On January 11, 2013, most French employees' and
employers' unions entered into an Inter-Professional National
Agreement (the "Agreement"), the purpose of which is to
combine company competitiveness with employment-related
guarantees.
The Agreement covers various topics without any specific
connections between them. It sets the basis for a compromise
between employers' and employees' interests and tries to
find the right balance between increased flexibility for employers
and additional rights and guarantees for employees. Listed below
are six areas— among the 20 topics covered—that focus
on and illustrate this search for a more balanced employment
law:
Alternative Collective Dismissal Procedures.
Employers will be entitled to derogate from the French Labor Code
as regards the main features (contents of the economic
documentation, meetings with the employee representatives,
redeployment measures, etc.) of economic dismissals. To do so,
employers will have the choice between negotiating an "ad
hoc" agreement with the unions or unilaterally proceeding, in
this latter case subject to Labor administration approval. Still,
the legal justification required from employers to validly proceed
with economic dismissals as set forth by the French Labor Code
(i.e., mainly long-lasting economic difficulties or safeguard of
competitiveness) is not affected by this reform and will therefore
still need to be complied with by employers.
Changes in Employment Litigation. Among the
changes resulting from the Agreement are (i) the possibility for
employers and employees to settle cases as from the first
employment litigation phase—the conciliatory
phase—contingent on them agreeing to use a fixed scale of
damages awards based on employee seniority, and (ii) the reduction
of the legal statute of limitation for employment litigation from
the current five years for all employment litigation to two years
for termination-related litigation and three years for
salary-related litigation as a result of the Agreement.
Discrimination cases will, however, remain governed by a five-year
litigation.
Increase of the Unemployment Contribution Paid by
Employers Using Fixed-Term Employment Agreements.
Employers will be kindly "invited" to limit the use of
very short (three months and less) fixed-term employment
agreements, since the unemployment contribution they will pay in
this connection will be increased from 4 percent to 4.5 percent and
up to 7 percent depending on the length of the employment
agreement.
Increased Flexibility in Case of Serious Temporary
Economic Difficulties. Employers faced with such
difficulties will be allowed to reduce employee compensation and/or
working time over a maximum two-year period, contingent on
successful negotiation on these topics with employee
representatives. Employees refusing the modifications brought to
their employment as a result of this negotiation will be treated as
dismissed employees.
Additional Access to Information Provided to Employee
Representatives and Employees. The Agreement requires that
(i) every company create an information database made available to
the employee representatives and to any certified accountant
(mostly paid by the company) retained by them to review this
documentation, and (ii) employees of companies having at least
10,000 employees worldwide, or 5,000 employees in France, be
represented by one of them at the management board of these
companies.
Extension of Health Care Coverage to All
Employees.Negotiations must start on this at the industry
or company level.
The contents of the Agreement must be inserted in a law before it
becomes applicable. However, its coming into force raises concern
as its contents have been severely criticized by employment law
experts for two main reasons. First, some of the main
employees' trade unions refused to sign the Agreement because
they considered its contents to be insufficiently favorable to the
employees, which brings into question the democratic nature of the
Agreement. Second, the Agreement will involve various modifications
to the existing Labor Code, the exact nature and scope of which
have not been anticipated and dealt with, in advance. Still, its
existence should be considered as a major step in collective
bargaining in France on the difficult path between flexibility and
protection of employment.
A first draft of the law was presented to the Government on 6
March 2013.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.