Monday, June 5, 2017

France - The Anticipated Labor & Employment Reforms of the New French President

By Roselyn Sands, EY Société d’Avocats

Emmanuel Macron was elected President of the French Republic on May 7, 2017.
His first order of business is reforming French labor & employment laws.

He seeks to trim the Labor Code by taking out hurdles that help no one while protecting employee rights. This requires, in part, moving from a one-size-fits-all legislative architecture to a customized approach by strengthening collective bargaining within companies.
Below are some of the key features of Mr. Macron’s reform:

A new manner of achieving flexibility

The new President wants to ensure that decision are taken “on the ground” through company-wide collective agreements which would prevail over industry-wide collective agreements, or by employee referendum. Industry-wide sectors would be reduced from 100 to 50. Yet, fundamental safeguards would remain in the Labor Code.

Simplification of a Staff representative bodies and strengthening of their role
President Macron seeks the implementation of a single body which would replace the personal delegates, the works council and the Health and Safety committee, in all companies and groups regardless of headcount threshold.

By exception, a company could negotiate an agreement with the unions whereby bodies would remain separated.

Staff representatives would have access to training notably on labor law, and specific tasks on company management. The government would also encourage union involvement and employees presence at the Board of companies so that their involvement can be more useful and pragmatic.

Predictability of Labor Court judgements

In case of litigation, President Macron would like the law to cap damages for wrongful termination. This would allow companies to better anticipate costs and risks of employee litigation.

This rule would not be applicable to dismissals based on discrimination or harassment.
All judgements would be immediately enforceable even pending appeal, subject to some exceptions, in order to prevent delaying tactics.

Tax-free incentive in particular tax free overtime compensation

President Macron would like to reinstate tax free treatment for overtime work to encourage employees to work more: a deduction of 0.50€ per hour on employer contribution for company with less than 20 employees; and full tax exemption of employee contribution on overtime.
Increased purchasing power for employees
President Macron would also like to remove employee contributions for health and unemployment insurance. This measure would be financed by an increase of the generalized CSG contribution of 1.7 point (contribution not only paid by employees). Employer contributions to social security would also be reduced.

Unemployment insurance for everyone

In order to encourage persons to take risks, change careers, try new ones, President Macron would like to make unemployment protection available to everyone, even those that resign.
Employees would have the possibility to benefit from unemployment allowance in case of resignation, once every five years.

Training employees and unemployed

Training will be reinforced by the conversion of employer training contributions to individual training rights for all workers.

Unemployed people would have access to additional training measures but could lose unemployment protection if 2 “decent” job offers are refused or insufficient efforts to search for work.

Maternity leave for all women who work

President Macron would like to create a universal maternity leave for all women whatever their status (employee, independent worker, non-employee…) to further create equality between men and women who work.

Improve access to the independent worker status (gig economy)

President Macron wants to improve independent worker status by removing heavy barriers notably by substantial decrease of their social security contributions and tax, in particular for small businesses that are struggling to survive.

Fighting against social dumping

President Macron would like France to influence Europe by the way of harmonization and creation of a European labor law common base notably by creating minimum standards on training, health and safety, unemployment insurance and minimum wage. Posting of workers in France would be limited to 1 year and European posting of workers rules would be redefined.

It will be interesting to see if these proposed reforms actually become legislation and how that might influence the French economy.