Over the past 2 years, several European countries, like Spain or the UK, have decided to simplify and lighten their labor and employment regulations to enable their companies to compete with emerging markets and to face the economic crisis.

In France, the Government has opted not to unilaterally modify the law but to give the employees’ and employers’ unions time to negotiate on that particular sensitive topic so that the fruit of their negotiation be reflected into a specific agreement to be transposed into the French labor Code.

On January 11th, 2013, the negotiation between employers’ and employees’ unions has enabled to reach what is already called a “historical” national agreement to deeply reform the French labor and employment law.

To become enforceable, such national agreement, known under the acronym A.N.I. (Accord National Interprofessionnel), needs to be transposed into the French labor Code by the Parliament. This should be done before next summer.

But is that national agreement really giving more flexibility to employers in France?

Among other provisions that give additional rights to employees (extension of complementary health scheme, creation of a personal professional training account, modification of rules about unemployment benefits…), the ANI modifies several aspects of French labor law with the view to make it more secure and flexible.

The national agreement deeply reforms French labor law on the four main following topics:

  • New procedure for implementation of massive layoffs (“social plan”);
  • Possibility to derogate to working time and remuneration to safeguard job positions;
  • Reinforcement and ease regarding the mobility of the employees when restructuring;
  • Reduction of the statutes of limitations and securing of the litigations.

New procedure for implementation of massive layoffs:

So far, massive layoffs (i.e. dismissals of at least 10 employees over a period of 30 days in companies having at least 50 employees) were strictly regulated by the French Labor Code which detailed the procedure to be complied with the works council as well as the specific elements that a “social plan” should contain.

To ease the implementation of such reductions in force, the ANI tends to favor the collective negotiation with employees’ representatives in order to reduce the number of collective and individual litigations subsequent to such plans.

To implement massive layoffs, companies would now have the choice between two processes:

  • Negotiating a majority collective agreement with the unions: In such a case, to be enforceable, the collective agreement will need to be signed by unions having gathered 50% of the workers’ voices during the first session of professional elections. Such a collective agreement could derogate to the French labor Code especially on the number and the schedule of the meetings with the employees’ representatives, the list of documents to be disclosed by the employer, the conditions and timeframes for the works council to hire an expert, the order of dismissals and the content of the “social plan”. The new timeframes agreed between the parties could not be suspended or exceeded which means that once an agreement is reached on the procedure, the parties will be bound by it. However, it is noteworthy that the main difficulty for companies is going to be able to reach an agreement with their unions on a project aiming at cutting job positions.
  • Implementing unilaterally a “social plan” with ratification by the French authorities: In such a case, the employer’s document will have to be submitted to the opinion of the works council and to be validated by the French social authorities (DIRRECTE). The French social authorities will have a 21-day timeframe to probate the document which has to specify the number and schedule of the meetings with the employees’ representatives, the timeframe under which the employees’ representatives have to be called to the meetings, the list of documents to be disclosed by the employer and the content of the “social plan”. The silence of the DIRRECTE means ratification. If the DIRRECTE refuses the document, the employer has to draft a new document.

In any case, the collective agreement or the unilateral “social plan” could be challenged within a 3-month timeframe and a 12-month timeframe for employees who challenge their dismissals or the abiding by the employer to the collective agreement or the unilateral “social plan”.

Possibility to derogate to working time and remuneration to safeguard job positions:

To enable companies to face temporary economic difficulties and to avoid the implementation of massive layoffs, the ANI provides that the employer and the employees’ unions can negotiate a majority collective agreement to bring more flexibility with respect to working time and remuneration.

The aim of such a company-wide agreement is to set up, for a maximum duration of 2 years, a legal framework enabling the employer to increase the working time and to reduce the remunerations in counterpart of his commitment to safeguard the job positions.

However, those agreements could not derogate to public provisions relating to minimum salary or legal duration or maximum daily or weekly working time, daily and weekly rest, paid holiday and collective bargaining agreements.

As the company’s collective agreement can modify the employees’ contract, it has to be accepted by the employee.

If an employee refuses to comply with the specific provisions of the company’s collective agreement, his/her dismissal is considered as an economic dismissal with cause. Contrary to what happens currently, if 10 employees or more refuse to comply with the specific provisions of the company collective agreement, the employer no longer needs to implement a massive layoff procedure if he wants to implement his project. In counterpart, the company’s collective agreement has to provide for specific measures to assist the employee who refused the modification of his contract. The ANI is not clear on what the obligations of the employer are in this respect.

It is noteworthy that if the employer does not comply with the terms and conditions of the company’s collective agreement, the employer will have to pay a penalty mentioned by the collective agreement itself.

Reinforcement and ease regarding the mobility of the employees when restructuring:

According to the ANI, internal mobility should give raise to a triennial negotiation. When companies contemplate the reorganization of their services (modification of job positions, workplace…) without cutting job positions, they now have the possibility of negotiating provided that the negotiation contains:

  • measures to facilitate the mobility (training, incentive to the geographical mobility);
  • limits to the scope of the geographical mobility;
  • measures aiming at conciliating the private and professional lives of the employees.

In any case, the mobility cannot have as an effect the decrease of the employee’s remuneration or classification and should maintain or improve his/her professional qualification.

Any employee who refuses such mobility will be terminated for personal reasons and not for economic reasons, because of his refusal. But the dismissal should give raise to redeployment measures, even if a “social plan” no longer needs to be implemented.

Reduction of the statutes of limitations and securing of the litigations:

In order to secure litigations related to the termination of employment contracts, the ANI provides that, at the stage of the Conciliatory Board, the parties may put an end to the dispute by paying to the plaintiff a lump sum ranging from 2 to 14 months depending on the length of service of the employee. It is noteworthy that so far if the termination was held without cause, the employee having at least 2 years of service in a company counting 11 employees could obtain a minimum indemnity of 6 months of salary.

Furthermore, the ANI provides for reduced statutes of limitations:

  • to 24 months instead of 5 years, except for discrimination cases, regarding litigations related to the performance or terminations of employment;
  • to 36 months instead of 5 years for payback salary if the claim is filed when the contract is still in force and if the claim is filed within the 24 months following the termination of the contract, the 36-month timeframe will start as of the termination.

The other statutes of limitations provided by the French Labor Code that are already shorter than those ones remain unchanged.

The ANI may therefore have a big impact on French labor and employment law depending on how it is going to be transposed into French law.

To be followed….