Thursday, March 5, 2015

France - The French proposed "Macron law" for economic growth: a summary of key changes affecting employment

Roselyn S. Sands
EY Société d’Avocats
Paris, France

The bill for economic growth (the “Macron” law) was submitted by the French government to the Parliament on January 22, 2014. The plethora of subjects covered by the bill, as well as the controversy throughout over 200 hours of debate, makes the passage of this bill difficult. Indeed, to try to save the threatened bill the Prime Minister Valls made use of article 49-3 of the French Constitution to bypass the Assemblée Nationale and submit the vote directly to the Senate for the first reading; the no-confidence motion failed on February 19, 2015.

The bill treats a multitude of subjects which aim to strengthen the French economy and increase its competitiveness. Specifically, in the area of human resources, the bill contains a series of measures which would have an impact on companies established in France.

The Macron law is about re-boosting France’s economy: increasing consumption and decreasing unemployment.

Measures aimed to increase flexibility

There are two key areas in which the Macron law seeks to increase flexibility: 1) working time matters; 2) downsizing matters.

• Certain businesses would open 7/7 and stay open later
To encourage increased consumption and employment, the new bill will allow certain businesses to open 12 Sundays per year (7 more than the current 5). Employees will be protected as Sunday work will be voluntary and a collective agreement must set increased remuneration for Sunday work.

The bill also relaxes the definition of night work in certain areas, and thus facilitates the ability of employers to open businesses from 7 a.m. to midnight. This expanded work day should encourage employers to hire new employees instead of simply resorting to the use of overtime work by existing employees, thus reducing unemployment. Employees will be protected in that night work will be voluntary and paid double.

• Simplification of certain downsizing rules
The LSE law voted in June of 2013 has already created greater control over the downsizing process and timeline, adding certainty which had been greatly lacking in the process.

The bill corrects one of the remaining difficulties of the redundancy rules in France, i.e. the extra-territorial “reclassement” obligation, requiring employers to find jobs for redundant employees even outside of France. The proposed bill would strongly limit the extra-territorial scope of this obligation.

Moreover, the employee selection criteria used to determine impacted employees would be easier to manage in that instead of a country-wide analysis, a site by site analysis would be possible.

Measures related to tax optimized compensation

The bill also provides a series of measures which would encourage the delivery of compensation through tax efficient pension and profit-sharing schemes, by offering more optimized tax and social security treatment.

In addition, the bill intends to modify the tax rules governing certain employee equity grants which could lead to more favorable tax treatments.

Measures to accelerate employment dispute resolution

The bill seeks to correct existing deficiencies with respect to employment litigation: the process is too slow and damage awards are unpredictable. Three specific proposed changes can be highlighted.

First, the bill provides for enhanced opportunities for parties in a dispute to resolve their differences through alternative dispute resolution proceedings, such as mediation, in lieu of the labor courts.

Second, French labor judges will now be encouraged to use a defined scale with respect to the range of damages to be awarded to employees in wrongful dismissal litigation (“licenciement sans cause réelle et sérieuse”).

Third, under the new bill, either party may request that the litigation follow two alternative and potentially accelerated routes.

Measures related to employee representation

The Macron law includes several measures which would impact the relationship between employers and employee representatives in France. The new measures seek to render sanctions for non-compliance more efficient by increasing the amounts of the fines, yet removing prison sentences.

In addition, the original bill aimed to render compliance with employee representation regulation easier and more efficient by creating a unique body (“Conseil d’entreprise”) which would replace the existing Works Council and the Health and Safety Committee. The government has decided to tackle this subject in a separate bill later this year.


In conclusion, the bill touches a wide gamut of issues beyond the employment related matters highlighted in this update. If the bill passes, it could result in an improved competitive position for France, and thus attract greater foreign investment.