France: Update on the Upcoming Labor Law Reform

By Angéline Duffour, Anna Milleret-Godet and Elise Farcy © Payne & Fears LLP Aug 14, 2017
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​Announced by Emmanuel Macron during his electoral campaign, the bill authorizing the French government to pass laws by ordonnance (decree), i.e. without a parliamentary debate, in order to improve social dialogue—adopted by the French Senate on Aug. 2—is the first part of the program the government wants to propose to employer organizations and trade unions. According to the official timetable, three decrees are expected to be published between now and Sept. 21, 2017.

Here are the main areas that may be subject to substantial changes from as early as September.

Economic Dismissals: What Might Change

Scope of assessment of economic grounds. The government may limit the scope of assessment of economic grounds to companies that are part, within the same group, of the same business sector and situated in France only. This scope, which is currently global, may therefore only apply on a national level in the near future. This measure would offer greater legal security to companies belonging to international groups and could encourage foreign groups to invest in France.

However, as a safeguard, the government plans to take all measures necessary to prevent the creation of economic difficulties within a group, by artificial or accounting means, with the sole purpose of making job cuts in a French subsidiary. This could give rise to numerous disputes.

Threshold for Job Protection Plans (JPP). The conditions governing collective redundancies may be adapted to the size of the company and the contemplated number of dismissals. Currently, when a company with 50 or more employees is contemplating at least 10 dismissals over a 30-day period, it is required to implement a JPP. This threshold of 10 dismissals may be modified in order to take into account the size of the company (it may be increased to 30 dismissals). This could allow certain large companies to reorganize, when the number of contemplated dismissals remains limited given its total workforce, without having to implement a JPP. 

Notion of professional categories. The conditions pursuant to which order criteria, related to professional categories, are applied in the case of collective redundancies may be specified. Majority agreements giving rise to JPPs may notably benefit from a presumption of conformity in this respect, thus limiting the Direccte's (French regional directorate for companies, competition, consumption, work and employment) verifications in this regard. This is already generally the case in practice. For JPPs established by means of a unilateral document, the terms and conditions regarding the verification of occupational categories may also become more flexible.

Scope and conditions of redeployment. The scope of redeployment will not be modified as such, but failure to respect the obligation to seek redeployment opportunities abroad would no longer call into question an economic dismissal.

Moreover, in the wake of law No. 2015-990 of Aug. 6, 2015, regarding economic growth, activity and equal opportunities, known as the "Macron Law," the forthcoming decree may further simplify the redeployment process for employers, in particular by no longer providing for the systematic communication of individual redeployment offers to the concerned employees. Instead, employees would be given access to internal offers via the Internet (for example, a list of employment offers accessible on the company's Intranet). 

Voluntary departure plans. The government may be authorized to take measures promoting and increasing the security of voluntary departure plans, in particular with regards to informing and consulting employee representative bodies. Once again, the idea is to facilitate redeployments within companies that undertake not to dismiss employees. Currently, companies are required to respect the same procedure as for a JPP.

Takeover of independent economic entities. While law No. 2016-1088 of Aug. 8, 2016, regarding labor, the modernization of social dialogue and the safeguarding of career paths, otherwise known as the "Labor Act," authorized companies with 1,000 or more employees (or belonging to a group with 1,000 or more employees) to implement a JPP before the sale of a business or transfer of an activity, creating the first crack in the automatic transfer of employees in accordance with Article L 1224-1 of the French Labor Code, the forthcoming decree may open up this possibility to companies with fewer than 1,000 employees. The aim is to facilitate takeovers when part of a company can be saved. 

Collective Bargaining: A New Reality

The relationship between company and industry-level agreements. The government may opt for a new relationship between industry-level agreements and company agreements by defining the primacy of one or the other depending on the area. The decree may therefore define:

  • The areas in which collective bargaining or company-level agreements cannot breach industry-level agreements. This may notably concern minimum wages under collective bargaining agreements, classifications and gender equality in the workplace, etc.
  • The areas in which industry-level agreements, whether professional or interprofessional, can expressly object to any breach by a company-level agreement. This may notably concern the prevention of occupational risks and difficult working conditions, disabilities, the conditions governing and means of exercising a trade union mandate, etc.
  • The areas in which company-level agreements would take precedence, i.e. all other areas.

The relationship between company-level agreements and employment contracts. The government also wishes to harmonize and simplify conditions regarding the recourse and content of agreements on the reduction of working time, internal mobility, job protection and development, the adjustment of working time and job security. Moreover, the termination of an employment contract in the event that an employee refuses an amendment of his or her employment contract, arising due to a collective agreement, will be based on specific grounds and not fall under the procedure for collective redundancies for economic reasons.

Conclusion of company-level agreements. The government may facilitate the consultation of employees (referendum) in order to validate company-level agreements, in particular by allowing employers to initiate such consultations. The conclusion of company-level agreements by elected representatives not mandated by a trade union, in companies with fewer than 50 employees, may also be facilitated.

Employee Representative Bodies: Creation of a Single Body

Companies may group together personnel delegates, the Works Council and the Health, Safety and Working Conditions Committee to form one body, the conditions for the creation, remit and functioning of which will have to be specified. The purpose of this amalgamation is to eliminate any compartmentalization, which no longer seems relevant given the cross-disciplinary issues dealt with, and facilitate social dialogue by sharing information and limiting the number of intermediaries for employers.

Dismissals: Safeguarding Work Relations

A Cerfa form rather than a dismissal letter? In order to safeguard dismissal procedures, the government is contemplating the implementation of a standard dismissal letter, which would take the form of a "Cerfa form." Employees would, however, be entitled to request further details about the reasons for their dismissal. Consequently, this would simply be an additional formality for employers to respect, as in practice they would continue to draw up dismissal letters to prevent any contestation from employees.

Return of the capping of indemnities granted by the Employment Tribunal. The indicative scale for the granting of damages in the case of dismissal without real and serious cause, implemented by the Labor Act, may become an obligatory reference, except in the case of dismissals tainted by harassment or discrimination or an "exceptionally serious" wrongdoing by the employer. It will specify minimum and maximum amounts, determined based on the employee's years of service. 

In parallel, the government may increase legal severance indemnities for dismissed employees and/or reduce or even eliminate the condition, set forth in the French Labor Code, that an employee must have at least one year of service. 

Reduction of time frames for objections. The statute of limitations for actions contesting the lawfulness or validity of an economic dismissal, currently fixed at 12 months, would be reduced.

Social Security and tax treatment of termination indemnities. The government wants to make conciliation before the Employment Tribunal more attractive by implementing special Social Security and tax exonerations. 

Angéline Duffour, Anna Milleret-Godet and Elise Farcy are Lexology authors for Payne & Fears LLP. © 2017 Payne & Fears LLP. All rights reserved. Reposted with permission of Lexology.

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