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French employment law often has the reputation of being a strict, rigid set of rules providing a high level of protection to employees. Yet, in the past few years, and in particular since 2017 under President Macron, employment law in France has undergone a certain number of changes, brought by various governmental reforms which aimed at simplifying the regulations, while also bringing a certain level of flexibility to the employers.
The following is an overview of the recent evolutions of labor and employment law in France, and this at a critical date: one year before the next presidential elections, scheduled for April 2022.
The 2017 Labor Law Reform
In September 2017, the French government enacted several ordinances which introduced profound changes to French labor and employment law, with the main intention of making the French labor market more flexible.
Hierarchy of Laws
French labor and employment law is based on both State-level sources (the Constitution, laws and regulations codified in the Labor Code, case law) and professional-level sources (industry-wide and company-wide collective bargaining agreements, unilateral decisions of the employer – “engagements unilatéraux”, company practices – “usages”), to which one should add applicable international and European conventions and treaties, and the interpretation of the law provided by case law. National collective bargaining agreements concluded at industry-level are very common and their application was, historically, mandatory in all companies belonging to the same industry. In principle, it was not possible to depart from it – unless, in certain cases where the alternative provisions were more favorable to the employees.
However, through the 2017 Labor Law Reform (and its previous installment, the 2016 Labor “El Khomri” Law), the structure of the French Labor Code was significantly amended to provide that company-wide agreements could depart from industry-wide agreements in many areas, even in cases where their provisions would be less favorable to the employees.
In fact, the industry-wide agreements kept their primacy vis-à-vis company-wide agreements in only six areas: minimum wage, employee classification, supplementary social protection, training, prevention of the arduousness of work, and professional equality between women and men. As a consequence, with the exception of these subjects, company-wide agreements may now be less favorable to employees than industry-wide agreements (e.g. in areas such as working time, paid leave, bonuses, severance payments, etc.).
This new architecture of social dialogue has contributed to a substantial increase of the number of company-wide collective bargaining agreements: In 2020, the General Labor Department counted 76,650 such agreements, compared to only 42,200 in 2016.
This significant increase in the number of company-wide collective bargaining agreements can also be explained by the new possibility to negotiate such agreements even within medium-sized and small companies, even in the absence of any trade union representatives, through negotiation with the elected “social and economic committee” members, if any, or by way of referendum directly with employees.
The importance of this evolution should not be underestimated, as only 8% of the employees in France effectively belong to a union (although collective bargaining agreements concluded with a union apply to all employees, regardless of whether they are unionized or not), and 2/3 of the companies in France have less than 10 employees.
One of the most important provisions of the 2017 Labor Law Reform relates to the simplification of employee representation: It replaces all previous employee representative bodies (i.e. works council – “comité d’entreprise”, staff delegates – “délégués du personnel”, health and safety committee – “comité d’hygiène, de sécurité et des conditions de travail) by one single body for all companies with at least eleven employees.
This new employee representative body, known as the “economic and social committee” (“comité social et économique”), had to be implemented in all concerned companies by December 31, 2019 at the latest. As it was already the case before 2017, the members of this employee representative bodies are employees of the company elected by their peers. Belonging to a trade union is not mandatory to be candidate.
In companies of less than 50 employees, the economic and social committee has a general role in the promotion of health and safety, in presenting individual claims (notably relating to the application of the Labor Code), etc. In companies of 50 or more employees, the economic and social committee has an additional role: It must be informed and/or consulted on many issues, notably concerning the organization, management, and general operation of the company; as well as on issues concerning capital, assets and/or employment structure; etc.
The social and economic committee does not hold any veto right, but its role in any project of the company should not be disregarded, as the law provides that its consultation process (which typically lasts from 1 to 3 months) must be completed before any decision being made and any project is implemented.
Individual Termination of Employment
The 2017 Labor Law Reform also aimed at securing the labor relation between the employer and the employee. Notably, assessing that the uncertain nature of their financial exposure in case of litigation following the dismissal of an employee could hinder some employers from hiring, the government introduced a cap for the indemnification of unfair dismissals (the “Macron Scale” – “Barème Macron”), which is based on the length of service of the dismissed employee and the overall headcount of the company. This cap does not, however, cover specific prejudices, nor cases where the dismissal would be deemed null and void (notably in case of moral harassment or discrimination) instead of merely “unfair”.
