"In France, the combination of several impactful economic and legal factors currently increases the risk of restructuring, reductions in force and even bankruptcies and should lead to deep changes in the way companies manage and reward their employees. Companies in France, belonging to foreign corporations, should anticipate the requirements of French law when implementing their decisions."
Employers in France should expect hard times, according to some of the best-informed employment specialists. They foresee a wave of bankruptcies and business collapses in the upcoming months—perhaps even weeks. In addition, employers will need to adapt to European regulation, which is becoming increasingly impactful on EU Member States. This article outlines the key highlights from 2024 and looks ahead to 2025.
2024: HIGHLIGHTS
- The time has come for French employers to pay the bill! A
combination of several factors are expected to have drastic,
detrimental effects on employment—among them the deadline to
repay state loans granted to employers during the COVID-19
pandemic, significant inflation, major changes in consumption and
living patterns, and the e-mutation in the automotive sector (i.e.
the transition to electric engines). For the most established
companies in the sectors concerned by these factors (notably
automotive, tech, real estate, and construction), bankruptcies are
avoidable; however, it is likely that some of these corporations
will need to restructure and decide to implement important
layoffs.
In such a case, particular attention must be paid to three aspects: (i) compliance with the French redundancy procedure, which varies depending on several factors; (ii) identifying the impact on the employees' health and safety and determining concrete mitigating measures; and (iii) properly budgeting for the restructuring plan while mitigating follow-up litigation as much as possible.
- Companies are facing claims regarding back pay of accrued paid leave rights during illness. They must also adapt their payroll system to the new regulations and provide new information to employees on their rights. Indeed, the French Labour Code was brought into line with European case law. Employees now accrue two days of paid leave per month during their sick leave; this law applies retroactively from 1 December 2009 for employees still employed, with a two-year limitation starting from 24 April 2024. A specific limitation of three years after the termination of employment applies to former employees.
2025: OUTLOOK
- On 7 June 2026, all EU Member States should have transposed the
European Pay Transparency Directive (the "Directive"),
which came into force on 6 June 2023, into local law. The aim of
the Directive is to ensure equal pay for equal work or work of
equal value and close the existing gender pay gap.
In France, the transposition will not lead to a revolution since a law currently in force already requires companies of 50 employees or more to improve equal pay between men and women through a gender pay index, appraised annually. However, those provisions of the Directive which will need to be transposed in France in June 2026 go far beyond existing French law, in terms of scope, measures and sanctions.
Employers in France will undoubtedly need to anticipate the adverse effects of this transposition, which should require them to audit their existing pay policy, structure, and results for any unjustified gaps and adjust as necessary, especially in the very likely scenario that employees will request the pay statistics concerning their peers. - The phased application of the EU Corporate Sustainability
Reporting Directive (CSRD) (large companies and groups) will start
in 2025. Large companies, or large groups above 500 employees and
other thresholds (including, in certain circumstances, some non-EU
companies), will need to issue a report on sustainability in
2025—for the year 2024—in a separate section of the
management report.
Although this is not a new obligation for large companies, reporting should be more detailed and based on the harmonized ESRS (European Sustainability Reporting Standards). The ESRS sets out the reporting requirements for a company's significant social and environmental impacts, risks and opportunities, and governance arrangements. Social impact includes the company workforce, workers in the value chain, affected communities, consumers, and end-users. Large companies, or large groups above 250 employees and other thresholds, will need to prepare to issue their report in 2026. This will require a major effort, in terms of mapping risks according to the new standards, which should be put into perspective with the new CS3D (see below). - The Corporate Sustainability Due Diligence Directive (CS3D) came into force on 25 July 2024 and must be transposed into national law by 26 July 2026, imposing new obligations on large companies. For large companies that were already subject to French law regarding the duty of vigilance, this directive enlarges the scope and obligations applying to companies above certain thresholds. Such companies will have an obligation to identify and analyse the (actual or potential) negative impacts on human rights and the environment arising from their own operations (activities), those of their subsidiaries, and their commercial partners (included in their chain of activities). Reference to human rights is likely to encompass compliance with large portions of labor law.
Employers in France—and those generally operating in the European Union—will need to skilfully anticipate and adapt to these current and future challenges.
Return to Insights: Employment | Benefits | Mobility – Q4 2024
Our last edition of the year highlights the most significant employment, benefits and mobility developments during 2024 and looks at what the future holds for businesses in 2025 across key jurisdictions.
This year has already seen many changes, with new laws, regulations and standards impacting a wide range of employment rights, the pensions and benefits landscape, and immigration policies. 2025 will be a year of yet more change and uncertainty requiring businesses to navigate a broad array of new challenges and opportunities affecting their workforce, planning and strategy.
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