Employment issues in M&A transactions in France

• a relevant employees’ representative body exists. This could include a:

1. European works council (EWC);
2. group council (GC);
3. central social and economic committee (CSEC);
4. social and economic committee (SEC);
5. collective bargaining agreements (which may stipulate special requirements).
   
   The SEC is a new employees’ representative body that merges the Works council, the Health and Safety Committee and the employees’ representatives. The SEC is elected at the term of the current office or, at the latest, on 31 December 2019.

• it is a takeover bid or a concentration operation under French law (see Section C. Merger);
•  there has been a change of control or an equity participation only (as French law understands equity participation), and the number of shares owned by the purchaser before the purchase;
• the shares purchased are in the company at which the CSEC, SEC has been elected, or in another organisation such as the parent company;
• the purchasing company is where the CSEC, SEC has been elected.

• a written consultation memo for the attention of the relevant employees’ representative body to ensure compliance with the notification or consultation process and all relevant information to allow the representative body to give clear advice.

• An EWC or GC may need to be informed or consulted, depending on the scope of the deal and bylaws of the company and the employees’ representative body.
• Information alone is not sufficient if a CSEC or a SEC has been established. If this is the case, a consultation process has to be implemented (see section 4).

• A CSEC or SEC needs to be informed and consulted, even in the case of an equity participation without any change of control. The information and consultation process must take place before any actual decision is made.
• Although the transaction is not in itself subject to the consent of the SEC (or EWC, GC, CSEC, etc.), non-involvement of the employees’ representatives constitutes a criminal offence punishable by a fine of up to EUR 7,500. The company itself can be subject to an additional fine of up to EUR 37,500. It could also lead to a suspension of operations until the employees’ representatives’ opinion is given.
• Depending on the context, the SEC may need to be consulted on the consequences of the transaction for health and safety and working conditions.

• Implementation should take place following proper information/notification and, if applicable, a consultation process.
• It is important that the purchaser and target coordinate their timetable/schedule for information or consultation.
• As far as employment law is concerned, a share deal does not in principle lead to an automatic transfer of the employment contract to the company purchasing the shares, even if the share deal results in a majority controlling interest. A specific analysis is necessary in each case to determine the precise consequences for the employment contracts of the employees.

• a relevant employees’ representative body exists. This could include a:

1. European works council (EWC);
2. group council (GC);
3. central social and economic committee (CSEC);
4. social and economic committee (SEC);
5. collective bargaining agreements (which may stipulate special requirements).
   The SEC is a new employees’ representative body that merges the Works council, the Health and Safety Committee and the employees’ representatives. The SEC is elected at the term of the current office or, at the latest, on 31 December 2019.

• it is a takeover bid or a concentration operation under French law (see Section C. Merger);
• there has been a change of control or an equity participation only (as French law understands equity participation), and the number of shares owned by the purchaser before the purchase;
• the target is aware of the share deal; if so, it must inform and consult the relevant employees’ representative body.

• a written information memo for the attention of the relevant employees’ representative body to ensure compliance with the notification or consultation process and all relevant information to allow the representative body to give clear advice.

• Information alone is not usually sufficient if a CSEC or SEC has been established. If this is the case, a consultation process must be implemented (see section 4).
• An EWC or GC may need to be informed or consulted, depending on the scope of the deal and the by-laws of the company and the employees’ representative body.
• If (I) the target has fewer than 250 employees and (II) the deal concerns more than 50% of the shares, every employee must be properly informed of the contemplated sale and invited to submit an offer to acquire the shares. The obligation to provide information does not amount to a pre-emptive right for the employees since the seller remains free to accept or refuse the offer made by employees on a discretionary basis.

• Other than in certain highly specific cases, and even if the deal concerns as little as 1% of the shares, the SEC or CSEC needs to be informed and consulted.
• Although the transaction is not in itself subject to the consent of the SEC (or EWC, GC, CSEC, etc.), non-involvement of the employees’ representatives constitutes a criminal offence punishable by a fine of up to EUR 7,500. The company itself can be subject to an additional fine of up to EUR 37,500. It could also lead to a suspension of operations until the employees’ representatives’ opinion is given.
• Depending on the context, the SEC may need to be consulted on the consequences of the transaction for health and safety and for working conditions.

• Implementation should take place following proper information/notification and, if applicable, a consultation process.
• As far as employment law is concerned, a share deal does not in principle lead to an automatic transfer of the employment contract to the company purchasing the shares, even if the share deal results in a majority controlling interest. A specific analysis is necessary in each individual case to determine the precise consequences for the employment contract of the employees.
• It is important that the purchaser and target coordinate their timetable/schedule for information or consultation.

