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France

February 05, 2024

By Paul Hastings Professional

Back to International Employment Law

France

KEY DEVELOPMENTS FOR 2024

Major pension reforms

The Pension Reform Act (the “Act”) was passed in April 2023 and contains three major changes:

The legal retirement age will be raised by three months per year in order to reach 64 (from 62) in 2030. Meanwhile, the minimum contribution period required to qualify for a full-rate pension is increasing from 41 to 43 years in 2027. For those who would not have been able to contribute for 43 years, the full retirement age will remain at 67. A long-career pension scheme has also been implemented.
The Act has increased the minimum monthly pension to €1,200 gross per month (equivalent to 85% of the French net minimum wage) for a full career with full-time contribution period. Part-time or interrupted careers are excluded from this minimum. According to the Ministry of Labour, between 10,000 and 20,000 new pensioners each year as of 1 September 2023 may benefit from this measure.
The Act abolishes the main special pension schemes for employees recruited from 1 September 2023. The schemes concerned are, inter alia, those for employees in the electricity and gas industries (“IEG”), the Paris transport authority (“RATP”), notary clerks and employees, and employees of the Banque de France. New joiners in these business branches or companies will be connected to the general pension scheme, while current employees will remain affiliated with their special scheme due to a grandfather clause. Other special pension schemes (e.g. seafarers, the Paris Opera, the Comédie Française), autonomous schemes for the liberal professions (such as solicitors) and agricultural schemes will not be reformed.

Small companies and profit-sharing schemes

In November 2023, the French Parliament adopted an act on profit-sharing agreements. Companies with fewer than 50 employees can now set up a mandatory profit-sharing agreement with a calculation formula less favourable for employees, compared to the legal formula applicable to companies employing at least 50 employees. To clarify, only companies with at least 50 employees for five consecutive years are required to set up a mandatory profit-sharing scheme.

In order to encourage companies with fewer than 50 employees to set up mandatory profit-sharing schemes, the Value Sharing Act now allows them to enter into a mandatory profit-sharing agreement with a less favourable calculation formula. Once these companies have exceeded the 50-employee threshold for five years in a row, they will have to adapt their calculation formula to make it at least as favourable as the legal formula for employees.

Until the passage of the Value Sharing Act, companies employing between 11 and 50 employees have been excluded from the obligation to set up a mandatory profit-sharing scheme. However, this is no longer in effect: as of 1 January 2025, companies with between 11 and 50 employees, whose net profit for tax purposes equals to at least 1% of their turnover for three consecutive financial years will be required to implement a value-sharing scheme. This value-sharing scheme may take the form of (i) a mandatory profit-sharing scheme; (ii) a voluntary profit-sharing scheme; (iii) an employee savings plan (e.g., Pereco); or (iv) a value-sharing bonus (known as a "PPV").

Employees’ freedom of speech at work

In France, employees benefit from a high degree of freedom of speech at work. As a result, only an abuse of this freedom can be used against them and potentially lead to dismissal for misconduct. French case law considers that the abuse of freedom of speech is characterized as "abusive, excessive or defamatory" language. In a ruling in late 2023, the Social Chamber of the French Supreme Court reinforced this freedom of speech. On the facts of the case, an employee was dismissed for: (i) having expressed persistent disagreement despite the company bargaining agreement on vacations and the employer's numerous clear explanations in this regard; (ii) deliberately refusing to accord with the organization by claiming the right to take vacations that were not provided in the company’s bargaining agreement; (iii) having expressed various threats to the company’s legal representative regarding paid vacation; and (iv) using an aggressive tone in several emails sent to the company’s hierarchy. In declaring the dismissal null and void, the Supreme Court held that the employer had failed to demonstrate how the statements made by the employee contained abusive, excessive or defamatory language. Therefore, when considering the dismissal of an employee for abusing his or her freedom of speech, the employer must be vigilant to ensure that the language used is itself excessive, abusive or defamatory.

