6. Cost-Reduction Strategies
To what extent can employers implement the following cost-reduction strategies as a result of COVID, and what are the primary limitations on each?
- Furloughs: it is not possible to furlough an employee without pay. Short time work can be used, subject to administration approval.
- Salary reductions: salary reductions are not possible without the employee’s consent.
- Redundancy: economic layoffs are possible if they are justified by a real and serious economic rationale that can be demonstrated. Standard dismissal procedures outlined by the French labour code must be followed.
- Facility closure: If this will result in job losses, there must be an economic rationale. If it only results in a change in work location for employees, this can still constitute a modification of their contract and procedures might need to be implemented.
Note that businesses that were forced to close down by government orders were and are entitled to a host of benefits: short time work for the employees impact and various stimulus packages to help offset a part of the economic fallout resulting from the closure.