• a relevant employees’ representative body exists. This could include a

1. European works council (EWC);
2. group council (GC);
3. central social and economic committee (CSEC);
4. social and economic committee (SEC);
5. collective bargaining agreements (which may stipulate special requirements).
   The SEC is a new employees’ representative body that merges the Works council, the Health and Safety Committee and the employees’ representatives. The SEC is elected at the term of the current office or, at the latest, on 31 December 2019.

• it is a concentration operation under French law (if this is the case, see Section C. Merger); 
• the operation could have consequences for the employees (in the case of a business transfer as understood in the EU Directive, employment contracts will be transferred, company-level collective bargaining agreements – including benefits – will be subject to changes, employees’ representative bodies could be modified);
• an information and consultation process must be implemented. This must take place before an actual decision is made and before any agreement is signed (even with conditions precedent).

• a written consultation memo for the attention of the relevant employees‘ representative body to ensure compliance with the notification or consultation process and all relevant information to allow the representative body to give clear advice.

• An EWC or GC may need to be informed or consulted, depending on the scope of the deal and bylaws of the company and its employees’ representative body.
• Information alone is not sufficient if a CSEC or a SEC has been established. If this is the case, a consultation procedure has to be implemented (see section 4).
• If the seller has fewer than 250 employees, every employee must be properly informed of the sale and invited to submit an offer to acquire the business. The obligation to provide information does not amount to a pre-emptive right for the employees since the seller remains free to accept or refuse the offer made by employees on a discretionary basis.

• The SEC or CSEC must be consulted regarding the financial and social terms and consequences of the deal.
• Although the transaction is not in itself subject to the consent of the SEC (or EWC, GC, CSEC, etc.), non-involvement of the employees’ representatives constitutes a criminal offence punishable by a fine of up to EUR 7,500. The company itself can be subject to an additional fine of up to EUR 37,500. It could also lead to a suspension of operations until the employees’ representatives’ opinion has been obtained.
• Depending on the context, the SEC may need to be consulted on the consequences of the transaction for health and safety and for working conditions.

• Implementation should take place following proper information/notification and, if applicable, a consultation process.
• In the event of a business transfer under the meaning of the EU Directive, we recommend that a notice of information be sent for the attention of the transferred employees.
• It is important that the purchaser and target coordinate their timetable/schedule for information or consultation.

• a relevant employees’ representative body exists. This could include a:

1. European works council (EWC);
2. group council (GC);
3. central social and economic committee (CSEC);
4. social and economic committee (SEC);
5. collective bargaining agreements (which may stipulate special requirements).
   The SEC is a new employees’ representative body that merges the Works council, the Health and Safety Committee and the employees’ representatives. The SEC is elected at the term of the current office or, at the latest, on 31 December 2019.

• it is a takeover bid or concentration operation under French law (if this is the case, see Section C. Merger);
• the operation could have consequences for employees (in the case of a business transfer as understood in the EU Directive, employment contracts will be transferred, company-level collective bargaining agreements – including benefits – will be subject to changes, and employees’ representative bodies could be modified). Check whether the operation could have any financial consequences, especially due to the harmonisation of social status.
• the information and consultation process must take place before any actual decision is made.

• a written consultation memo for the attention of the relevant employees‘ representative body to ensure compliance with the notification or consultation process and all relevant information to allow the representative body to give clear advice.

• An EWC or GC may need to be informed or consulted depending on the scope of the deal and by-laws of the company and the employees’ representative body.
• Information alone is not sufficient if a CWC or WC has been established. If this is the case, a consultation procedure has to be implemented (see section 4).

• The SEC or CSEC must be consulted regarding the financial and social terms and consequences of the deal.
• Although the transaction is not in itself subject to the consent of the SEC (or EWC, GC, CSEC, etc.), non-involvement of the employees’ representatives constitutes a criminal offence punishable by a sentence of up to one year’s imprisonment and a EUR 7,500 fine. The company itself can be subject to an additional fine of up to EUR 37,500. It could also lead to a suspension of operations until the employees’ representatives’ opinion has been obtained.
• Depending on the context, the SEC may need to be consulted on the consequences of the transaction for health and safety and for working conditions.