KEY DEVELOPMENTS FOR 2023

French economy

During the COVID-19 pandemic, French companies benefited from supportive financial policies conducted by the French government. This allowed to limit the number of companies in bankruptcy and the employees to be made redundant in 2020 and 2021. Such policies ended in 2022. But France’s economic situation held up well in 2022. However, like other European countries, France is facing a risk of recession or at least of stagflation for 2023 associated with a ‘cost of living crisis’ as a result of high inflation.

Economists are expecting a significant increase of companies entering into insolvency proceedings or more generally forced to reduce their headcounts in 2023. Despite such difficulties, employers should also expect increasing requests from employees and unions to increase wages in accordance with the curve of inflation.

Reform of the unemployment benefit system

The French unemployment system is known to be one of the most favorable for employees in the world in terms of duration (up to 24 or even 36 months in specific cases) and level of compensation. French employers operating in many business sectors have been facing difficulties to recruit candidates since the end of the COVID-19 crisis, while the French unemployment rate remains around 7% (v. 3% in Germany or 3.6% in the U.K.). The French Parliament passed the “full employment” Act on 17 November 2002. This Act tends, amongst other things, to make the French unemployment system more flexible and tighten the conditions:

Firstly, the incentive modulation of the duration of unemployment compensation depending on the tensions on the employment market. If this market is « tensed » (more vacant job offers), i.e. the unemployment rate is below 9% or if it has not increased by at least 0.8% over one quarter, the duration of unemployment compensation will be decreased by 25% with an incompressible compensation period of six months. To the contrary, if the unemployment rate is above 9% or increased by 0.8% over one quarter, the previous compensation duration will apply. Subject to the guidelines to be provided by the on-going decree of enforcement, the modulation system does not take into account the specificities of local or business employment markets. This reform will come into force as of 1 February 2023.

Secondly, the loss of the unemployment benefits for any job seeker who was under fixed-term or interim contract but refused twice over 12 months a job offer for a permanent contract for the same job, on the same work place and with the equivalent remuneration. These new provisions open the way for litigation on whether or not the job offers corresponded to the same job previously held by the employee.

Thirdly, the Act excludes job seekers from unemployment benefits in the event of abandonment of their previous job without legitimate reason. If the employee voluntarily leaves his or her job and did not respond to the employer’s formal notice to return to work, his or her abandonment will be considered as a simple resignation, which does not entitle him or her to the unemployment allowance.

The French Civil Supreme Court validated the “Macron scale” on the damage awards for wrongful dismissal

In 2017 the French administration implemented by way of legislative decree a new scale framing the amount of the judicial damages for wrongful dismissal (commonly known as the “Macron scale”). The Macron scale was strongly criticized, mainly by the unions but also by judges, since it was argued that the Macron scale’s limits were too low especially for employees having few years of service and does not permit a relevant compensation for the damage suffered by employees in accordance with European legislation. Many employment tribunals and courts of appeal refused to comply with the Macron scale. Others did comply with it. Given the judicial uncertainty caused by these contradictory decisions, the position of the highest French civil jurisdiction was strongly awaited. By two decisions dated 11 May 2022 the French Court of Cassation validated the Macron scale.

Assuming that the judicial debate is closed (which cannot be certain), employers must keep in mind that the enforcement of the Macron scale has triggered growing claims for damages on top of those applicable for wrongful dismissal, such as damages for vexatious dismissal conditions, inappropriate working conditions, moral harassment, or back pay for overtime.

KEY DEVELOPMENTS FOR 2022

Reform of gender equality at work

An Act dated December 24, 2021 (the “Rixain Act”) has strengthened the principle of gender equality at work for companies with 1,000 employees or more (for at least three years). Under this Act, employers are subject to new obligations:

as from March 1, 2022, companies are required to publish the gap in the representation between men and women amongst top-executive employees (cadres dirigeants) and members of the company’s management bodies;
as from March 1, 2023, such gaps will be published in the website of the Labor Ministry on a regular basis;
as from March 1, 2026, not less than 30% of men or women must be top-executive employees and members of management bodies;
as From March 1, 2029, not less than 40% of men or women must be top-executive employees and members of company’s management bodies; and
as from March 1, 2031, employers that do not comply with the abovementioned obligations could be held liable of a fine of up to 1% of the annual payroll.

Employer should begin reviewing their employment, pay and reporting processes in order to remain compliant.

