New Developments
Since 2023, the French government has profoundly modified employment law in France, through the pension reform. Also, the rules on whistleblowing have been thoroughly reviewed, quotas have been passed to ensure the presence of women in senior management and most recently, a new law updating the French Labour Code to ensure compliance with European law on employee’s right to holiday entitlement while on sick leave has triggered new obligations and some practical issues for employers.
Moreover, since 2013 and even more so after 2017, the staff representative structures have been simplified and significant efforts to secure dismissals have been made.
a. The pension reform
The legal retirement age is gradually being raised from 62 to 64 years old. The minimum pension is increased by 100 euros per month. However, early retirement before the age of 64 is permitted for people who started work before the ages of 16, 18, 20 and 21.
In addition, the access to progressive retirement has been extended: until now reserved exclusively for employees, craftsmen and shopkeepers, the scheme has been extended to local government officers (“fonctionnaires“), self-employed professionals and lawyers from September 1st, 2023. In this case, employers must justify that the part-time work requested by the employee is incompatible with the company’s economic activity. In the absence of a written, reasoned response from the employer within two months, the agreement is deemed to have been reached.
Combining work and retirement allows retired people to work and receive both their professional income and their retirement pension. As of September 1st, 2023, combining work and retirement will create new pension rights. Until now, this income subject to contributions did not give any entitlement to an additional pension. Henceforth, at the end of a period of combined employment and retirement, it will be possible under certain conditions to claim a “second pension” calculated based on the same rules as the first pension.
Finally, the new French pension system also creates rights and advantages for families, parents, orphans and for parents with a handicap child. The reform takes into consideration the professional weakening (“usure professionnelle”) by creating an investment fund.
b. The law on whistleblowers’ protection
While transposing into French law the 2019 European Directive, French Parliament has taken this opportunity to review the rules on whistleblowing generally.
The law will now allow employees to make whistleblowing reports directly to external authorities whereas they first had to raise them internally until now.
HR grievances such as sexual and moral harassment as well as discrimination claims will fall within the scope of the whistleblowing law. This means that the heightened protection of whistleblowers will apply. For example, non-respect of the strict confidentiality rules can lead to up to 2 years’ imprisonment and a EUR 30,000 fine and any measures taken to obstruct a report can result in punitive damages and a EUR 60,000 fine. This is in addition of the invalidity of any retaliation actions which can also result in criminal penalties.
Companies should therefore ensure they have put in place a whistleblowing policy if they have not yet done so (mandatory for all companies with over 50 employees). For those who already have a system in place, they should see how their policy needs to be updated and also how to make their system more attractive to employees to avoid all concerns being raised systematically with external authorities. Finally, HR teams need to be trained on how to handle complaints in line with the new law.
c. Quotas on women in senior management
Since March 2022, companies with 50 employees or more, that were already obliged to publish their “equality index score”, now have to publish each year the detail each of the indicators relating to pay gaps used to calculate the score. The Administration has set the minimum level expected for each indicator. If the company’s results are below these levels, the company will have to define and publish what actions will be taken to improve their results. This information will be made public via the Ministry of Labour’s website.
In addition to the “equality index score” indicators, companies with over 1,000 employees will need to publish each year the percentage of men and women who are “cadre dirigeant” (specific status under French law which usually corresponds to C-suite and D-suite executives) and members of the company’s governing bodies. The aim is to reach 30% women by 2026. Companies with low female representation at this level should begin succession planning and changes in hiring practices in order to meet this objective.
Company agreements on homeworking will also need to cover specifically the situation of pregnant employees.
From March 2023, the new indicators for companies with over 1,000 employees have been made public via the Ministry of Labour’s website.
By March 2026, at least 30% of “cadre dirigeant” and members of the company’s governing bodies in companies with over 100 employees must be women. Companies not having reached this goal will have to negotiate appropriate and relevant corrective measures during the mandatory negotiations on professional equality, or, failing that, this action plan will be set unilaterally by the company, after having consulted the works council.