• The SEC or CSEC must be consulted regarding the financial and social terms and consequences of the deal.
• Although the transaction is not in itself subject to the consent of the SEC (or EWC, GC, CSEC, etc.), non-involvement of the employees’ representatives constitutes a criminal offence punishable by a sentence of up to one year’s imprisonment and a EUR 7,500 fine. The company itself can be subject to an additional fine of up to EUR 37,500. It could also lead to a suspension of operations until the employees’ representatives’ opinion has been obtained.
  Depending on the context, the SEC may need to be consulted on the consequences of the transaction for health and safety and for working conditions.

• a relevant employees’ representative body exists. This could include a

1. European works council (EWC);
2. group council (GC);
3. central social and economic committee (CSEC);
4. social and economic committee (SEC);
5. collective bargaining agreements (which may stipulate special requirements).
   The SEC is a new employees’ representative body that merges the Works council, the Health and Safety Committee and the employees’ representatives. The SEC is elected at the term of the current office or, at the latest, on 31 December 2019.

• it is a takeover bid or concentration operation under French law;
• there is a need to inform and consult the health and safety committee;
• there will be consequences for the employees (in the case of a business transfer as understood in the EU Directive, employment contracts will be transferred, company-level collective bargaining agreements – including benefits – will be subject to changes, and employees’ representative bodies could be modified). Also check if the operation could have financial consequences, especially due to the harmonisation of social status.

• In the event of a merger without a takeover bid or concentration:

1. information for the attention of the relevant employees’ representative body to ensure compliance with the notification or consultation process.
2. the consultation process of the SEC or CSEC must be implemented prior to the board meeting’s decision to go ahead with a merger.

• In the event of a takeover bid:

1. information for the attention of the GC or SEC of the target company;
2. information for the attention of the SEC of the raider (by the acquirer).
3. prepare the acquirer for a possible hearing before the GC or SEC of the target company and its technical expert if one exists.
4. prepare documentation for the attention of an expert, possibly chosen by the GC or SEC of the target company.

• Concentration operation:

1. determine the subsidies needed to organise a meeting of the SEC;
2. prepare documentation for the attention of an expert, possibly chosen by the SEC of the target company.

• Merger without a takeover bid or concentration:

1. an EWC, GC, or employees’ representative may need to be informed or consulted depending on the scope of the deal and bylaws of the company and employees’ representative body.
2. the SEC or CSEC must be consulted prior to a decision to merge being taken.

• Takeover bid:

1. Obligations of the acquirer
   1.1 Towards its employees
   1.1.1 If a SEC exists

1. to meet the SEC of the acquirer immediately after the offer is submitted;
2. within two days, to provide the SEC of the acquirer with information about:
   • the content of the bid; and
   • consequences for employment.

1.1.2 If no SEC exists

1. To inform all employees of the bid.

1.2 Towards SEC of the target

1. To provide the CSEC, SEC or all employees of the target (through CEO of the target) with a notice of information for the Financial Market Authority within three days of it being published.
2. In the event of a hearing in front of the CSEC or SEC of the target, the acquirer must provide information regarding:
   • its industrial and financial policy;
   • its strategic plans for the target company;
   • the possible consequences for employment, employment locations, and decision-making centre.

2. Obligations of the target

1. To meet the CSEC or SEC immediately after the offer is submitted. The CSEC or SEC decides whether the acquirer will be heard and can decide to proclaim the acquisition as friendly or hostile. The CSEC or SEC also has the right to appoint a technical expert.
2. To meet the CSEC or SEC of the target, with the possibility of the acquirer being heard, within 15 days following the publication of the notice of information being given to the Financial Market Authority, and before the general shareholders’ meeting.

2.1 If neither a CSEC nor a SEC exists

1. To inform all employees of the bid.
2. To give all employees the notice of information for the Financial Market Authority as provided by the acquirer.

• Concentration operation

1. Obligations of the acquirer and the target
   • To meet the SEC within three days of the publication of the concentration information by French Administrative Authority or European Commission.
   • A second meeting with the SEC is also possible in the event of a technical expert being nominated by the SEC.
   • SEC can ask to be heard by the French Administrative Authority and, under certain conditions, by the European Commission.

Not applicable.

• Implementation should take place following proper information/notification and, if applicable, a consultation process.
• Although the transaction is not in itself subject to the consent of the SEC (or EWC, GC, CSEC, etc.), non-involvement of employees’ representatives constitutes a criminal offence punishable by a fine of up to EUR 7,500. The company itself can subject to an additional fine of up to EUR 37,500. It can also lead to a suspension of operations until the employees’ representatives’ opinion has been obtained.
• The date of transfer of employees, if applicable, cannot be retroactive, even if the operation can have retroactive effects for tax and account purposes.
• It is important that the purchaser and target coordinate their timetable/schedule for information or consultation.