France: Proposed additional obligations to seek a buyer before closing a site

A proposed new law is being considered in France that would impose significant new obligations and potential costs/delays on large employers wishing to close a site.

On 2 October 2013, the French lower house of Parliament adopted the “loi Florange” which would apply to companies within a group with more than 1,000 employees. This is due to be considered by the Senate in December 2013.

The proposed new law would increase obligations on an employer to actively seek a buyer before closing a site. The key points are:

• Prior to closing a site, the employer would have to spend a period of three months actively seeking to identify a buyer, using its best endeavours.
• All relevant information must be communicated to potential buyers, offers carefully considered and a detailed response provided in relation to each offer.
• The works council could be assisted by an expert and give an opinion in relation to any offers.
• At the end of the three month period, the employer would have to report to the works council indicating the measures taken, offers received and why these were refused.
• If the works council considers that the employer has not properly complied with its obligations, within 15 days of receiving the employer’s report, it could bring proceedings before the Commercial Court (Tribunal de Commerce). The Court can impose the following sanctions:
  • a fine of up to 20 times the minimum monthly wage per dismissed employee (capped at 20% of the annual turnover of the business) ie, at current rates potentially just over €28,600 per redundant employee. This sum is in addition to the existing obligation to contribute to the re-industrialisation of the region – capped at four times the monthly minimum wage;
  • the employer may also be required to repay state aid granted to it in the previous two years in relation to the business closed.

Action for employers

If this law is implemented, employers will need to carefully review their obligations in relation to site closures in France and ensure sufficient steps are taken to seek a buyer.

Article written by Emma Röhsler, Of Counsel.