New legislation related to the protection of employment: "Loi portant sÚcurisation de l'emploi"
FRANCE - A new important employment regulation was adopted by the French Parliament on 14 May 2013, introducing a number of important new measures affecting employers in France.
The Act has not yet been officially published and has been referred to the Constitutional Court (on 15 May 2013). Therefore, a decision of the Constitutional Court is pending.
This new legislation reflects provisions agreed in the national inter-professional agreement (accord national interprofessionelle) which was signed on 11 January 2013 between the French employers’ associations and three of the five major trade unions. The changes are likely to have a significant impact on the French labour market.
The key points of this Act are as follows:
a. New Procedures for Implementing Collective Redundancies
As the law currently stands, if an employer with at least 50 employees declares a minimum of ten employees redundant within a 30-day period, a “social plan” designed to mitigate the impact of the proposed redundancies must be presented.
The employer is required to inform and consult the works council about the social plan. It must contain specific information, including proposed measures to encourage redeployment or retraining for those employees affected by the proposed redundancies. This process can be very time-consuming and complicated.
In an attempt to give French employers more flexibility, the new legislation provides for a greater selection of procedures that can be followed.
Employers will now be able to (a) negotiate an agreement with the relevant trade union; or (b) unilaterally implement a social plan.
In both cases, employers will be able to diverge from the standard requirements governing the number of meetings with employee representatives, the timetable for dismissals, selection criteria, etc., with the overall aim being to speed up the collective consultation process.
Indeed, the new Act provides for maximum time limits for the information and consultation procedure with the works council with regard to proposed collective redundancies:
- a maximum of 2 months for collective redundancies of less than 100 employees;
- a maximum of 3 months for collective redundancies of 100-249 employees;
- a maximum of 4 months for collective redundancies of 250 employees or more.
If at the end of such a period the works council has not given its opinion, the opinion is deemed to have been given.
If an employer decides to negotiate an agreement with the relevant trade union, the parties will be bound by it once agreement on the procedure is reached. The employer will be required to submit the social plan to the relevant Labour Authority for approval, and the Labour Authority will have 15 days within which to issue its approval.
If an employer unilaterally implements a social plan (at its instigation or because negotiation to reach an agreement failed), the employer will still be required to submit the plan to the Works Council for its opinion (but not necessarily for its approval). It will then be able to submit it to the relevant Labour Authority for its approval.
If the Labour Authority does not give its approval within 21 days, the plan is deemed approved. If, however, it rejects the plan, then the employer will have to resume negotiations again and draft a new agreement.
In both cases, dismissed employees will have two months within which to challenge the agreement. If successful, they will be entitled to get their jobs back or to compensation of at least six months’ salary.
b. A stricter requirement to seek a buyer in the event of the closure of the site
There is now a stricter obligation for the employer to seek a buyer in the event of a proposed closure of the site. The company must also inform the works council of such efforts at the beginning of the information and consultation procedure in relation to the proposed closure and redundancies.
The works council can appoint an expert to assist in reviewing the measures taken by the employer in this regard.
The works council is also informed of any formal offers (the general obligations regarding the confidentiality of information given to the works council apply) and may give an opinion on these (to be given within 2-4 months, depending on the number of proposed redundancies).
c. Timetable for Exchanging Information
In a collective redundancy exercise, the Works Council has the right to appoint a chartered accountant to advise it on such matters as the content of the social plan. The accountant can request further information about the employer’s proposals and this can sometimes result in lengthy delays.
Under the new Act, there will be a strict timetable for requesting and exchanging information between the parties, which should enable the process to progress more quickly.
d. Two new mandatory consultations of the works council
The Act implements two new compulsory consultations of the work council:
Each year, the works council must now be specifically consulted:
(i) on the strategic orientation of the business and the consequences of this on the business, employment, evolution of jobs and competencies and recourse to contractors/temporary staff.
(The works council may propose alternative approaches and may appoint an expert to assist it in this regard (a maximum of 20% of the costs of the expert are paid from the works council's budget, the balance is paid by the company).
(ii) on the use of tax credits received by the company. The works council may require explanations in the event that it notes any breach of the provisions of the Tax Code, ultimately also producing a report and bringing this to the attention of the supervisory board and shareholders.
e. Provision of additional information by the company to the works council – a permanently accessible information database
The works council must now be provided with additional economic and social data which is regularly updated (included within a permanently accessible information database once this particular provision is in force).
