France: The Loi Travail - Introduction

One of Emmanuel Macron's key campaign promises was the reform of laws relating to employees partly, in order to help French companies respond in a more flexible manner to the challenges they are facing to become more competitive in the global market and encourage the creation of jobs.

Background to the reforms

• The current series of reforms follow on from some of the reforms Macron championed whilst he was Economics and Finance Minister under President Holland and the Loi El Khomri – but arguably go much further in certain aspects and constitute a significant amendment to French Labour law.
• In particular, the 36 concrete reforms permit companies to negotiate a number of key issues on a company basis, rather than necessarily being bound by industry wide provisions – eg, in relation to working time and are designed to encourage and facilitate the creation of jobs, putting the emphasis on local negotiation, creating a climate of confidence and providing increased legal certainty for employers.
• The Labour Minister (Muriel Pénicaud, former HR Director of Danone) has acknowledged that the measures are "taking a risk" – assuming that putting trust in the social partners to negotiate and giving more rights to companies to negotiate at a local level will pay off. There will be a review in two years' time to see if the bet has paid off.
• Three main areas identified as requiring reform in order to achieve this aim:
  • Employment law – this is the first chapter and the ordonnances covering these aspects were published on 31 August 2017.
  • Training- still to come
  • The unemployment regime- still to come

Over the next few weeks, we will be issuing a number of briefings highlighting the changes which are likely to be most relevant for our clients and identifying the key points to be aware of, plan for and make use of. This first briefing is designed to give some background to the process and an overview of the key measures. In future briefings we will go into more detail on the key points that are likely to be of particular interest to our clients.

The story so far

Timetable for the process

This approach – rather than implementing measures via the classic legislative process – is designed to enable the reforms to be implemented more quickly.

The trade unions and far left wing parties (La France insoumise) have indicated they consider that the reforms do not sufficiently protect employees, or go too far towards flexibility for companies and have called strikes on 12 and 23 September 2017. The Prime Minister, Edouard Philippe, has indicated that there is still some room for amendments to the proposals but only in a minor way and so the versions of the ordonnances which were published on 31 August 2017 can therefore be regarded as being in fairly final form.

What is an ordonnance and why is it used here?

The Government has used a process of an umbrella law – the Loi d'habilitation – which identified the key subjects and broad scope of the proposed reforms, which was debated and passed rapidly through Parliament, followed by ordonnances which are passed under the Law, and which permits the Government to avoid having to pursue the usual parliamentary process for the detail of the key aspects of the Law, which are covered by the ordonnances.

The aim is therefore to move quickly and ensure rapid implementation.

Certain decrees are planned which will set out further detail required for implementation – and these will follow in due course.

All measures will be in force after adoption by the Conseil des Ministres and at the latest by 1 January 2018.

For the measures in relation to dismissals, these will apply to dismissals notified after the reforms are in place (ie, will not apply retroactively to dismissals notified prior to such date).

Key themes - the five ordonnances

There are 5 ordonnances – and the subjects have been divided up into 5 categories:

1. On Predictability (Flexibility) and safeguarding working relationships – this covers:

• The caps on damages payments awarded by the Tribunal – we will cover this in our first detailed briefing on the reforms, which will follow shortly;
• Time limits for bringing tribunal claims – which are reduced (1 year rather than 2 years for dismissal claims);
• Important amendments to rules relating to redundancies:
  • the test for economic dismissals (redundancies) – to be restricted to the business sector in France
  • simplifying redeployment obligations;
  • the definition of employees within a pool for selection to be specified more clearly.
• The creation of collective agreed terminations (previously limited to individual terminations) without recourse to a social plan (ie, a PDV regime separate from the social plan regime): this will allow companies to organise collective dismissals without having to demonstrate economic difficulties and will enable them to hire staff afterwards (ie, will be useful for companies needing to restructure competencies, such as many of the Banks and SSIIs):
  • with a majority collective agreement (which may for example be used to manage the age period require an employer to undertaken eg, to create jobs and hire younger employees);
  • the consent of the employees; and
  • with a control by the French Authorities (the DIRECCTE).
• A form is to be used for the notification of dismissals, with the right, subsequently, for the employer to supply or employee to ask for further details of the dismissal.
• Further measures to facilitate the acquisition of companies in difficulty – reducing the impact of TUPE for example.
• Provisions relating to homeworking (télétravail) : providing a right to work from home unless the employer can demonstrate this is not possible.
• Measures relating to the recourse of fixed term and temporary employees.
• Measures relating to manpower lending (prêt de main d'oeuvre).
• Changes to tribunal procedure and the service limit to trigger a termination payment (being a reduction from 12 months to 8 months).

