Undeclared Work of an Irregular Foreign National: Cumulation of Compensation Prohibited, Choice of the Most Favourable

Imagine an employer in Cournon-d'Auvergne who hires an undocumented gardener, paying him under the table for two years. One day, the employee discovers his rights and claims compensation. Can he cumulate the compensation for undeclared work and that for employing an irregular foreign national? The Court of Cassation says no, but offers him a choice: the most favourable law. A decision that changes the game for employers, but also for landlord-property owners who, without knowing it, could find themselves in a similar situation.

You may be asking yourself this question if you employ a gardener, a caretaker, or any other staff without checking their residence permit. The decision of 18 March 2020 (No. 18-24.982) clarifies the rules: no double penalty for the employer, but no double compensation for the employee. Explanations.

Behind legal jargon, there is a human story: an exploited foreign worker, an employer taking a big risk. And if you are in this situation, know that the courts, from Clermont-Ferrand to Paris, now apply this rule strictly.

The Facts: A Story That Happens Every Day

Mr. Y, a foreign national without a residence permit, was hired by a cleaning company in Clermont-Ferrand. For several months, he worked without a declared employment contract, paid in cash. When the relationship ended, he brought a claim before the employment tribunal for compensation. Two texts were available to him: Article L. 8223-1 of the Labour Code (lump-sum compensation for undeclared work, equal to six months' salary) and Articles L. 8252-1 to L. 8252-4 (back-pay and termination compensation for employing an irregular foreign national).

The employee claimed cumulation of both, amounting to nearly €18,000. The employer argued that one or the other must be chosen, on the grounds that undeclared work and employment of an irregular foreign national are two separate offences but the law prohibits cumulation of compensation. The Paris Court of Appeal, on 29 June 2017, agreed with the employer: it compared the two schemes and awarded the employee the one most favourable to him, namely back-pay (€12,000) and termination compensation (€3,000), totalling €15,000, compared to six months' salary (€12,000) for the undeclared work compensation.

Mr. Y appealed to the Court of Cassation. The Court of Cassation, on 18 March 2020, dismissed his appeal, approving the reasoning of the Court of Appeal: no cumulation, but application of the most favourable provision. A decision that confirms consistent case law and reassures employers about the absence of double penalty.

The Reasoning of the Court — Analysed

The Court of Cassation relies on two key texts. Article L. 8223-1 of the Labour Code (which penalises undeclared work with a lump-sum compensation equal to six months' salary) and Articles L. 8252-1 to L. 8252-4 (which provide, for the employment of an irregular foreign national, payment of unpaid wages and termination compensation of at least one month's salary).

The reasoning is simple: these two compensatory schemes have the same object — to compensate the damage suffered by the employee due to the lack of authorisation and the concealment of employment. Cumulating them would amount to compensating the same damage twice, which French law prohibits (principle of full reparation without double compensation).

Is the Court innovating? No, it confirms a well-established position. But it provides an important clarification: the judge must compare the two schemes and apply the one most favourable to the employee. In this case, back-pay (€12,000) plus termination compensation (€3,000) = €15,000, higher than the lump-sum compensation for undeclared work (€12,000). So the former was retained.

The employer's arguments (no cumulation) therefore prevailed. The employee argued that the two texts pursued different purposes: one compensates for undeclared work, the other for lack of authorisation. But the Court considered the damage to be unique: the fact of having worked without being declared and without authorisation. A rhetorical question: can the two really be dissociated? The answer is no.

What This Changes for You — Practically

If you are an employer, this decision protects you from double compensation, but does not exempt you from paying what is due. If you have employed an irregular foreign national, you will have to pay either the lump-sum compensation of six months' salary, or back-pay plus termination compensation, depending on what is most advantageous to the employee. In either case, the amount can be steep: for example, for a salary of €2,000 per month, six months = €12,000, or back-pay over two years = €48,000 in salary, plus €2,000 in termination = €50,000. The judge will choose the higher amount.

If you are a foreign employee, you cannot cumulate, but you must be vigilant: ask your lawyer to calculate which option is most favourable to you. In Clermont-Ferrand, a recent case showed an employee obtained €18,000 in back-pay, compared to €12,000 for the lump-sum compensation.

For landlord-property owners who employ a caretaker or gardener, the same rule applies. Check your employees' residence permits carefully, because in the event of an inspection, you risk an administrative fine of up to €15,000 per employee, in addition to compensation.

Four Tips to Avoid This Type of Dispute

• Systematically check the residence permit of any foreign employee before hiring, and keep a copy in the personnel file. If in doubt, apply for a work permit from the prefecture.
• Declare all your employees via the DSN (Nominative Social Declaration) and keep an up-to-date single staff register. Undeclared work is punishable by 3 years' imprisonment and a fine of €45,000.
• In the event of an inspection by Urssaf or the labour inspectorate, do not panic: cooperate and provide all supporting documents. Voluntary regularisation can reduce penalties.
• Consult a specialised lawyer as soon as a dispute arises. In Clermont-Ferrand, Maître Zakine can help you assess your risks and negotiate a settlement before the employment tribunal is seized.

Further Reading: Related Case Law and Developments

This decision is part of a line of Court of Cassation rulings. Already in 2016 (No. 14-29.688), the Court had held that the lump-sum compensation for undeclared work cannot be cumulated with damages for unfair dismissal. In 2018 (No. 17-15.455), it extended this principle to cumulation with compensation for employing an irregular foreign national.

The trend is clear: judges want to avoid double compensation, but they grant the employee the benefit of the most favourable rule. This means that, for the future, employers must be even more cautious: the financial risk remains high, but at least it is capped.

A development to watch: the law of 20 September 2020 (No. 2020-1140) strengthened sanctions against the employment of irregular foreign nationals, notably by increasing administrative fines. Case law may evolve towards stricter application, but the principle of non-cumulation should remain.

What You Absolutely Must Remember

In summary, here are the key points in Q&A format:

Can I cumulate compensation for undeclared work and that for employing an irregular foreign national? No, it is one or the other, the most favourable.

How do I know which option is most favourable? Compare six months' salary (lump-sum compensation) with back-pay of unpaid wages + one month's salary (termination compensation). The judge decides.

What are the risks for the employer? In addition to compensation, an administrative fine of up to €15,000 per employee, and possible criminal prosecution.

What should I do if I am a foreign employee? Consult a lawyer to assess your rights. Do not sign any settlement without advice.

Does this rule apply everywhere in France? Yes, it is common law. The employment tribunals of Clermont-Ferrand, Paris, or Marseille apply it in the same way.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →