<p>Notice period compensation: can an employee accumulate their new salary?</p>

Picture the scene: you are an employee in Grasse, working for a perfume company. You are told that your workshop is closing. Economic redundancy. You have more than two years' service, therefore you are entitled to two months' notice. But your employer tells you: "You found another job almost immediately, so I will only pay you one month's pay in lieu of notice." Is this lawful? The question that every employer or employee asks: can pay in lieu of notice be accumulated with the salary from one's new job? This decision of the Court of Cassation of 16 June 1976 answers clearly: yes, the employee is entitled to the full amount of the payment in lieu, regardless of whether they have found new employment. In short, the employer cannot reduce the payment on the grounds that the employee has suffered no loss. Let us analyse this case.

The Facts: An Everyday Story

Mr X had worked for several years for the company Bres, a cosmetics manufacturer based in Cagnes-sur-Mer. In 1975, the company decided to close a workshop and dismissed Mr X for economic reasons. By virtue of his service exceeding two years, he was entitled to a period of notice of two months pursuant to Article L. 122-6 of the Labour Code (now Article L. 1234-1). The employer paid him pay in lieu of notice corresponding to only one month, arguing that Mr X had found employment with a new employer almost immediately after his dismissal. The company considered that, since he had suffered no loss of salary during the second month, he was not entitled to this payment. Mr X brought the matter before the Conseil de prud'hommes (Employment Tribunal) of Grasse to claim payment of the missing month. The judgment found in his favour. The company Bres appealed, but the Court of Cassation upheld the decision of the lower courts. The reasoning is inexorable: it was the employer who terminated the contract and who placed itself in a position where it was unable to provide work. It is irrelevant that the employee found other employment elsewhere; the pay in lieu of notice is due in full.

The Reasoning of the Court — Analysed

In its judgment of 16 June 1976 (No. 75-40.359), the Court of Cassation relied upon Articles L. 122-6 and L. 122-8 of the Labour Code (now Articles L. 1234-1 and L. 1234-5). These provisions stipulate that a dismissed employee is entitled to a period of notice, the length of which depends on their length of service, and that, failing the performance of the notice period, the employer must pay compensation in lieu. The central point is as follows: the obligation to pay the compensation arises from the fact that the employer is the originator of the termination. "It is the company which dismissed him that placed itself in a position where it was unable to provide him with any work," the judges wrote. In other words, the cause of the non-performance of the notice period is attributable to the employer, not the employee. The latter did not refuse to work; he simply did not have the opportunity to do so. Consequently, the benefit he derives from new employment cannot be used to reduce the compensation. This would be a double penalty: the employee loses his job, and, on top of that, part of his compensation is withheld because he had the good fortune to find work quickly. The Court rejected the employer's argument that pay in lieu of notice is compensatory in nature (to remedy a loss). It affirmed that it is a fixed-sum payment, due as of right as soon as the employer fails to provide work for the employee during the notice period. This reasoning has been consistently applied since this decision: pay in lieu of notice is deferred salary, not compensation for loss of opportunity.

What This Means for You — In Practical Terms

For employees: if you are dismissed and entitled to a notice period, you must receive the full amount of pay in lieu, even if you find another job the very next day. For example, in Grasse, an employee in the perfume industry with 5 years' service, made economically redundant, is entitled to two months' notice (approximately €6,000 based on a salary of €3,000). If they find a new job after one week, the employer cannot reduce the payment pro rata. They must pay the full €6,000. For employers: do not make the mistake of withholding part of the payment on the grounds that the employee has a new job. You would be ordered to pay the balance, plus statutory interest (the rate is fixed annually, currently around 4.5% in 2024). In practice, the Conseil de prud'hommes of Grasse applies this rule strictly. If you are a landlord (for example, of commercial premises in Cagnes-sur-Mer), the m