By March 2029, at least 40% of “cadre dirigeant” and members of the company’s governing bodies in companies with over 1,000 employees must be women. Companies not having reached this goal will again have to negotiate on corrective measures as described above but will have to reach the objective by 2031 at the latest. Otherwise, they will be subject to a penalty of up to 1% of their total wage bill.
d. Updates on employee information requirements under EU Transparent Working Conditions Directive
The Decree n° 2023-1004 dated October 30th, 2023, has transposed the EU Directive 2019/1152 on Transparent and Predictable Working Conditions into French law, effective in France from November 1st, 2023.
Employers are required to communicate certain information to staff upon hire including on common subjects such as position, pay, length of trial period etc. but also with regards information which is less commonly communicated such as information on training rights and health care and pension coverage.
Most of this information must be communicated to employees within 7 days of hiring but employers are allowed extra time (up to 30 days) to communicate certain information such as training rights, holiday entitlements, process by which the contract may be terminated, health care and pension coverage and applicable collective agreements. Such information must be provided in writing and, subject to certain conditions, can be communicated electronically.
Moreover, employees called upon to work abroad for a duration exceeding 4 weeks must receive, before their departure, information on the duration of the mission, the currency in which the remuneration will be paid and any benefits they may enjoy such as housing allowance etc.
In case of non-compliance, an employee can make a formal request for this information and, in the absence of a response by the employer within 7 days, can initiate proceedings before the Employment Tribunal to obtain such information.
Finally, though not directly related to the information upon hiring, the Decree further mandates that all employees hired under fixed-term or temporary contracts for a period exceeding 6 months can request information on all available indefinite-term positions available within the company which must provide the list within 1 month. It is a new information requirement that companies have to take into consideration.
e. Major change in 2024: holiday entitlement during non-work related sick leave
On April 10th, 2024, the French Parliament adopted a new law updating the French Labour Code to ensure compliance with European law on employees’ right to holiday entitlement while on sick leave. This was rendered necessary following several rulings by the French Supreme Court in September 2023 which had prompted much debate.
Under French law, employees acquire a certain number of days of holiday during a 12-month period (acquisition period) that they can then take during the following 12-month period (holiday period). Moreover, under French law, a distinction is made between sick leave resulting from a work accident or occupation illness (work-related sick leave) and ordinary sick leave.
In the past, only employees on work-related sick leave could acquire holidays during their sick leave (2.5 days holiday entitlement per month i.e. maximum 5 weeks holiday per yearly reference period).
Under the new law, employees on non-work-related sick leave will also acquire holidays (2 days holiday entitlement per month i.e. maximum 4 weeks holiday per yearly reference period). Moreover, under the new law, if employees were not able to take all their holidays before their sick leave, they can take them upon their return to work over a period of 15 months. This 15-month period starts running from the date the employer has informed the employees of the number of days they have acquired and the time period they have to take them. The employer has 1 month in which to provide this information.
With regards holidays acquired during the sick leave, there is also a 15-month carry-over period, but the start date of this period is different according to the situation.
If employees were on sick leave for less than 1 year during the acquisition period, as above, the carry-over period starts from the employer having provided the necessary information upon their return to work.
However, if employees were on sick leave during the entire acquisition period, the 15-month period starts running from the end of such acquisition period.
For employees who were on sick leave before the new law but after December 1st, 2009, they can claim the additional holiday entitlement they should have enjoyed but such claims must be made within the next 2 years.
f. Resignation of an employee and presumption of abandonment of job
Even before its entry into force, the presumption of resignation caused a lot of ink to be spilled. The Labour Code now provides that an employee who voluntarily abandons his position and does not return to work after having been given notice to justify his absence and to return to his position, by registered letter or by hand-delivered letter against discharge, within the period set by the employer, is presumed to have resigned at the expiration of this period. The deadline provided above cannot be less than 15 days.
g. Staff Representation: the CSE (The Social and Economic Committee)
The Macron Reform has significantly simplified staff representation in companies. Up to now, there have been three types of staff representative bodies, all of which are chaired by the employer:
- in companies with 11-49 staff: staff delegates (“délégués du personnel”);
- in companies with 50 and above: staff delegates, a works council and a health and safety committee.
The staff delegates were in charge of relaying claims regarding the day-to-day working life of the company staff, while the works council is mainly in charge of economic matters, and the health and safety committee deals with health and security matters.
