EARN News
Fundamental labour law reform in France
Lyon, 2017-12-29
On the 22 of September 2017, France’s new president Macron enforced his announced labour law reform by adopting five regulations:
In particular, it is intended to enhance legal certainty in the event of termination procedures (I.),
the staff representative bodies for the participation of the employees become leaner (II.)
and it will become easier for companies to deviate from collective agreements (III.).
I. Enhanced legal certainty in the event of dismissal procedures
Calculable claim for compensation
The already very formal French dismissal procedures were characterized by high severance pay for employees whose amount which lay largely at the discretion of the Judge.
In case of dismissal without clause, employees with a 2-year period of employment at larger-sized companies (>10 employees) are entitled to a claim for compensation of at least six monthly salaries, with no cap.
For companies with 11 employees or more, the two following legal regulations now apply:[1]
- With less than 1 year of seniority: at most 1 monthly salary as compensation;
- Between 1 and 2 years: between 1 and 3.5 monthly salaries;
- From 3 years: at least 3 monthly salaries, the maximum increases gradually: 4 (at 3 years); […] 9 (at 9 years); […] 13 (at 15 years) and a maximum of 20 (from 30 years).
For smaller companies (max. 10 employees) there are different lower limits at seniority of up to 10 years.
In contrast, the legal compensation for dismissal of a contract at a reasonable termination on time was raised.
Simplification of the operational termination
International corporations are relieved of redundancies operational termination has facilitated: Previously, the entire company – and therefore also the foreign parent/affiliate corporation – were affected by economic difficulties. This reality check of economic difficulties is now reduced only to the French corporation.
Moreover, the obligation to offer the employee a possibility for re-employment at the foreign location of the concern was abolished.
II. Employee‘s representation
The personnel representation law was characterized by a large number of committees. The former three person representation bodies have generally merged since 2018-01-01[2] to a social and economic advisory board (so called comité social et économique). This is now the only contact person for the employees on questions particularly regarding work safety, work duration and redundancies and aims to facilitate communication within the company.
III. Reinforcement of individual work agreements
By agreements with the workforce, companies are given the opportunity to differ from industry collective agreements. Smaller companies should be able to adapt the employee relationships (e.g. concerning initial probation, period of notice/severance pay, 13. monthly salary, seniority bonus) without participation of trade union representatives and therefore more flexible to individual circumstances.
For certain exceptions, like minimum wage or maximum working hours, industry agreements are still priority.
CONCLUSION: The primary aim of the reform is to strengthen the French middle class and make it more competitive. An important focus of the French labour laws were streamlined and should make work relationships less bureaucratic so that the innovations were evaluated as basically positive, particularly from the employer’s side. It remains to be seen, how the transformed social dialogue will be adopted and implemented.
Author: Petra Kuhn, Avocat à la Cour, diploma judicial officer
ZGS Avocats Associés