matter before the industrial tribunal to obtain partial unemployment benefits, arguing that the closure was imposed and that they had not consented to the attribution of their leave.

After an initial judgment, the case went up to the Court of Cassation. The debate focused on a specific point: can the employer impose the taking of the fifth week of paid leave during a closure for economic reasons, even if the employees no longer have any leave days available?

The Reasoning of the Court — Analysed

The Court of Cassation relies on a fundamental principle: the fixing of the dates of paid leave is a prerogative of the employer (its managerial authority). Article L. 223-7 of the Labour Code (former) provides that the employer determines the period for taking leave, subject to compliance with legal provisions (such as the minimum duration of the main leave and the obligation to dissociate the fifth week).

Here, the company Rexroth-Sigma complied with these rules: it dissociated the fifth week from the first four (which the law requires, because the fifth week cannot be attached to the main leave without agreement). It also ensured that the employees suffered no loss of salary: those who still had leave days were paid normally during the closure. Those who no longer had any also did not lose salary, because they simply no longer had any leave entitlement – they are therefore not entitled to partial unemployment benefits, since those compensate for a loss of salary, which was absent in this case.

The judges thus reject the employees' argument that the economic closure does not allow the imposition of the fifth week. They recall that the employer can freely choose the closure period, even for cyclical reasons, as long as it complies with legal rules and the employees suffer no salary prejudice.

This decision confirms a consistent line of case law: the employer's power in matters of leave is broad, but it is circumscribed by the obligation not to infringe employees' rights. Here, no right was violated, because the employees did not lose any salary – they simply exhausted their leave.

What This Changes for You — Practically

If you are a business owner in Mulhouse or elsewhere, this decision reassures you: in the event of a downturn in activity, you can close your business and attribute this closure to the fifth week of your employees' leave, without having to pay partial unemployment benefits, provided that your employees still have leave days available. If not, you must pay them normally or place them on partial unemployment. For example, if an employee has already taken their five weeks, you cannot impose a closure without pay.

For employees, the message is clear: your employer can decide alone on the dates of your leave, including the fifth week. If you have no days left, you will not be paid during the closure, but you may be able to claim partial unemployment if the employer registers you for it. In Thann, a metalworker could find themselves in this situation if their company closes for economic reasons: they should check their leave balance and, if necessary, negotiate a spread.

For landlords, this decision has an indirect impact: if your tenant (a company) closes for economic reasons and attributes its leave, its turnover may fall. You could then face requests for rent reduction. But that falls under commercial law, not employment law.

Four Tips to Avoid This Type of Dispute

• Anticipate closures in the internal regulations: provide for annual closure periods and their attribution to leave, respecting the notice period (one month before the start of the leave).
• Inform your employees in writing: a letter or notice specifying the closure dates and the arrangements for taking leave avoids misunderstandings.
• Check each employee's leave balance before attributing: if an employee has no days left, offer them unpaid leave or register them for partial unemployment.
• Consult employee representatives: the social and economic committee (CSE) must be informed and consulted about the closure and its consequences.

Further Reading: Related Case Law and Developments

Before 1993, some courts of appeal considered that the employer could not impose the fifth week during an economic closure, because this fell under partial unemployment. The Rexroth-Sigma judgment put an end to this uncertainty. Since then, the Court of Cassation has confirmed this position several times, notably in a judgment of 16 December 2020 (No. 18-26.500) where it held that the employer can impose the taking of leave during a period of partial unemployment, provided that a notice period of at least one clear day is respected.

The trend is therefore clear: the employer's power in setting leave dates is strengthened, but it must always respect the notice rules and not penalise employees. In practice, this means that companies can more flexibly manage periods of low activity, without fear of systematic litigation.

Key Points to Remember

FAQ:

• Can the employer impose the fifth week of leave during an economic closure? Yes, provided that the employees still have leave days available and they suffer no loss of salary.
• What to do if an employee has no leave days left? The employer must either pay them normally or place them on partial unemployment.
• Can an employee refuse to take their leave during this period? No, because fixing the dates falls within the employer's authority, unless the employee has already made individual commitments (e.g., holiday bookings) – but this must be negotiated.
• What deadlines must be respected? The employer must inform employees at least one month in advance, except in exceptional circumstances (deadline reduced to one clear day for partial unemployment).
• Does this case law still apply today? Yes, it is still valid and has been confirmed by recent judgments.

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