Increased protection for individuals working in online platforms

Individuals working for online platforms in France benefit from the status of an independent worker. However, over the last few years, many litigious claims have been initiated by independent workers in order to obtain the recognition of employee status.

In France, decisions are taken on a case-by-case basis. French judges accept to recognize the status of employee to individuals working for/through platforms, when they are definitely subject to the power of management of the platform. By deliberation dated December 9, 2021, the Commission of the European Union suggested using five criteria in order to determine if an entity must be presumed as the employer of the platform’s workers:

worker’s remuneration set by the platform;
monitoring of the worker’s performance by the platform;
absence of possibility for the workers to choose their working time or the tasks assigned to them;
obligation to wear a uniform; and
prohibition of working for another company.

If at least two of the five abovementioned criteria are met, the platform would be presumed to be the employer and would have to apply the protective rules applicable to employees (for example, minimum remuneration, working time limitations, unemployment insurance, retirement scheme, etc.).

Note that this project of the Commission of the European Union must still be approved by the Member States. The future of this topic is also likely to change following the outcome of the presidential elections in France so employers should continue to monitor the developments in this area.

Reform of the retirement system

In 2020, a significant reform of the French retirement system had been discussed before the Parliament and then suspended because of the COVID-19 crisis. The main aim of such reform, which gave raise to many criticisms, was to harmonize the many existing retirement schemes in France.

In the context of the presidential elections in France, many candidates already indicated that they would modify this project of reform. It can be anticipated that this new system will not lead to a unique retirement regime. However, the reform could entail pushing back the retirement age by three years to 65 years (as is the case in many European countries).

KEY DEVELOPMENTS FOR 2021

Recent decision restricting the definition of joint-employment

Companies belonging to the same group must coordinate their business activities and policies, to the extent that subsidiaries may be placed under the subordination of the parent company and lose some autonomy when acting as an economic player but also as an employer.

Pursuant to French law, "joint-employment" is defined as the situation where the relationship between two or more employers is so deep and integrated that those companies should be considered as one sole company with respect to their respective employees. Unlike a standard employer-employee relationship, in which a unique employer (for instance, a subsidiary which financial means are limited) bears the financial responsibility for its employees, these responsibilities are jointly borne by the subsidiary and the parent company in a situation of joint-employment.

French case law used to consider that there was a situation of joint-employment between two companies in case of confusion of (i) interests, (ii) activities, and (iii) management. In 2016, the French Supreme Court specified that joint-employment would be recognized only when a significant loss of autonomy of the subsidiary could be evidenced, for instance when the hiring process was conducted by the parent company (French Supreme Court, Labour section, 6 July 2016, n°14-27.266).

In a decision dated 25 November 2020 (n°18-13.769), the French Supreme Court went even further by stopping the use of the three abovementioned criteria to define joint-employment. According to the Court, the criterion to be taken into account to determine the existence of a joint-employment is the total loss of autonomy of the subsidiary. In this case, the Court of Appeal of Caen had recognized a situation of joint-employment between a subsidiary and its parent company due to the fact that the human resources were directly managed by the parent company and that strategic and commercial decisions were taken by the parent company. The Supreme Court held a more stringent position by considering that joint-employment involves a permanent interfering of the parent company with all aspects of the management of its subsidiary. Otherwise, the latter does not totally lose its autonomy (French Supreme Court, Labour section, 25 November 2020, n°18.13.769).

That more stringent definition of joint-employment should limit the legal risk exposure of a foreign parent company with respect to the workforce of their French subsidiaries, especially in the event of reorganization and collective dismissal.

Recent decision concerning the transfer of criminal liability relating to acts committed by an absorbed company

Pursuant to French legislation and the French criminal code in particular (article 121-1 according to which "none are held criminally liable for any but their own doing"), in case of a merger of two companies, the merging company could not be condemned for criminal acts committed by the absorbed company (i.e., a third party) before such merger.

