A revolution in French employment law?

French employment law is set to change, but the proposals have caused dissent and strikes.

guillaume bordier capstan
Guillaume Bordier

On 11 January 2013, a national inter-professional agreement (accord national interprofessionnel or ANI) was signed between French employer organisations and three national trade unions on a new economic and social model to promote business competitiveness and protect employee jobs and career paths.

Negotiated at the invitation of the government, the 2013 ANI served as the basis for a new “flexisecurity” bill. In accordance with a call by President François Hollande, the resulting bill will likely be adopted by the National Assembly and Senate without major changes in order to maintain the balance negotiated by the employer organisations and trade unions.

The 2013 ANI includes important modifications to existing labour laws such as the possibility for companies facing serious, existing or foreseeable, economic difficulties to conclude a safeguarding jobs company agreement with trade unions by which the employees agree to a reduction in wages or an increase in working hours against a commitment by the employer not to carry out redundancies for the term of the agreement; a faster and simpler procedure for informing and consulting with employee representative bodies and a faster and simpler collective redundancy procedures with greater legal certainty.

The ANI also introduces a requirement for employers to seek out a buyer before closing a site; a reduction in the statute of limitations of certain employment related lawsuits; a possibility for companies having union delegates to negotiate a mobility agreement to facilitate professional and geographic mobility within the company; the creation of personal job training accounts; and mandatory complementary health insurance for all employees by 1 January 2016.

As with all flexisecurity laws, this new bill seeks to simultaneously increase labour market flexibility and secure jobs. However, the question is whether an equitable balance between these interests can be found.

Its supporters, in particular the minister of labour, Michel Sapin, have touted it as social democracy at work and as a “mini revolution”. Others, such as the general secretary of the CFDT, the second largest trade union, see the new changes as a necessary measure to protect jobs in the prevailing economic situation in France and Europe.

But others, like the CGT and FO, respectively the number one and number three largest tradeunions in France, which have refused to sign the ANI, view it as a lopsided bill in which employee rights have been drastically undercut in favor of employer interests.

While it is uncertain whether the new law will achieve its dual purpose, it is clear that it will have a considerable impact on labour law, especially as they pertain to economic dismissals.

Under French law as it exists today, collective redundancies are strictly regulated. Depending on the number of employees involved, specific procedures must be followed. The greater the number of employees involved, the more burdensome the procedure becomes for the employer.

The most complicated procedure is for large redundancies, which requires the employer not only to inform and consult the employee representative bodies (works councils and the health andsafety committee) and implement dismissal ordering criteria, but also to implement a social plan to limit the number of dismissals, assist employees made redundant to find new employment and mitigate the impact of their redundancy.

Arguably the most significant changes that the proposed law would produce would be in relation to procedures for large numbers of redundancies, by permitting employers and unions to negotiate the number and calendar for meetings with the works council, the list of documents to be produced by the employer, the conditions and deadline by which the works council could seek the assistance of an expert, the dismissal ordering criteria and the content of the social plan. The new law would also permit employers to unilaterally stipulate collective redundancy rules and the terms and conditions of the social plan.

The works council would still have to be informed and consulted on the collective dismissal plan, but the consultation process would be limited to two to four months depending on the number of employees affected. Once the works council has issued its opinion or the deadline has expired, the employer would submit the agreement or the document unilaterally established by it to the labor authorities for approval.

Existing laws do not set a deadline for the issuance of works council opinions. This has translated into a stronger negotiating position for employees, as works councils have been empowered to stall the collective redundancy process for long periods of time by requesting additional information from the employer or delaying a request for expert assistance. Under existing law, social plans can also be challenged for insufficiency and result in the suspension or the cancellation of a redundancy procedure.

The new law should permit employers to reduce the time necessary to carry out large collective redundancies. It should also provide employers with greater legal certainty with regard to their compliance with the consultation procedure and the content of the social plan, provided that the labour authorities have approved the procedure.

These are but a few examples of the changes that would result from the passage of the 2013 ANI into law. Some of these changes would fly in the face of long established case law. Others, it has been implied, would upturn fundamental principles of French labour law and thus labor relations.

In a country like France with a long history of pro-labour sentiment and laws, perhaps one can see in the 2013 ANI a mini revolution – a recognition for the need for change, not only in light of the economic situation in France and Europe, but also in light of the increasingly competitive global employment market, that may lead to finding a genuine balance between flexibility and security.

At the same time, there is another section of society that is ready and willing to fight any change that would result in a loss of employee rights and benefits even if it means greater job insecurity in the long-term.

For the moment, it appears that the proposed law will be passed by the Senate on 14 May. As for its effects, whether it will result in a real increase in labor market flexibility or simply new species of labor lawsuits or some mélange of the two is yet to be seen.

Guillaume Bordier is a partner at Capstan. Associate Kaela Ji Eu Kim assisted with this article.