A side effect of the Macron scale is that claims on a moral harassment or on a discrimination are increasing over the past years.
Moreover, the 2017 Reform simplified the requirements for motivation of a dismissal letter: A template form was issued, and a specific procedure was introduced that enables the employer to provide precision of the grounds of dismissal after notification of the dismissal letter. The statute of limitation applicable to challenge a dismissal on personal grounds was also lowered to one year (except for claims related to the execution of the employment contract or to specific situations such as discrimination or violation of the protective statute for pregnant women).
As with dismissals on personal grounds, the 2017 Labor Law Reform aims at bringing more security to economic dismissals. Before the reform, the economic grounds for a dismissal had indeed to be assessed at the level of the business sector of the whole group to which a company belonged –in other words, economic difficulties could have to be proven on a worldwide scale in order to justify an economic dismissal in a French subsidiary!
Since 2017, on the contrary, the economic situation of a group should be considered only at the French national level in order to justify an economic dismissal. Likewise, potential internal redeployment opportunities within the group for the employees dismissed on an economic ground must now only be offered in France (although it remains common for companies to voluntarily offer redeployment positions abroad).
Collective Mutual Termination Process
The 2017 Labor Law Reform also created a new scheme, called “collective mutual termination” (“rupture conventionnelle collective”), which enables an employer, through the conclusion of a company-wide agreement with the relevant employee representatives (it could not be implemented unilaterally by the employer), and under the control of the Labor Administration, to organize the voluntary departures of as many employees as it wishes. Contrary to classic workforce reduction / collective redundancy schemes, a collective mutual termination procedure does not necessitate to justify the existence of any economic difficulties (although the existence of such difficulties could help the discussions with the employee representatives and the Administration). In this scheme, the risk of individual litigation from employees is limited. However, the reorganization may only be implemented through voluntary departures which will not provide any guarantee on the target organization.
The Status of Platform Workers
A recent parliamentary report estimates that, as of January 2021, at least 200;000 persons work as independent contractors for digital platforms (in particular in the ride-hailing and food delivery sectors) in France. The status of these workers, who are not hired under an employment contract and do not per se benefit from the protection associated with “classic” employee status (notably social security, paid leave, unemployment insurance, etc.), has given rise to many debates in France in the last few years.
A Law on “mobility orientations” dated December 24, 2019 provides only for limited guarantees for these workers, by allowing the platforms to establish a charter determining the conditions and modalities for exercising its social responsibility, which should define the platform’s rights and obligations as well as those of the independent contractors with whom it works.
In parallel, there is an increase in litigation related to the nature of the relationship between these “independent contractors” and companies using digital platforms and apps to connect customers and workers. In 2018, the French Supreme Court (“Cour de cassation”) ruled for the first time that an independent worker from a home meal delivery platform had in fact the status of an employee. In 2020, the same Court requalified the relationship between an independent driver and Uber as an employment contract, as it considered that the driver’s independent status was fictitious. Yet, the legal debate continues, as platforms keep on demonstrating that they are mere intermediates between independent workers and customers, and that these workers are in no way in a subordination relationship with the platforms.
More recently, the French government issued, in April 2021, an ordinance providing for the professional election of representatives for the drivers and delivery-men in the Spring 2022, with a clear intention to encourage social dialogue between the platforms and the independent workers. According to the Minister of Labor, such dialogue “will ensure a better balance of commercial relations between the different actors and the implementation of working conditions and remuneration adapted to the situation of the workers”. Whether such discussions, and potential negotiations, will have a real impact on the status of independent platform workers will certainly be one of the key question of the upcoming years.
On its side, the French Senate launched this Summer 2021 a fact-finding mission on the impact of “uberization” and digital platforms on jobs and employment. This mission’s report has been presented at the end of September and provides several recommendations on the following areas: improving working conditions, promoting social dialogue, monitoring algorithmic management and ensuring the transparency, clarification and adjustment of platform algorithms.