However, in a recent decision rendered on 25 November 2020 (n°18-86.955), the French Supreme Court modified its position in this regard by stating that the merging company can be criminally sentenced to pay a fine for criminal offences committed by the merged company before the merger. The Court explained that the economic and operational continuity of the corporate body involves that the merged company should not be considered different from the merging company. It is worth noting that this French case law is in line with the case law of the Court of Justice of the UE (CJUE, 5 March 2015, C-343/13, Modelo Continente Hipermercados SA v. Autoridade para as Condiçoes de Trabalho) and the Europezan Coiurt of Human Rights (ECHR, 5th section, 1 October 2019, n° 37858/14, D. 2020. 475)).

Absence of any protection for an employee alleging discrimination in bad faith

Pursuant to French law (article L. 1132-2 of the French labour code), any employee denouncing facts of discrimination cannot be sanctioned, in order to avoid any possibility of retaliation by the employer against his employee.

With this in mind, the query arose as to what the options are of an employer facing the situation where an employee wishing to be protected against potential dismissal, claims knowingly and in bad faith that discriminative acts would have been committed against him or other employees of the company. Pursuant to French case law, it is clear that the bad faith of the employee cannot be deduced from the mere fact that the discrimination could not be proved.

In a recent case, an employee sued its employer pretending that he was discriminated by the employer due to his ethnical affiliation. Concomitantly, the employee seized a specific French body ("Défenseur des Droits") who is specifically in charge to check whether discriminative acts were committed. Such body decided to close the case with no further action.

The employee was then dismissed for serious misconduct, for proclaiming constantly that he was discriminated by his employer. He therefore challenged the validity of his dismissal.

The French Supreme Court recalled that an employee denouncing discrimination acts could not be sanctioned, unless his bad faith can be proved. In the present case, the Court pointed out that: (i) the employee never complained about any discrimination during the working relationship, (ii) he tried but failed to obtain, between two contracts, the payment of a significant financial package, and (iii) the alleged facts of discrimination were very evasive and not detailed. The Court considered that these three circumstances were sufficient to prove the bad faith of the employee and ruled that his dismissal was valid.

COVID-19 related measures

Covid-19

COVID-19 will still be a crucial issue in the coming year. Some investigations to check whether the company that received public subsidies met all the required criteria will be intensified over the next months. If it is proven that the situation of the company was not sufficient to benefit from the public subsidies (in particular, partial unemployment allowance), such company may have to reimburse such amounts and to pay penalties depending on the circumstances.

Reform of the retirement system

In 2019, a significant reform of the French retirement system had been adopted by the Parliament. The main aim of such reform, which gave raise to many criticisms in the public sector, was mainly to harmonize the many existing retirement schemes in France.

Due to the COVID-19 crisis, the Government decided to postpone the application of this controversial reform to 2021. However, the discussions did not really start and we cannot totally exclude that this reform will be postponed once again or even merely withdrawn in the next weeks/months.

Reform of the unemployment insurance

Adopted in July 2019, the objective of this reform about unemployment insurance was to save around 1.1 and 1.3 billion Euros per year in hardening the rules of indemnification.

For the same reasons than for the retirement, the French Government temporarily postponed the application of the unemployment insurance scheme.

The Government indicated to the trade unions that new discussions would occur in Autumn 2021 concerning this reform in order to adapt it to the current situation.

KEY DEVELOPMENTS FOR 2020

Recent decision concerning the status of Uber drivers

In France, the vast majority of Uber drivers are independent contractors (auto-entrepreneurs) and do not benefit from the French status of employee (and the corresponding protective rules that come with employee status).

In order to avoid a significant difference of treatment between certain categories of employees and Uber drivers, the French Government forced Uber (and the companies employing drivers according to the same business model) to provide the drivers with a minimum level of protection (e.g., insurance against work related accident) in 2016.

In spite of these measures, a former driver sued Uber in order to recognize that he should have been considered as an Uber employee rather than a mere independent contractor. The arguments put forward by the driver highlighted that he was fully subject to the decision making of Uber, including a prohibition to have his own clientele, prohibition to fix the prices, possibility to be sanctioned by Uber in case of wrong itinerary, etc.

The French Supreme Court confirmed the decision rendered by the Court of Appeal of Paris in 2019 and considered that the relationship between the claimant and Uber must be requalified into an indefinite-term employment agreement.

