The Reform of Labor Law in France

THE REFORM OF LABOR LAW IN FRANCE IS ADOPTED

On January 11th, 2013 a national agreement between unions of employees and employers was signed, bringing significant changes to the country’s Labor Law. A law was necessary in order for its provisions to enter into force.

The Law ”for the Security of Employment” (Loi de Sécurisation de l’Emploi) of June 14th 2013 intends to provide employers with a more flexible and predictable environment, while strengthening certain employee rights.

To be enforceable, some provisions will have to be further defined by subsequent governmental decrees.

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In exchange for measures bringing more protection to the employees, companies are granted more flexibility and predictability, especially in a downturn context.

The main provisions of the Law are as follows:

(i) More protection for employees and additional information to staff representatives

• Access to supplementary heath care coverage• Duration of the “Redeployment Leave” is extended• Part time employment should have a minimum duration of 24 hours per week• Sabbaticals in companies with more than 300 employees to work for another company• Duty to search for a buyer before closing a site and to inform the works council, applicable in companies or groups of 1000 + employees; a bill is currently being discussed before Parliament to complete the provisions of the Law.• Staff representatives’ information on prospects & strategic directions of the company: companies will have to put in place a unique & regularly updated database to which the staff representative bodies shall have access. This database will contain economic & social information on the last two years and the current year, and prospects over the next three years (i.e., notably information on

financial flows, investments, equity capital, liabilities, etc.). The works council will have to give its opinion on the company’s strategic directions every year and can be assisted by a chartered accountant of its choice.

(ii) More flexibility and predictability for employers

Fixed timeframes for the WC’s to express its opinion and for the conduct of WC expertise. The Law provides that the WC will have to express its opinion in a fixed timeframe. This timeframe will be set by an agreement between the employer and the WC, or in the case that no agreement is reached by a decree. This timeframe cannot be inferior to 15 days. In the event that no opinion is given, the latter will be deemed to be a negative one. For the expertise, the law specifies that the WC expert will have to hand in his report within reasonable time, set by an agreement between the employer and the WC, or if no agreement is reached before a time limit defined by a decree. Should litigation arise about information requests, the Court will have to issue a decision within 8 days.

Ability to cut employees’ working time and wages during economic downturn: in the event of severe & temporary economic downturn, it is possible to sign with the unions representing the majority of the employees - for a maximum period of two years – an agreement allowing the employer to cut down employees’ working time and/or salary with in return the guarantee that they will not be made redundant during the agreement period. The agreement should guarantee “sharing of economic profits” at its term and provide for penalties in case of non-compliance with such obligation. Once the agreement has been reached with the unions, if the employee opposes to such change, s/he will be made redundant but the company will be exempted from implementing the collective redundancy procedure.

• Length reduction of the collective redundancy procedure in companies with at least 50 employees and flexible framework for company agreements: the threshold that triggers the obligation to put in place a Job Preservation Plan (“Plan de Sauvegarde de l’Emploi”) has not changed (i.e., redundancy of at least 10 employees within a period of 30 days). However, the redundancy procedure is modified. Henceforth, the collective

1 This timeline does not apply to some legal actions including claims for discrimination.

redundancy procedure & the content of the Job Preservation Plan are determined by 1) conclusion of a company agreement with the unions or 2) by a document prepared by the employer which has to be approved by the labour authorities.

• In the first scenario, the parties must specify in the company agreement (to be signed with trade unions that have obtained at least 50% of the votes in favour of the “representative” trade unions, at the elections of the works council) the content of the Job Preservation Plan. They can also define the consultation procedure by setting out notably the number of meetings with the WC, consultation timelines, list of documents to produce, conditions for appointing an expert, dismissal selection criteria. Should the agreement be signed, it will have to be approved by the labour authorities after a 15 days review, review which will be limited compared to the second scenario.

• In the second scenario, the employer will unilaterally prepare a document containing the aforesaid information and the Job Preservation Plan. These documents shall be first submitted to the WC for opinion before being submitted to the labour authorities for approval. Once said documents are submitted to the WC, the redundancy procedure commences and the following timelines cannot be exceeded:

- 2 months if the redundancy concerns 10 to 99 employees, - 3 months if the redundancy concerns 100 to 249 employee, - 4 months if the redundancy concerns 250 employees and more.

Labor authorities will have 21 days following the submission of the documentation – including the Job Preservation Plan - to approve them. Absence of response will be deemed as approval. Any refusal should be motivated. Should the labour authorities refuse their approval, the employer has to redraft a new Job Preservation Plan and resubmit it for approval.

• In case of collective litigation on the redundancy plan, the Court shall issue its judgement within three months and three additional months in case of an appeal.

• Internal mobility: companies which contemplate implementing “usual collective measures of reorganization” with no redundancies involved (e.g., change in the employees’ functions and/or place of work) can propose to their employees an internal mobility - of course without any reduction in their remuneration or classification. The conditions & modalities of such mobility should be negotiated with the union delegates every three years. In case of refusal of the employees - should such internal mobility bring a change to their employment contracts- they will be terminated on personal grounds but will benefit from accompanying measures.

• Encouragement of conciliatory route in case of litigation: at the conciliatory hearing, the employment tribunal will propose a settlement based on pre-determined lump sum indemnity:

- Between 0 to 2 years of service: 2 months’ salary - Between 2 to 8 years of service: 4 months’ salary - Between 8 to 15 years of service: 8 months’ salary - Between 15 to 25 years of service: 10 months’ salary - Over 25 years of service: 14 months’ salary.

The employee is free to accept or refuse the indemnity. Should s/he refuse - the case will be tried before the court.

• Reduced statute of limitations: legal actions in relation to the execution and/or termination of the employment contracts can no longer be launched within 5 years but 2 years following termination1. As for claims on payment of salary arrears, the statute of limitations is reduced from 5 to 3 years.

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Flichy Grangé Avocats, Paris (Claire Toumieux & Marielle Zucchello)

www.leglobal.org • www.flichy.com

www.leglobal.org • www.flichy.com