The Impact of Covid-19
Although recourse to remote working was secured and facilitated by the 2017 Labor Law Reform, it is the Covid-19 pandemic and the successive lockdowns that really lead to the generalization of such working organization. As of today, although lockdown in France officially ended on June 30, 2021, some companies still encourage their employees to work from home, one or a few days a week, where possible. Specialists now wonder if this is merely a temporary trend, or if remote work will become a common benefit for most French employees in the future.
From a strict legal point of view, remote work can be implemented through various means: collective agreement, unilateral decision of the employer (potentially implemented after consultation of the economic and social committee), or specific individual agreement with the employee.
Prior to the Covid-19 pandemic, a specific “furlough scheme” already existed and allowed employers to maintain their operation at a reduced scale, in case of major drop in activity. Under such scheme, an employer can, under control of the Labor Administration, reduce the working hours of employees and/or close down part of the company. In these circumstances, the loss of income suffered by employees as a result of their hours not worked is partially compensated by the employer through the payment of an allowance for each hour not worked (at least 70% of their gross hourly pay). The employer then receives a lump-sum compensation allowance from the State. Within the context of the Covid-19 specific measures, this furlough scheme can be implemented for a period of up to twelve months (instead of six months).
In order to help companies facing a lasting reduction of their activity, and avoid collective redundancies in the context of the pandemic, the French government also introduced in June 2020 a new furlough mechanism, named “APLD” (for “Activité Partielle Longue Durée” – long-term partial activity). This mechanism enables an employer to reduce the working hours of its employees by up to 40% of the legal working time (i.e. 40% of 35 hours a week: 21 hours). Meanwhile, as from July 2021, the employees must receive a remuneration at least equal to 60% of their gross hourly pay for each hour not worked, and the employer receives as corresponding compensation a State allowance equal to a percentage of the gross hourly pay of the concerned employees. This mechanism can be implemented for up to 36 months, under the control of the Labor Administration, by way of collective bargaining agreement negotiated with the relevant employee representatives, or by way of unilateral decision, on the condition that an industry-wide collective agreement already provides an APLD framework.
According to the French Labor Ministry, c. 500,000 employees were subject to furlough in August 2021 (i.e. 2,4% of the employees of the private sector), against c. 2.2 million in May 2021 (i.e. a decrease of almost 80%, which can be explained by the end of lockdown and the reopening of many shops, restaurants, and other public spaces, as well as a diminution of the State allowance for companies of certain sectors).
As per a new law passed in August 2021, certain employees, notably health professionals and employees working in places where a health pass is mandatory (e.g. restaurants, cultural establishments, trains, malls, etc.) must present a valid health pass (i.e. a Covid-19 vaccination certificate, a negative RT-PCR/antigenic test, or a recovery certificate) or, in some cases, are even subject to a Covid-19 vaccination obligation, to be authorized to work.
If an employee subject to such obligation cannot show the necessary proof to his employer, his employment contract will in principle be suspended, and he will not be paid, until he can show the relevant certificate. The use of paid leave by the employee or, if possible, his affectation to a position where a health pass is not necessary, is also possible in order to avoid such suspension of the employment contract. In any case, any dismissal on such grounds remains prohibited. The issue of the validity of the suspension of the employment contract in this context is currently pending in front of various French courts.
In all other professions that are not subject to mandatory vaccination or health pass, a lack of pass or a refusal to vaccinate cannot justify a suspension of the employment contract, nor a sanction. In this situation, an employer cannot impose vaccination on his employees nor force them to carry out a RT-PCR test in order to work on site.
Perspectives for 2022 and beyond
In addition to these evolutions, new major reforms are already being prepared for the upcoming months, in particular concerning pension systems, as President Macron has announced that discussions in this respect may be re-open by the end of the year. In the context of the upcoming 2022 presidential elections, such major and controversial reforms could even become a way for the current President to launch his potential re-election campaign especially in a context of an embellishment of the employment sector…
It is therefore essential to remain informed of these new and changing texts, in order to benefit from all opportunities that the French workforce and market may offer.