As a result of this decision, and given that the so-called independent contractor relationship had been terminated before this judgment, the claimant benefited from a severance package and an indemnity in lieu of notice.

Even if this decision does not prevail as being an automatic requalification into a permanent employment agreement for any Uber driver (as such requalification is rendered on a case-by-case basis), we believe that this may affect Uber's global business model (and other companies with similar business models), at least in France.

In addition, this decision may result in a reaction from the French Agency for the Recollection of Social Contributions (URSSAF). It may be keen to seek reimbursement of all the social contributions that have not been paid by Uber in France over the past three years. This would strongly affect the financial performance of the company and may even lead to Uber's French activities shutting down.

The best solution to help create some certainty in respect of employment status may be to establish a new and intermediary type of contract. Even though this contract would be less protective than a full and standard indefinite-term employment agreement, it would be more protective than the current independent contractor status.

Reform of the unemployment insurance system

Two new decrees have been promulgated to reshape certain regulations applicable to the French unemployment insurance system.

The main objectives of this reform consist of (i) fighting against the abusive recourse to short-term contracts (which represent 77% of total recruitments in France), and (ii) increasing the attractiveness of working compared to unemployment benefits (which are relatively high in France compared to other countries), in particular, by decreasing unemployment benefits for executive-level employees.

measures against the abusive recourse to short-term employment contracts
Pursuant to this reform, only seven business lines using a high number of short-term employment contracts (agri-food industry, transportation, water purification industry, etc.) will be the first subject to a new 'bonus-penalty' system. Over a second phase, this system will be applicable to all companies registered in France. According to this system, the more a company uses short-term employment contracts, the more social contributions will increase (and vice versa).
implementation of new regulations that encourage any unemployed person to find a new job rather than remain unemployed
In order to support employment, the Government has established new rules enabling the French unemployment agency to progressively decrease the benefits payable to executive-level employees.

Confirmation of the validity of the Macron scale

A scale setting the minimum and maximum compensation amounts to be paid to French employees for unfair dismissal (depending on their years of service) was published in 2017. The aim of this scale (i.e., the Macron scale) was to enable the employer to have a better view of the costs attached to dismissals in France.

Pursuant to the Macron scale, employment judges cannot, in principle, exceed the maximum compensation amount fixed in such scale in the event of an unfair dismissal. However, several employment tribunals challenged the validity of the Macron scale and awarded compensation to certain employees which exceeded the maximum awards set out in the scale. The judges did so on the basis that the scale did not provide the employees with fair compensation in light of the harm suffered.

Consequently, there was an intense debate concerning the applicability of the Macron scale. This debate was settled by two recent decisions rendered by the French Supreme Court and the Court of Appeal of Paris. It was confirmed that the Macron scale was lawful and enabled a 'proper compensation' of the harm suffered by employees.

KEY DEVELOPMENTS FOR 2019

New assessment tool to assess gender equality

Pursuant to the new Act (loi “Avenir Professionnel”, n°182/2018, dated 8 September 2018), a new assessment tool will be implemented with effect from 2019 to assess whether companies are complying with gender equality. This assessment grid will be based on 5 criterions with a possible total score of 100 points. The 5 criterions are as follows: (i) remuneration gap between women and men in the company concerned, (ii) chance for a woman to obtain a rise of remuneration, (iii) chance for a woman to be promoted, (iv) percentage of pay rise following a maternity leave and (v) number of women amongst the top ten remunerations.

If a company scores less than 75 points, it will have a three-year period to reach the threshold of 75 points (although the results must be published on the company's website each year). If it fails to score 75 points after the three-year period, the company will have to pay a fine that may amount up to 1% of the global wage bill.
This Act will come into force on 1 March 2019 and will initially apply to companies employing at least 1,001 employees. Companies employing between 251 and 1,000 employees will be subject to the same obligations, but will benefit from a transitional period until 1 September 2019. Companies employing between 50 and 250 employees will be subject to these new obligations from 1 March 2020.

