So employees sue, the court (as reasonably independent party) checks the books, and decides that you actually had reason to fire them. Sounds like a good trade-off to me (to keep both employers and employees honest).

I don't know the situation in France, but in Germany the Arbeitsgerichte (employment courts) are rather cheap for both parties (unless you opt for the most expensive lawyer around, of course - however that might not help the case that you're really bleeding money).

As for the multinationals and their local branches: For one, I doubt that this court's decision applies universally (case law isn't typical in continental Europe), and even then, we'd have to see the circumstances of the case.

I could imagine that the court found that money was extracted from the french affiliate (eg. using somewhat dubious licensing agreements) with the implied purpose to make the franch branch look weak enough that it can do all kinds of restructuring (such as reducing work force).

With such tight coupling between the two corporations (why should the french affiliate hand over money for nothing if it's not just a branch of the parent Co.?), one can expect that money flows back to aid the affiliate, too.

But that's speculation (one way or the other).

I am French, live and work in France currently so I am familiar with the situation. It's true that work-related laws favour a lot the employees over the company and protect them a lot but I really don't see this as a bad thing at all. Employees cannot slack of all day, endanger the company be fired and still sue you and won tons of money. But you cannot fire half of your company without a really good reason either. I can understand that it seems strange to someone not working in France but when you've lived with this kind of protection it really is one of the best thing that makes me want to keep working in France.