Reform of France’s labour laws: Flexibility and simplification for businesses

The French government, headed by President Emmanuel Macron, has embarked on an ambitious and unprecedented project for social reform. It has committed to stable rules throughout its term of office. The new legislation aims to free up energy in the labour market by injecting flexibility. Particular attention is being paid to small businesses.

French employer federations generally consider that the project is heading in the right direction. CPME, the French employer federation representing SMEs and U2Ps (very small businesses), which groups together tradesmen and professionals, is even showing signs of being very satisfied. MEDEF welcomes these measures as a first important step towards introducing more flexibility for businesses.

Key measures concern the following in particular:

1)   Primacy of company-level agreements made easier

*There is a redistribution of the areas covered by law, between industry-wide agreements and company-level agreements. Primacy will be given to company-level agreements in a number of areas that were previously subject to industry-wide agreements (e.g. bonuses). A number of areas will no longer be subject to law and will be open to collective bargaining (e.g. duration, renewal conditions and succession of short-term contracts, industry-wide agreements to determine activities covered by a “permanent assignment contract” which is automatically interrupted (without the need for dismissal), once the assignment is finished.

*Firms with less than 50 employees will be able to negotiate directly with their employees to establish rules that are adapted to the needs of businesses, without mandatory recourse to trade unions.

2) Lightening the burden on businesses

*The number of employee representative bodies is being reduced from four to two.  Works councils, health, safety and working conditions committees, and staff representatives, will be grouped together into a new social and economic committee, alongside union representatives. In some cases, there will be just one organisation, the works council (which will integrate union representatives).

3)   Greater flexibility and legal security for businesses and employees

*A scale is provided to determine the compensation awarded by a judge in the event of a court decision overruling a dismissal: this measure allows greater control of the  legal and financial risks, by providing visibility and securing termination of work contract procedures. For instance, in the event of a court ruling against their employer, an employee with 2 years’ seniority will be entitled to claim compensation of up to a maximum of 3 months’ salary, or 10 months’ salary for 10 years’ seniority. Compensation could reach a maximum of 20 months’ salary for 30 years’ seniority.

*The rules in terms of dismissal procedures are being relaxed: until now, companies were bound by the grounds for dismissal stated in the mandatory letter sent by the employer to the employee. From now on, providing certain conditions are complied with, the employer can specify or complete the grounds for dismissal a posteriori, without incurring heavy fines (unspecified or incomplete grounds for dismissal being sanctioned by a fine equal to a maximum of one month’s salary). In all cases, the employee will have one year (rather than 2 years currently) to legally contest their dismissal.

*Voluntary redundancy programmes can be rolled out without the company being obliged to comply with dismissal procedures and without having to establish an employment protection plan.

Finally, for international businesses, examination of real and serious grounds for dismissal will be restricted to within the French national territory. Similarly, the obligation of redeployment abroad for employees whose job no longer exists is being scrapped.

Source: MEDEF

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