One of the main points in the Macron reforms is the merging of the current three staff representative bodies into one. The Works Council, Staff Delegates, and Health and Safety Committee are now combined into the Social and Economic Committee: the CSE. Note that it will also be possible, subject to the existence of a collective agreement, instead of a CSE, to implement a Conseil d’entreprise. This body would basically have the same prerogatives as the CSE but would, in addition, be able to enter into and revise collective agreements, instead of trade Union delegates that would no longer exist.
Implementation of the CSE
The minimum threshold for mandatory implementation is when the company employs at least 11 employees for 12 consecutive months. In principle, the CSE is set up at the end of the current mandate of the elected staff representatives, or at the renewal of one of these bodies.
The body has the same configuration, regardless of the size of the company. It must include a health, safety and working conditions commission in companies and separate establishments that have at least 300 employees.
The number of seats to the CSE varies in proportion to the staff headcount. It ranges from 1 representative for companies with 11 employees, up to 35 representatives for companies with over 10,000 employees.
CSE’S RESPONSIBILITIES
CSE’s responsibilities in companies with fewer than 50 employees
There has been a carry-over of most assignments formerly entrusted to the Staff Delegates:
- they can therefore present individual claims relating to wages, the application of the labour code, etc.
- they will have a role in the promotion of health, safety and working conditions in the company, investigation of accidents at work or occupational illnesses.
- they can refer to the labour inspectorate all complaints and observations relating to the application of legal provisions.
CSE’s responsibilities in companies with 50 or more employees
There has been a carry-over of the powers previously assigned to the Staff Delegates explained above as well as those previously assigned to the Works Council:
- the CSE remains informed and consulted on matters concerning the organisation, management and general operation of the company.
- the CSE remains informed and consulted periodically on:
- the strategic orientations of the company;
- the economic and financial situation of the company;
- the social policy of the company, working conditions and employment
- finally, the CSE has prerogatives that were formally those of the Health and Safety Committee (CHSCT).
Changes to rules regarding dismissals
GENERAL RULES
In the past, some employers have been sentenced to pay damages, because they failed to comply with certain formal legal requirements regarding the way the dismissal letter should be motivated.
The Macron labour law reform has simplified the requirements regarding the letter, although the procedural requirement involving a pre-dismissal meeting remains unchanged.
To help employers in the process, the Government issued a template form that may be used for dismissal. Also, a specific procedure has been set up, that allows the employee to ask for more precision on the grounds for his dismissal explained in the dismissal letter.
The employee now has 15 days to make the request for further explanation.
If the dismissal letter is ruled as insufficiently motivated, this will trigger the payment of damages for unfair dismissal (see below).
STATUTORY SEVERANCE
Under French law, dismissal triggers the payment of a statutory severance or, if more advantageous, the severance provided for by the applicable sectorial CBA, if any. The Macron reform increased the statutory severance and makes it mandatory for employees whose length of service is of 8 months (instead of one year).
The formula is now the following:
- 1/4 of a month’s salary per full years of service up until 10 years;
- 1/3 of a month’s salary per full years of service (as of) above 10 years.
The reform does not change the fact that a dismissal for gross or serious misconduct (“faute grave ou lourde”) does not trigger the payment of any severance.
STATUTE OF LIMITATIONS TO CHALLENGE A DISMISSAL
Over the past decade, Parliament has periodically reduced the statute of limitations.
Just as for economic dismissals, the statute of limitation to challenge a dismissal based on personal grounds is now one year.
This time limitation does not apply to disputes in relation to the contract’s execution nor to situations triggering a nullity (violation of protection of pregnant women, discrimination, etc.).
Please note that the 3-years statute of limitations still applies for claims in relation to wages and overtime, in particular.
INDEMNIFICATION
French regulation was criticised by employers because of the uncertainty as to their potential financial exposure once they have dismissed an employee.
Indeed, Labour Courts could be quite severe and the amount of damages granted could vary depending on the jurisdiction ruling the case.