Merger of complementary pension schemes

Over the last decade, all private sector employees were subject to a first complementary pension scheme (“Arrco”), while executives also benefited from a second complementary pension scheme (“Agirc”) and were entitled to higher pension allowances than those granted to non-executives. As of 1 January 2019, the complementary pension system for all private sector employees has been simplified as a result of the merger of Agirc and Arrco into a single pension scheme. Each employee, regardless of his/her status, will now benefit more from a harmonized complementary pension program.

his reform is the first step in relation to further significant reforms regarding the merger of all 42 French pension schemes.

Future key reform: prospective merger of all French pension schemes

In 2019, the French government intends to unify all 42 pension schemes currently in force in the private and public sectors. The rules and conditions applicable to the 42 schemes are very different from each other. For example, pension allowances granted to civil servants are based on remuneration granted over the last 6 months before retirement, while the reference period applicable to employees in the private sector corresponds to the last 25 years before retirement.

The proposed reform is expected to raise many discussions between the Government, unions and employers’ associations and Parliament. Needless to say this reform will be very challenging from a political and social perspective.

KEY DEVELOPMENTS FOR 2018

Macron Ordinances

On September 23, 2017, the French government enacted 5 ordinances amending some of the key provisions of the French employment code known as the ‘Macron Ordinances’.

Statutory Damages for Unfair Dismissal

Damages granted by employment tribunals will be capped depending upon the length of service of the employee and the size of the company. The cap ranges between 0.5 and 10 months of salary in companies employing less than 11 employees, and between 1 and 20 months of salary in companies employing more than 11 employees. Judges are not bound by this damages scale in case of harassment, discrimination and/or violation of a fundamental right.

Macron Ordinances – Increase in Legal Severance Pay

Any employee with more than 8 months of service is entitled to receive as severance pay 25% of their average monthly salary for each year worked in the company (instead of 20% previously) for the first 10 years of service (and 33% for the following years of service save where there is a more favorable formula provided by an applicable business sector CBA, in which case the later formula would apply.

Changes to Criteria for Redundancy Situations for International Group Companies

When an international group is considering whether there is a legitimate redundancy scenario in France, this will no longer be by reference to economic situation of the wider international group, but will instead be by reference to the economic difficulties faced in France alone.

Creation of a New Employee Representative Body

The staff delegates, the works council and the health and safety committee will be replaced by a new employee representative body (the “Social and Economic Committee”). This new representative body will have to be implemented in any company having at least 11 employees between January 1st, 2018 and the end of 2019, and is intended to perform the duties previously carried out by any staff delegates, works council and / or health and safety committee.

Implementation of the Collective Mutual Agreed Termination Agreement

An employer must enter into a company’s collective mutually agreed termination agreement detailing the maximum number of terminations contemplated and the number of job losses. Once concluded, the agreement must be sent to the French labor administration for approval within 15 days. If the administration does not approve the proposed agreement, the employer may abandon the project or insert the modifications requested by the administration and then re send the revised agreement. Once the collective agreement is approved, affected employees are entitled to leave the company in accordance with its terms and conditions. Employees must then benefit from a termination indemnity at least equal to the severance paid in the case of dismissal, and the employee has the right to challenge the validity of the mutually agreed termination within 12 months of termination.

KEY DEVELOPMENTS FOR 2017

Introduction of significant changes to the French Labour Code in relation to company-level agreements, redundancy, TUPE and changes to collective status

The Employment Law which came into force on 8 August 2016 (referred to as the El Khomri law n°2016-1088) introduced significant changes to the French Labour Code. Most of these changes will become effective in 2017 as and when dozens of implementing decrees will be issued. The key changes introduced are to:

Company-level agreements relating to working time, rest time, and vacation can now provide less favourable provisions than agreements entered into at a higher level if signed by unions representing more than 50% of the employees or by unions representing more than 30% of the employees and then approved by the majority of the employees through a specific referendum process. These new regulations relating to company-level agreements are applicable as of 1 January 2017 and will otherwise be more generally applicable as of 1 September 2019.
Redundancy plans, by defining more precisely the economic grounds which must be put forward in order to proceed with a valid redundancy. Effective as of 1 December 2016, the Labour Code provides a more detailed definition of “economic difficulties”, to be reflected or evidenced by objective criteria, i.e., a decrease in orders or turnover, or operating losses, erosion of reserve fund, or of the gross operating surplus, or by any other element likely to justify these difficulties. The Code will also then specify the minimum duration for relevant decreases in orders or turnover reflecting economic difficulties, i.e., at least one quarter for a company of less than 11 employees, at least two consecutive quarters for a company of 11 to 49 employees, at least three consecutive quarters for a company of 50 to 199 employees, and at least four consecutive quarters for a company of 300 employees or more.
The TUPE regulations which apply on a transfer of an undertaking, provide that all employment agreements assigned to the transferring business are automatically transferred to the purchaser. The transferor was therefore not allowed to implement redundancies prior to the transfer. Effective since 9 August 2016, article L. 1233-61 of the Labour Code allows the transferor to implement redundancies prior to a transfer in limited circumstances, thereby preventing the transfer of employment agreements to the purchaser.
The simplification of the harmonisation process where employees with different benefits derived from different collective bargaining agreements are brought together, for example by way of a merger.

New rules applicable to employment-related litigation at first instance and appeal level

Following the issuance of a Decree on 20 May 2016, and effective as of 1 August 2016, new litigation rules will significantly impact the litigation process applicable to employment-related claims, including mainly:

the obligation for the plaintiff to detail his/her claims and communicate his/her supporting evidence when initially filing claims in the first instance labour court;
employees filing a claim before the labour courts are no longer prevented from filing subsequent claims in connection with the same employment contract; and
in the case of appeal, appellants are no longer entitled to plead their case themselves, they must be assisted by a lawyer or union representative.

Revision of unemployment benefit scheme

The unemployment insurance scheme currently applicable in France is the result of a negotiated agreement between employers’ and employees’ organizations. The unemployment insurance scheme is financed through contributions paid on employees’ salaries. The amount and duration of benefit payments depend inter alia upon the period during which the claimant has contributed to the scheme and total contributions paid. Monthly unemployment benefits are usually equal to approximately 57% of the employee’s previous compensation (within the limit of €12,872 per month in 2016) and are served during a maximum two-year period, extended to three years for employees aged 50 or over.

The unemployment benefits scheme is being renegotiated by employers’ associations and employees’ unions organizations in the coming months as it is no longer sustainable considering the current unemployment level in France (the debt of the unemployment benefits scheme will reach €29.4 billion by the end of 2016 and €35 billion by 2018).

KEY DEVELOPMENTS FOR 2016

Merger of the consultation procedure with works council by reduction of topics under Rebsamen Act

As of 1 January 2016, the 17 topics to be discussed with works councils each year are organised into three consultation rounds regarding respectively (a) the strategy of the company, (b) its economic and financial situation, and (c) social policy, working conditions, and employment.

Furthermore, the Rebsamen Act has also modified the frequency of works council meetings as of 19 August 2015 to:

every two months in companies having less than 300 employees; and
every month in companies having 300 or more employees.

Merger of negotiations with unions by reduction of topics under Rebsamen Act

As of 1 January 2016, employers can now decide to reduce the number of mandatory negotiations to be conducted with unions each year from 12 to three, i.e., (a) professional equality between men and women and well-being at the workplace, (b) salary, working time, and profit-sharing ((a) and (b) to be conducted each year in any company), and (c) management of employment and career development - to be conducted every three years in companies which have 300 or more employees.

Increased flexibility for work on Sunday and evening work under the Macron Act

In certain areas in retail (under certain circumstances), some stores are entitled to open on Sundays and in certain international tourist areas, employees of retail shops including large department stores can work at night (i.e. between 9:00 p.m. and midnight), provided, in both cases, that employees are volunteering, eligible for increased compensation, and are entitled to accompanying measures (e.g., transportation means to be paid by employer) and to time off in compensation.

All those items are to be negotiated between employers and unions. Most French unions remain opposed to the softening of work schedules and to date, few company-wide collective agreements have been entered into.

Increased flexibility to renew fixed-term employment agreements under the Rebsamen Act

Most fixed-term employment agreements can now be renewed twice but the total duration of the fixed-term agreements, even renewed twice, must not exceed the maximum limits of 9, 18, or 24 months applicable depending on the terms of the fixed-term agreements.