The information must cover (i) the current year, (ii) the two previous years and (iii) perspectives in relation to the next three years. A decree will define the type of information required more precisely (stricter obligations are likely to apply to companies with 300+ employees), but this information is likely to relate to:
- information about investments relating to the employees, in particular in relation to temporary and part-time workers, training and working conditions
- capital and debt
- remuneration of employees and the management team
- social and cultural activities
- remuneration to finance bodies
- payments to the company, e.g., from public aid and tax credits
- intra-group commercial and financial transfers.
On a date determined by decree or at the latest on 31 December 2016, the database must also include other information that is regularly provided to the works council (under existing provisions).
A general confidentiality obligation applies in relation to all such information provided.
Employers are already obligated to regularly supply certain information to the works council and some of the above information may be already included in the existing obligations. However, the new law extends the type of information that must now be provided, in particular in relation to company finances.
f. Alternatives to Redundancy: "Employment adjustment programmes (Accord de maintien dans l'emploi)"
Employers who face “economic difficulties” will be able to enter into agreements with trade unions under which employees agree to changes that have an adverse effect on their terms and conditions (such as a reduction of wages or an increase of work hours) in return for a commitment by the employer to not implement any redundancies during the term of the agreement. This may not exceed two years.
g. Voluntary Mobility Period
Employees with at least two years’ service will have a new right to go and work for a different company for a fixed period, subject to obtaining an agreement from their actual employer. At the end of this period, they will have the right to return to their “original” employer.
If the employee does not notify the original employer of his/her wish within this time period, the original contract is considered terminated on the grounds of resignation (i.e., with no termination payments or rights to bring a claim).
This new right will only apply to companies with at least 300 employees.
h. Part-time employment
From 1 January 2014, the minimum part-time working time is set at 24 hours a week. Nevertheless, a part-time worker can request his/her employer to conclude an employment contract with a working time lower than 24 hours per week, particularly:
- if he/she wants to work for several companies at the same time for personal reasons;
- or if he/she is a student under 26 years old.
Moreover, negotiations have to be initiated in various industries where at least one third of the workforce works part-time in order to define and detail the working conditions of part-time workers.
i. Personal Training Allowances
Employees will have the right to earn up to 20 paid hours per year for training (up to a maximum of six years) and this will be transferable to any new employer.
j. Employee Representatives
Companies with at least 5,000 employees in France (or 10,000 employees worldwide) must appoint employee representatives to their board of directors or surveillance board if the Head Office is located in France.
If the board has less than 12 members, it must include at least one employee representative. If there are more than 12 members, it must include at least two employee representatives.
k. Reduction of the prescription period for employee claims
The Act reduces the prescription period from 5 years to 2 years (from the termination of the employment contract). However, for claims relating to salary, which have been made during the applicability of an employment contract, the prescription period is fixed at 36 months.
l. General application of healthcare coverage for employees
The Act stipulates general application of healthcare and welfare coverage for employees who do not yet benefit from such mandatory collective coverage within their company.
The industrial sector must launch new negotiations prior to 1 June 2013 in order to implement such coverage. The future negotiated agreements will necessarily have to provide that the companies have 18 months to amend their company agreements in such a way as to ensure full compliance with the new industry-wide obligations.
In any case, these company agreements will have to enter into force on 1 January 2016 at the latest.
If no industry-wide agreement is signed prior to 1 July 2014, non-covered companies will have to launch new negotiations within the scope of the annual obligation to negotiate welfare coverage, as set forth by Article L.2242-11 of the Labour Code.
If no company agreement is concluded by January 2016, companies will have to implement a "minimum level" of healthcare and welfare coverage for their employees.
m. Portability of welfare rights
Since 1 July 2009, Article 14 of the national multi-industry agreement of 11 January 2008 on "the modernisation of the labour market" has entitled employees who so wish to benefit from continued welfare and healthcare coverage already in force within the company.
This right is subject to the registration of the employee with the Pôle emploi (employment centre) and to his/her entitlement to unemployment benefits. Its duration is the same as that of the previous employment contract, calculated on the basis of complete months, until the employee finds new employment and in any case, for a maximum of 9 months.
The new Act states that this portability option will be set at 12 months for all employees (instead of previously 9 months).