Labour Law : a Deep Change


Terminating an employment contract under the « MACRON » Executive Orders

Reduction of the statutory limitation period

Any action pertaining to the termination of the employment contract is prescribed (i.e. statutory limited) by a period of twelve months starting from the day the termination has been notified (French Labour Code art. L14171-1).

The limitation period is thereby reduced from 2 to 1 year.

Motivation of the dismissal

Until then: the case law was clear. There was an obligation for the employer to state materially verifiable, precise and objective motivations of the dismissal. Choosing imprecise motives amounted to a lack of motivation since the letter of dismissal set (and still sets) the borders of the legal dispute.

From now on: There is a faculty for the employer to specify the reasons stated in the letter of dismissal. This comes either on the employer initiative or at the request of the employee (French Labour Code art. L1235-2).

As a result: If the employee fails to express such request of specification to the employer, insufficiency of the motivation stated for the letter of dismissal does not in itself deprive the dismissal of a real-and-serious cause, though it entitles the employee to an indemnity not exceeding one month’s salary (French Labour Code art. L1235- 2 subparagraph 3).

Dismissal for economic reason: scope of appreciation of the economic motivation

Until then: the economic reason of the dismissal was appraised at the company level or at the level of the activity sector of the group to which it belongs, even abroad.

From now on: Article L1233-3 of the French Labour Code limits the geographic scope of appreciation of the economic motivation to the national territory and thus allows a company having difficulties in France to reorganize, even if it belongs to a flourishing international group.

Limitation of the indemnities due for unfair dismissal

The legal reform completes the process of capping the indemnities due to the employee for a dismissal without a real-and-serious cause.

The French Conseil constitutionnel had invalidated a previous setting of scales adopted in 2015, which provided for a different scheme of compensation depending on the size of the enterprise concerned (Cons. const. 5 August 2015, QPC n°2015-715).

However, this decision did not concern the setting of scales as principle but the criterias enacted by the legislator to modulate the compensation.

The new setting of scales is defined at the article L1235-3 of the French Labour Code.

It consists in floors and ceilings of a progressive character depending on the seniority of the employee.

A distinction founded on the size of the company remains in application. The scales applicable to the companies with less than 11 employees only includes floored-indemnities.

Increase in termination indemnity

Until then: the legal indemnity could not be less than 1/5th of a month’s salary per year of seniority.

From now on: the termination indemnity cannot be less than:

- ¼th of a month’s salary per year of seniority, up to 10 years;

- 1/3rd of a month’s salary per year of seniority from 10 years.

In addition, the seniority expected to obtain the legal termination indemnity is now equal to 8 months of salary instead of 12 months of salary until then (French Labour Code art. L1234-9).


Establishment of conventional collective dismissals

In order to secure voluntary redundancy plans which did not benefit from a legal framework, the executive order of 22 September 2017 introduces a new way to terminate amicably the employment contract: the procedure of “conventional collective termination” (French Labour Law art. L1237-17 et seq.).

It allows to organize, through a collective instrument, multiple terminations “by mutual agreement” of the employment contract.

Like the individual type of conventional terminations, it cannot be assimilated to a resignation or a dismissal, nor be imposed by one or the other of the parties concerned.

The collective agreement defines the maximum number of departures and job losses. It also stipulates the duration of implementation of the conventional collective termination and the criterias to be met by the employees to benefit from it.

The acceptance by the employer of the employee’s application to the procedure entails the mutually agreed termination of the employment contract.

Already set in motion by some major companies (PSA, PIMKIE), this new modality of termination leaves room to a sort of perplexity according to several authors who raise the question of a “disguised” social plan.

Nevertheless, some guarantees have been provided:

- The employer must inform the French Administration at the beginning of the negotiations and consult employee representatives according to a mechanism following-up the agreement and for the duration it lasts.

- As in the case of Employment Protection Plans (PSE), the French Direction régionale des entreprises, de la concurrence, de la consommation, du travail et de l’emploi (DIRECCTE) will be the competent administrative authority in charge of validating the agreement related to the conventional collective termination.

Strengthening the collective bargaining

Modification of the articulation between branch conventions and company agreements in three parts

The first is the one according to which the branch agreement must prevail, imperatively.

The second is the one according to which the branch agreement prevails only if it stipulates so, expressly.

The third is the one according to which the company agreement prevails, automatically.

From now on, the stipulations of the company agreement take precedence over those of the branch agreement having the same purpose, whether they are concluded before or after the date the branch agreement came into force.

On this issue pertaining to the hierarchy of norms, the prevalence is clearly given to the company agreement, except for precisely enumerated areas (French Labour Code art. L2253-1 et seq.).

To illustrate, it is theoretically possible for a company agreement to modify the amount of a bonus set in conventional terms, such as vacation premiums, or eventually to suppress it.

For all that, it is still necessary to find partners ready to sign such an agreement (unions or other interlocutors referred by the law).

The way employment contracts and company agreements relating to duration of work, remuneration and mobility of the employees are interlinked has been modified altogether. Specific rules have been laid down in case where an employee has been dismissed for refusing to abide by such an agreement. (Labour Law Code art. L2254-2).

Agreements reached without union representatives

In companies with less than 11 employees, the employer is left the choice to propose them the adoption by referendum of a collective labour agreement’s draft without the union or other employee representatives’ consent.

To this end, the employer would have to obtain a favorable 2/3rd majority vote of the personnel.

Merging of IRPs and creation of the CSE

The flagship measure in terms of social dialogue is surely the merging of the personnel representatives (RPs), the enterprise committee (CE) and the health, safety and working conditions committee (CHSCT) into one brand new entity: the Social and Economic Committee (Comité Social et Economique).

This CSE must be set up in companies with at least 11 employees. It is mandatory only if the workforce is reached for 12 consecutive months (French Labour Code art. L2311-2).

To be implemented before January 1, 2020.

Limitation period of the action aiming to nullify an agreement

Any action for annulment of all or some parts of an agreement must be initiated within a two-months period from its notification or publication.

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