France: Employment law gets less complicated

The rules governing collective redundancies - i.e. when a company with at least 50 employees plans at least 10 job cuts- have traditionally made the process long and unpredictable in France:

• long, as the works council could cause significant delays by asking for more information, appointing an expert before giving its opinion and referring to the judiciary if the employer did not agree; and
• unpredictable, since the judiciary could, months and even years after the dismissals, declare them void and order the reinstatement of the claimant employees.

To try to put an end to this situation, the on 11 January 2013 the social partners concluded a national agreement for a more secure employment market which has been transposed into the Law dated 14 June 2013.

This legislation introduces three major changes:

First, the Law has introduced time limits for the works council consultation process:

works council must give its opinion within two, three or four months, depending on whether less than 100, between 100 and 250, or more than 250 job cuts respectively are planned. If the works council fails to give its opinion within the applicable timeframe, it is deemed to have been consulted. If it decides to appoint an expert, the expert's report must be presented at least 15 days before the deadline for the works council to give its opinion. If the Health and Safety Committee has to be consulted because the restructuring impacts the working conditions, its consultation will also have to be completed before this deadline.

Second, the employer now has the choice between two tracks to implement an Employment Protection Plan ("Plans de Sauvegarde de l'Emploi" or PSE) previously known as a "Social Plan":

• The negotiation of a company collective agreement with the unions: The agreement covers all or part of the following topics: information and consultation of the works council, selection criteria of the employees to be dismissed, timeframe of the dismissals, number of jobs to be eliminated and professional categories concerned, implementation of the training, adaptation and redeployment measures. To be valid, the agreement must be signed by representative trade unions that together won at least 50% of the votes cast in the first round of the most recent works council elections.
• A "unilateral document": if the employer decides not to negotiate or if the negotiation failed, he may prepare and issue a "unilateral document" which covers the same matters as the company collective agreement.

Third, the judicial review of the dismissal procedures is largely replaced by an administrative review by the labour authorities: both the company agreement and the "unilateral document" must be submitted to the local labor authorities:

• the agreement must be "validated": the labour authorities only check that the agreement is valid, the works council consultation was regular and the PSE meets the basic requirements;
• the "unilateral document" must be "homologated": the labour authorities, who carry out a broader review, check that the PSE contains measures such as internal redeployment actions and actions to support employees who want to start a new activity and that it is generous enough with
• regard to the group's resources;
• the labour authorities have 15 (validation) or 21 (homologation) days to take their decision: if there is no decision within this time limit, the agreement or the "unilateral document" is deemed to have been accepted; and
• the decisions of the labour authorities, whether positive or negative, may be referred to the administrative tribunals who must decide the case within three months.

The first results of these new procedures are encouraging: after 18 months of implementation, it appears that:

• 75% of companies chose to start negotiations on an agreement on the PSE;
• an agreement has been reached in 60% of the cases either on all topics (50%) or on some of them (10%);
• the labour authorities have refused either the validation of the agreement or the homologation of the "unilateral document" in only 10% of the cases; and
• 7% of their decisions have been referred to the administrative tribunals whereas 20 to 30% of these procedures were referred to the judiciary before.