Zoom on Labor Law Reform: Stabilization, Simplification and Flexibility

The French executive, with authorization from the legislature, has just implemented a broad-ranging set of labor-law reforms by executive order.

Five orders were published in the Official Journal on September 23, 2017 (nos. 2017-1385 to 2017-1389) to the ends of simplifying labor law and affording companies greater flexibility. Many of the new provisions came into force on September 24, 2017, the day following their publication in the Official Journal.

The key measures enshrined in these decrees are the following:

Measures to stabilize the legal framework governing the termination of employment contracts

In order to stabilize the framework governing the termination of employment contracts and to attendant risks, judges are now bound by a statutory frame of reference in awarding severance compensation in cases of unjustified dismissal (“licenciement sans cause réelle et sérieuse”). This mandatory compensation scale, articulated in the form of tables, provides for both minimum and maximum levels of compensation, the amount of which is determined on the basis of the employee’s length of service in the company. Moreover, smaller companies with fewer than 11 employees enjoy lower minimums in keeping with their financial means. This new scale applies to dismissals notified after the publication of the relevant executive order, namely after September 23, 2017. The stated aim of such formalization is to stimulate job creation by increasing the predictability of the consequences of termination for the employer.

The statute of limitations for contesting contractual termination has been shortened from 2 years to 1 year as of the serving of formal notice of dismissal. These provisions apply to statutory terms currently in progress as of the publishing of the order period, provided the total term does not exceed the term provided for under previous law.

The obligation to provide justification for dismissal has been attenuated by offering the employer a new possibility, namely that of elaborating the grounds for dismissal adduced in the notice of dismissal after the serving of such notice.

Moreover, as regards redundancies, the scope for assessing the legitimacy of the economic grounds adduced for dismissal is hitherto limited to France. Similarly, the obligation to relocate the employment has been attenuated and limited to the national territory.

New flexibility of French labor law

The reforms provide new and greater flexibility to employers by way of collective negotiations.

In this regard, the first executive order provides for the harmonization and simplification of the conditions under which employers may have recourse to company-specific agreements governing employment. In order to answer to the necessities tied to the company’s operation, or in view of preserving or developing employment, a company-specific agreement may be concluded which modifies the employees’ employment contracts by reorganizing working time, remuneration and the conditions of internal professional or geographical mobility. In the event that the employee refuses such modifications, the employer may decide to dismiss him or her and such a dismissal will be deemed justified by ipso facto real and serious grounds.

Similarly, in order to favor voluntary departures, a collective conventional termination procedure has been instituted. A collective agreement, which must be approved by the administration, may be concluded to organize voluntary departures, without justification on grounds of redundancy and outside of any job-preservation plan. The employer’s acceptance of an employee’s candidacy for voluntary departure will entail the termination by mutual consent of the latter’s employment contract.

Simplification of staff representation

The executive orders serve the will to simplify the architecture of the employees’ collective representation within the company by merging the staff delegates, the works council and the committee for hygiene, safety and working conditions into a single body: the Social and Economic Council (“comité social et économique” or “CSE”).

The Social and Economic Council will inherit the powers of the staff delegates in companies employing between 11 and 49 persons, and those of the three former representative functions mentioned above in companies of 50 employees or more. Moreover, the Social and Economic Council may, by collective agreement, be transformed into a works council incorporating the negotiating prerogatives of trade-union representatives.

Eric Guillemet

Eric Guillemet is a lawyer and partner in labor law. For over 20 years, he has been assisting companies with their development and their day-to-day management to help them reach […]