French labor law has been thoroughly reformed by five new ordinances, delivering on the campaign promises of French President Emmanuel Macron. Just months after his election, the new laws have been passed and are in force.
The key changes cover the following areas.
Consolidating Staff Representation into a Single Economic and Social Committee
The ordinances call for the creation of a single body for staff representatives—a social economic committee (Comité social et économique (CSE)). The CSE combines the former staff representatives (DP), the former works council (CE), and the former health, safety, and working conditions committee (CHSCT). It also replaces the single staff delegation (DUP). The transition to a single CSE is a mandatory obligation on employers. An employer wishing to maintain three separate representative institutions will no longer be able to do so beyond the transitional period, which ends on December 31, 2019.
The CSE is a unique and civil body with a budget. It will fully exercise the prerogatives delegated to the staff delegates and the members of the CE and CHSCT.
Limiting Dismissal Indemnities
The ordinances create a scale of indemnities that judges must apply in cases of unfair dismissal. The scale ranges from 1 month’s salary for employees with less than 1 year of service, to a maximum of 20 months’ salary for employees with 30 or more years of service.
It is anticipated that the greater clarity around awards will help employers assess the risks and costs of a dismissal with much more precision and will aid settlement negotiations. Judges will retain the power to award larger indemnities in cases of discrimination, harassment, and violation of a fundamental right.
Flexibility in the Dismissal Process
When assessing the case for the economic dismissal (i.e., a dismissal for reasons of redundancy) of an employee, the framework for assessing the economic hardship required to be shown will be limited to openings within the company or related companies established in France as opposed to worldwide. This will remove the requirement to show economic hardship on a global basis, which previously proved extremely problematic to multinational companies seeking to restructure to remain competitive. Furthermore, it is now easier for employers to comply with the obligation to look for reemployment options within the group company as employers are not required to personally send available job vacancies to the employee and are limited to the French territory. Publishing a list of available positions in France, accessible to the concerned employees, is now sufficient to fulfill an employer’s obligation with regard to reemployment.
Increased Power for Companies
The main aim of the ordinances is to increase flexibility by giving more power to companies. Building on reforms, which started in 2016, the ordinances extend the list of subjects for which companies may make agreements with their employees (or unions) that prevail over sectorial ones. For example, a company can now organize by collective agreement the departure of more than 10 employees without having to justify it with any economic difficulties.
These widespread reforms are also notable for the legal method used—ordinances. By using ordinances in lieu of new legislation, the government was able to implement major reform in a few months, and avoid more detailed parliamentary debates that would otherwise have been required.
After just a few months’ negotiations with unions, both the Senate and Parliament passed an enabling law, authorizing the government to go forward with the reforms using ordinances.
This governmental technique, now often used in France, has the advantage of speed. In no more than four months, labor law has been deeply transformed.
The main objective of the change has been to introduce flexibility to organizations, allowing them to set their own rules through agreements with their workers (through unions or directly with employees). This is a departure from France’s tradition of industry-wide collective agreements.
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