By Roselyn Sands, Ernst & Young Société d'Avocats
The French government is currently reviewing a draft bill that will have important consequences for numerous aspects of labor and employment law in France. The draft bill for “new freedoms and safeguards for companies and workers”, which contains over 50 articles on dozens of different subjects, still has to follow the usual French legislative process.
Hardly had the draft bill been published than it raised comments from the ranks of politicians of all sides, labor and employer unions and legal professionals alike. The draft will be the subject of vivid debates before the French legislature which are likely to be lengthy and agitated. As a matter of reference, the bill for economic growth (the “Macron” law) which also brought modifications to sensible areas of French labor and employment law, such as economic redundancies, was discussed for over 200 hours.
In the preamble, the draft bill (the “El Khomri” bill based on the name of the Minister for Labor who submitted it) states that its purpose is to follow through with the spirit of the reforms that have been implemented by the French government over the past 4 years in matters relating to labor and employment law. The preamble also insists on the fact that its goal is to strengthen the power of collective bargaining.
Measures to define the general principles of French employment law
Article 1 of the draft bill provides that a preamble will be introduced in the French Labor Code which will contain the 61 basic principles of employment law in France. These basic principles provide guidance on a variety of subjects, such as the rights and freedoms of employees, remuneration, working time and paid holidays.
The 61 basic principles will not supersede any of the articles contained in the French Labor Code, but will act as guides for those who must interpret the rules provided by the French Labor Code. For instance, article 38 of the preamble simply states that “all employees are entitled, each year, to paid holidays with a minimum set by law”; thus, the purpose of the article is to state that paid holidays are a basic employee right, without establishing what amount should be guaranteed and thus leaving future governments, or even perhaps the employer, to determine what amount should be given.
Measures to strengthen collective bargaining
Regarding collective bargaining, the draft bill’s preamble notes that France is “a country where relations between employees, their representatives and their employer are still often marked by distrust, which causes prejudice to its image with regards to foreign stakeholders”.
In order to remedy this issue, the draft bill provides for new rules regarding company-wide collective bargaining agreements (CBA). Such agreements can now be passed by means of employee referendum, whereas previously only unions were entitled to negotiate these agreements.
In addition, majority unions, who have obtained more than 50% of votes during the previous Works Council elections, no longer have the right to veto negotiations on a company-wide CBA. The draft bill provides that, on the contrary, unions who obtained at least 30% of votes during the previous Works Council elections can request that a referendum be held if the majority unions refuse to sign a company-wide CBA.
In addition, all collectively bargained company-wide CBAs, unless stated otherwise in the agreement, will be for a duration of 5 years, and will be published on an online database, unless they contain information prejudicial to the employer.
Measures to increase flexibility for employers and security for employees: working time
The draft bill includes a series of measures impacting working time. These measures aim to increase employer flexibility and freedom in organizing the company, while safeguarding employee rights, in particular with regards to work life balance and health and safety at work.
The manner in which the section on working time has been drafted is innovative, given that each subject contains 3 subsections. A first subsection on the principle which is of public policy and can never be differed from; a second subsection on the subjects which can be collectively bargained; a third subsection on the rules which apply if negotiations fail or do not take place.
For example, regarding working time and overtime, in its first subsection the draft bill states that as a matter of principle a working week in France remains 35 hours and employees can perform overtime within the limit of a yearly ceiling and for compensation of an increased hourly rate. In its second subsection, the draft law provides that the yearly ceiling as well as the amount of the rate increase can be negotiated in a company-wide CBA (the increase which must remain above 10%). In its third subsection on this subject, the draft bill states that if no agreement is reached, the minimum increase for overtime must be 25%.
The draft bill contains numerous measures on working time, which include night work, part time work, weekly and daily rest periods as well as fixed number of days working agreements (“forfait jour”). These agreements, which are reserved for managerial employees and state that they are to work a fixed number of days and not hours per year, must now ensure that the employees’ workload is properly supervised and that employees are entitled to be “disconnected” from their work.
Measures to render termination costs more predictable
Some in France believe that a cause of unemployment is the risks for employers associated with employee termination. The draft bill contains several measures which aim to favor and encourage employment in France by easing the difficulties in dismissals. These measures either reduce the cost and risk tied to redundancies or provide additional flexibility for employers in the way they manage their workforce.
The uncertainty of the costs of a potential challenge in wrongful dismissal litigation (“licenciement sans cause réelle et sérieuse”) is considered as being a reason for which foreign stakeholders sometimes shy away from investing in France. French labor judges will now be bound by a defined scale with respect to the range of damages to be awarded to employees in wrongful dismissal litigation. The draft bill proposes that the amount of damages will depend on the employee’s length of service, with a maximum amount of 15 months’ salary for employees with more than 20 years of seniority.
The draft bill proposes that a new justification for economic redundancies be introduced in the French Labor Code. Companies facing economic difficulties, measured by a reduction in orders or a reduction in turnover compared to the same period of the previous year, or measured by an operating loss over the previous months, or measured by a considerable decline in the company’s reserves, or any other worrying economic element which might justify such difficulties. In addition, the period which must be taken into consideration can be defined in a company-wide agreement.
Lastly, the draft bill provides that when faced with job-threatening difficulties the employees’ working conditions, including remuneration, can be modified through collective bargaining.
This draft bill is far from being voted into law as legislative debates will follow. It does demonstrate that even the socialist government is willing to propose laws across the political spectrum to render French labor and employment laws more flexible.