2. Measures in relation to reinforcing collective negotiation - this covers the following key topics:

This ordonnance covers the following key topics:

• Consolidation of the employee representative bodies (personal delegates, works council and health and safety committee) into one body – the Social and Economic Committee (Comité social et économique).
• The trade union delegates may also integrate this body to form one sole employee representative structure – on the German Betriebsrat model.
• Companies with less than 50 employees (ie, which do not have a trade union delegate) may negotiate collective agreements directly with the employee representatives (the validity of the agreement is subject to the signature by the members of the social and economic committee members receiving a majority of the votes at the last elections) and will no longer have to have an employee mandated by a trade union - ie, a challenge to the trade union monopoly for smaller companies (but trade unions remain the sole interlocutor for companies with 50+ employees and agreements require the agreement of a majority of 50% of the representative trade unions– NB the employer organisation, MEDEF, had hoped for the limit to be increased to companies with 300 employees).
• Within companies with less than 20 employees the employer may organise a referendum of the employees unilaterally in relation to any subject for a collective agreement (eg, working time) – with a requirement to obtain 2/3 agreement from the employees before a collective agreement can be put in place.
• On certain measures however, agreements negotiated at local level cannot be less favourable than national level agreements eg:
  • Job classifications
  • Minimum salary levels
  • Professional training and the mutualisation of funds
  • Equality between men and women
  • Fixed-term contracts
  • Trial periods
• Companies will be able to seek to negotiate company level agreements to derogate from certain national collective bargaining agreement provisions, such as bonuses to be replaced by other measures (eg, voluntary profit sharing or extended private health care cover) and certain working time provisions.
• Furthermore, there can be a derogation from the CBA provisions by way of a collective agreement negotiated at company level, in order to respond to requirements of the business in the following aspects:
  • working time;
  • certain aspects of remuneration;
  • professional and geographical mobility, etc.
• An employee has 1 month to inform the employer of his refusal of the terms of the collective agreement – if he is dismissed, the dismissal for this reason is considered to be for a lawful reason and the employer only has to follow the dismissal procedure for individual dismissals (not collective dismissals).
• In the absence of a collective agreement to the contrary negotiations must be undertaken in relation to the following topics:
  • Annually on - remuneration, working time and sharing value within the company;
  • Annually on - professional equality between men and women and the quality of life at work (including for example the right to "disconnect" devices);
  • Every three years in companies with at least 300 employees on the management of jobs and professional careers (GPEC).
• Elected representatives have 10 hours per month maximum dedicated to their elected duties paid by the employer (hours should only be increased in exceptional circumstances). Time spent on mandatory information and consultation procedures does not count within this limit.
• The ordonnance includes measures relating to the appreciation of the majority nature of agreements.
• In reality this will therefore allow a negotiation on flexibility and adapting the measures provided by the Company to the needs and preferences of its employees.
• There is also a new provision providing that, for the collective bargaining agreement (CBA) to extend to companies with less than 50 employees, a specific provision in the CBA must provide for such extension.

3. On the new organisation of social and economic dialogue in the company and encouraging trade unions - this covers the following key topics:

• A social and economic committee is to be put in place in all companies with 11 or more employees (ie, at least 11 employees over 12 consecutive months)
• Section 2 of the ordonnance sets out the attributions of the social and economic committee for companies with less than 50 employees eg:
  • to present to the employer the individual or collective complaints and demands of the employees;
  • to promote health and safety and to investigate any work related accidents;
  • in SA companies where applicable present to the Board.
• Section 3 of the ordonnance sets out the attributions of the social and economic committee for companies with at least 50 employees:

as above, plus :

• facilitating access for women to jobs and resolving issues relating to maternity, the access of handicapped persons to work etc.;
• there are mandatory annual information and consultation exercises (as is currently the case) on:
  • the strategic orientations of the business;
  • the economic and financial situation of the business;
  • the social policies of the business and working conditions.
• information and consultation on decisions relating to the management and economic and financial evolution of the business, the organisation of work and general operation of the business (article L.2312-8);
• the social and economic committee must also be informed and consulted in relation to the following (article L.2312-37):
  • the means of control of the activity of employees;
  • restructuration and suppression of jobs;
  • redundancies;
  • public takeovers;
  • liquidation procedures.
• the remit of the social and economic committee is extended to other workers eg, temporary workers;
• there are no changes to the process of consultation (the requirement for detailed written information, limited ability to extend consultation periods through an application to the Courts etc.) but the employer must report with details on the opinion and recommendations given by the social and economic committee;
• employee representation on the boards of SAs:
  • companies with 2 electoral colleges have 2 employee representatives (one from the ETAM college and one from the executives college);
  • companies with 3 electoral colleges have 4 employee representatives on the board (2 from the employee category, 1 from the ETAM category, 1 from the executive category)

4. Extending and increasing the scope of collective agreements – this ordonnance covers in particular

the following topics :

• extending and enlarging collective agreements;
• representative status at a national and multi-professional level and the operation of the fonds paritaire

5. Prevention of professional risks and health and safety issues – this ordonnance covers in particular

the following topics :

• measures relating to the prevention of the adverse effects of exposure to risks at work;
• the professional risk prevention account (compte professionnel de prévention)

We look forward to sharing with you our briefings on the specific aspect of these measures over the next few weeks – the first detailed briefing will look at the cap on damages payments.

Written by Sophie Brézin, Partner, and Emma Röhsler, Partner