Any employee working in a company employing at least 11 employees and having 2 years of service could obtain indemnification of 6 months’ salary in case his dismissal was ruled unfair, which could happen quite often. On the other hand, there was no cap
The Macron reform now imposes a binding grading scale to the Labour Court based on the employee’s seniority accrued within the company. For example, 2 years of seniority will entitle the employee to damages between 3 and 3.5 months of salary (in companies with at least eleven employees). 10 years of seniority will entitle the employee to damages between 3 and 10 months of salary (again, in companies with at least eleven employees). This grading scale does not apply in case the dismissal is ruled null and void. Neither does it cover particular prejudices, nor does it apply to claims in relation to the execution of the employment contract.
ECONOMIC DISMISSAL
Since 2013, the French Government and Parliament aimed at making the economic dismissal procedure easier or at least a bit less severe towards large groups and companies.
The Macron reform deals with:
- The perimeter within which the economic rationale shall be assessed.
Before the reform, the economic rationale was assessed at the level of the business sector of the Group to which the French company belongs to worldwide, and not only in France or in the E.U. This would then trigger damages to be paid for “unfair dismissal” even in case the French subsidiary was experiencing losses for many years, because the “business sector” of the Group itself was quite profitable worldwide.
This economic rationale is defined as either “economic difficulties” or the “need to safeguard the competitiveness” or “technological changes” or, finally, the total and definitive shut down of a French legal entity. The law did not change this, nor the fact that the Group’s situation still needs to be taken into account; it also maintained the reference to the “business sector” of said Group.
However, it is now possible to only focus on the Group’s economic situation in France alone. Indeed, Section L.1233-3 of the labour code provides that: “Economical issues, technological transformation or the necessity to safeguard competitiveness, are assessed at the company level if it does not belong to a Group and, otherwise, it must be assessed under the scope of the other companies of the Group, operating in the same business sector, and established on the national territory”.
This section then provides for some definitions of the Group depending on where the “dominant” company (parent company, basically) is located.
Finally, the law now indicates that the “business sector is characterised, in particular, by the type of products, goods, or services, the targeted customers, the distribution networks and methods, all relating to the same market”. This enumeration seems to confer a significant importance to the “market” criteria, but it might be subject to a different interpretation from the courts.
- The internal redeployment duty: the reform puts an end to the duty to search for internal positions within the company’s Group abroad.
This fundamental requirement is now limited to France alone, still within the Group’s perimeter. The reform also eases the process for proposing redeployment opportunities.
The employer may now start by delivering a list of available positions within the Group in France only. The employee has 15 days to show interest.
AGREEMENTS ORGANISING COLLECTIVE TERMINATIONS BY WAY OF AGREEMENT
Since 2008, entering into a mutual termination agreement with an individual employee is possible. This agreement has to be submitted to the labour administration’s approval, which can be implicit. This scheme has proven to be very popular and not conflictual.
On the other hand, since 2013, the mass layoffs proceedings (at least 10 job eliminations in companies of 50 employees or more) had been placed under the labour administration’s control, and negotiation of the redundancy package with unions were strongly encouraged. This reform proved to have a positive outcome as the proceedings became less conflictual, and their duration and outcome more predictable.
Although those “forced departures” plans have become less conflictual, it remains a trauma for the workforce, and a significant source of financial exposure for the company. Also, this process, even in case an agreement is being reached with unions, still involves quite a long consultation process with the Works Council and the Health and Safety Committee.
Conscious that entering into forced departure plans might not always be the best way to deal with a need to reduce the size of the workforce, when voluntary departures appear to be possible, the Macron Government imagined a new scheme called “mutually agreed termination”, placed under the labour administration’s control, and subject to a company agreement concluded under the aforementioned conditions.
Entering into this agreement does not require a consultation of the elected staff representatives, but they must be informed.
It may be implemented only to organise voluntary departures, meaning that an employee who would belong to a targeted job category must not have his job eliminated or substantially altered if he is not a candidate to this collective departure, that is proposed by the employer.
TELEWORK
The Macron reform brings telework provisions into the 21st century, with the possibility of its implementation by collective agreement or, failing that, by a charter drawn up by the employer after a possible consultation with the CSE in some cases. In the absence of a charter or collective agreement on telework, it is possible to set up telework via an agreement between the employer and employee, formalised by any means.