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Changes to France’s complex labour law

The fourth of our international monthly series of articles by guest lawyers, Charlotte Michaud of Flichy Grangé Avocats, looks at recent changes to France’s labour laws.

International Series #4 – Changes to France’s complex labour laws

On January 11th 2013, French employers and labour unions reached a national agreement, which brings significant changes to the country’s complex labour laws. A law was necessary in order for its provisions to enter into force. The French Parliament passed the bill on May 14th 2013 and the law has now been promulgated (ref : loi n°2013-504 du 14 juin 2013 relative à la sécurisation de l’emploi).

Providing for a complete overhaul of the redundancy procedure, and new tools of flexibility, this law profoundly amends the French labour code. It notably amends several tools intended to maintain jobs in the event of economic difficulties.

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

In essence,

•    New duty in case of closure of a site: companies (or part of a group) employing at least 1,000 employees that consider the closure of a site will be under the duty to search for a buyer and to inform the works council. The works council may appoint an expert to investigate on the searching process (methodology for example).

•    Strengthening of the works council’s information and consultation on the company’s strategic direction. This will be done by setting up a single database and new obligations of consultation on said strategic direction. Meanwhile, the law also provides employers with more flexibility and predictability. The works council will have to express its opinion in a fixed timeframe and the works council expert will have to hand in his report within a reasonable time, set by an agreement between the employer and the works council, or if no agreement is reached, before a time limit defined by a decree.

•    Ability to cut employees’ working time and wages during economic downturn: in the event of severe and temporary economic downturn, it is possible to sign an agreement with the unions representing the majority of the employees – for a maximum period of two years.  This agreement can allow the employer to cut down employees’ working time and/or salary in return for a 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 an employee opposes such change, they will be made redundant but the company will be exempted from implementing the collective redundancy procedure.

•    Substantial modification of redundancy procedure in the event of a Job Preservation Plan: the new law reinforces the Labour Administration’s role and provides for a binding maximum length of the procedure. The Job Preservation Plan will need to be determined by:

  1. the conclusion of a company agreement with the unions (provided that those unions actually represent at least 50% of the workforce)
  2. by a document prepared by the employer, which has to be approved by the labour authorities.

In the second scenario, these documents shall first be submitted to the works council for opinion.

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

•    Possibility to negotiate the implementation of internal mobility: companies that consider implementing “usual collective measures of reorganisation” 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. In case of the 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.

•    Generalisation of health and pension benefits: the law provides that companies will have to set up complementary healthcare benefits by January 1st 2016 at the latest. The complementary healthcare refers to the guarantees provided by a private insurer in addition to the allowances of the Social Security, as regards health expenses.

•    Reduced statute of limitations: legal actions in relation to the execution and/or termination of the employment contracts now have to be launched within 2 years following termination rather than the previous 5 years (this timeline does not apply to some legal actions including claims for discrimination). As for claims on payment of salary arrears, the statute of limitations is reduced from 5 to 3 years.

For more information on employment law issues in France, Charlotte Michaud can be contacted at michaud@flichy.com. You can also visit the Flichy Grangé Avocats website: www.flichy.com