EMPLOYMENT LAW REFORM FRANCE

The employment law reform decided by the President Emanuel Macron consists of five ordinances providing 36 measures in total in order to modernize the French Employment law and to strengthen the French economy.

The ordinances have been adopted by the Ministerial Council on 22 September 2017 and published on 23 September 2017. In a next step, these ordinances have to be ratified by a law which has to be presented within a period of three months running from their publication.

Nevertheless, certain measures have already entered into force following the publication of the ordinances.

In a nutshell, the employment law reform aims at making the French employment law more flexible with regard to the hiring of employees, the termination of employment agreements and the definition of the applicable working conditions. The future will show whether the chosen measures and their implementation are suitable to achieve the identified objectives.

In detail:


1. TERMINATION FOR ECONOMIC REASONS

• Economic reasons such as economic difficulties are to be proved on a national level and no longer on an international group level except in case of abuse such as artificial generation of economic difficulties.

• Reclassification possibilities abroad are no longer to be offered to the concerned employees.

• Reclassification possibilities can be offered by any and all means, e.g. by means of an intranet-list. A personalized offer sent by registered letter to each concerned employee is no longer required.
  
  
  2. VOLUNTARY REDUNDANCY PLANS

• Codification of the termination option «Voluntary redundancy plans» which currently has been subject to a varying case law.

• Voluntary termination plans can be implemented by means of a works agreement subject to the approval of the competent authorities.

• Employees have to agree with the termination of their employment agreement.

• Employees are granted the mandatory severance payment which they would have received in case of a unilateral termination of their employment agreement.

3. EMPLOYMENT AGREEMENTS

• The currently strict regime applicable to fixed-term contracts and temporary work can be amended by means of a collective bargaining agreement, in particular the maximum period and the number of possible renewals.

• Implementation of a home office regime by means of a works agreement or a charter carried out by the employer: Employees whose position is covered by the home office regime, can in particular request a home office work which can be refused by the employer exclusively for cause.

4. STAFF REPRESENTATIVES

• Merger of the three staff representation institutions (délégués de personnel, comité d’entreprise, comité d’hygiène, de sécurité et des conditions de travail) and replacement by a social and economic council (comité social et économique) which will overtake the competencies of the previous staff representation instances
• By means of a collective bargaining agreement or a works agreement, the social and economic council can be transformed into a company council (conseil d’entreprise) which is solely entitled to negotiate any and all works agreements on a company level.

5. SOCIAL DIALOG IN THE COMPANIES

• Instead of collective bargaining agreements, works agreements negotiated on a company level can provide the regime applicable with respect to working time organization, work security and remuneration elements.

• The stipulations of the works agreements precede the employment contract. Therefore, in case the concerned employee refuses to accept the works agreement stipulations, a termination is justified.

• The negotiation of works agreements on a company level are possible – even in case a labor union representative has not been nominated in the company.

• Companies employing less than 20 employees can negotiate directly with the employees. However, the works agreement resulting from such negotiations has to be approved in writing by 2/3 of the employees.
  
  
  6. TERMINATION FORMALITIES

• Termination notification must not any more provide comprehensively the reasons justifying the termination. A completion of the termination notification following the notification upon request of the employee or at the initiative of the employer is possible.
  
  
  7. LIMITATION OF THE TERMINATION INDEMNITIES

• The mandatory severance payment which is due in case of a termination – independent from the fact whether the termination is justified or not, and independent from the termination motivation except for good cause or gross fault – is augmented from 20% to 25% month’s salary per year of service for the first 10 years of service.
  Moreover, the mandatory severance payment entitlement raises from eight full months of service on instead of one year of service.

• The termination compensation which is granted by the labor courts in case a termination is considered as unjustified is capped depending from the seniority of the concerned employee. The compensation amounts to minimum one month’s salary in case of a seniority of less than one year and is capped at 29 months’ salary from a seniority of 20 years on. The respective quota do not apply in case the termination is based on discrimination, harassment or impacts substantive freedom.

8. EMPLOYMENT COURT PROCEDURE.

• Reduction of the period of time within the employee has to file a lawsuit in order to challenge his termination from 24 months to 12 months running from the date of the notification of the termination on.

*With the collaboration of the firm Racine – Carla Di Fazio-Perrin