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A Landmark Reform of France’s Labour Law: Flexibility vs. Security, A Win-Win Arrangement?

Submitted By Firm: Fromont Briens

Contact(s): Sophie Pelicier Loevenbruck

Author(s):

Sophie Pelicier Loevenbruck

Date Published: 5/24/2013

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The unemployment level in France is currently at its highest since 1997, culminating at almost 11%, representing a total of 3,224,600 unemployed as of March 2013.

A “flexicurity” agreement was reached on January 11, 2013 after more than 4 months of intense negotiations between labour unions and business leaders to overhaul France’s notoriously rigid Labour Code.

This agreement, known under the acronym ANI (or “Accord National Interprofessionnel”), which can be defined as a national and all industries-wide collective bargaining agreement that is per se enforceable to almost every employer, significantly modifies crucial aspects of French labour law with a view to simultaneously making it more flexible and granting new rights to French workers. The agreement served as the basis for a new flexicurity bill that was recently passed on May 14, 2013. Although this piece of legislation is currently being examined by the French constitutional council (“Conseil constitutionnel”), the reform should be final in the very near future.

The securing of employment first results from granting more flexibility to the employer through various measures: job safeguarding arrangements (or “accords de maintien dans l’emploi”), internal mobility frameworks, a deeply renovated procedure to implement massive layoffs and partial activity.

Job safeguarding arrangements (“accords de maintien dans l’emploi”)

A new legislative provision now allows employers facing serious temporary economic difficulties to negotiate with unions to reduce working hours and the corresponding employee wages for up to 2 years, in exchange for job security and to reduce potential lay offs. Such an adjustment can also be achieved by increasing the working time without any raise.

In other words, the employer and the unions must necessarily negotiate a collective agreement that would enable the employer to rearrange working time and wages in exchange for a commitment to safeguard jobs of the affected employees for the duration of the agreement (at least).

The employee must therefore give his consent for such an agreement to be enforceable against his own individual employment contract. If he refuses, his dismissal will be considered as an individual dismissal with economic cause. The job safeguarding agreement must necessarily contain measures aimed at limiting the consequences of these contract terminations.

Internal mobility

The statute also makes it possible to negotiate the organisation of the professional or geographical mobility of the employee inside the company, as long as said mobility is not caused by a layoff plan project. Such a possibility clearly departs from previous case law, according to which geographical mobility constituted a modification of the employment contract if it were to take place outside certain limits (known as “zone géographique”), thereby requiring the consent of the worker. Now, the social partners are able to negotiate in order to delineate these geographical limits.

If the employee accepts the mobility, any contrary clause included in his individual employment contract will be considered unenforceable, as is the case with the “accord de maintien dans l’emploi”. Similarly, if the employee refuses, his dismissal will be considered as an individual dismissal with economic cause. The agreement should provide for measures to limit the consequences of such terminations for the employees.

Partial activity

In order to simplify the resort to partial activity during an economic crisis and to limit layoffs as much as possible, workers will be declared to be in partial activity after having received authorization from the administrative authorities, if they undergo a wage reduction due to a temporary closure of part of or the whole company, or if they undergo a reduction in their working time bringing the latter to a level below the legal limit.

New procedure to implement massive layoffs

The securing of employment, one of the stated goals of this statute, results from both stricter pre-defined deadlines, allowing the decisions to be made up-front, and from a deep reform of the procedure to set massive layoffs in motion.

To implement massive layoffs (dismissals of at least 10 employees within a 30-day period in a company of over 50 employees), companies can now choose between two processes:

  • negotiating a collective bargaining agreement with the unions that received at least 50% of the workers’ votes during the professional elections;
  • a unilateral implementation of a “social plan” to be ratified by the French administrative authorities (DIRECCTE).

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Regarding the job security component of this piece of legislation, the securing of employment that is expected to result from this statute calls for the creation of new rights to benefit the workers (such as an “individual vocational training account”, external mobility frameworks, rechargeable rights to the national unemployment insurance, additional healthcare and social welfare cover generalisation, a stricter regulation of part-time work).

An individual vocational training account

In order to facilitate an employee’s access to vocational training, any worker, regardless of his age or status, will benefit from an individual training account as soon as he enters the labour market. Social partners have provided for this account to be transferable should the employee change employers or become unemployed. This account will be credited yearly for at least 20 hours per full-time worker.

External mobility

The bill aims at fostering employee mobility, allowing them to “take away” certain rights with them. Therefore, in companies and groups of over 300 employees, any employee that can justify at least 24 months of seniority can benefit from a voluntary and secured period of mobility, with the consent of his employer. His contract will be suspended during that period, therefore allowing the worker to practice in another company with a view to developing his skills.

Part-time work

The statute provides for a stricter framework regulating the use of part-time work when the latter does not proceed from the employee’s decision. Starting January 1, 2014, the minimal weekly working time will be set at 24 hours, except for workers younger than age 26 pursuing their studies. This limit, however, can be lowered at the written demand of the worker or through a collective agreement.

Rechargeable rights to the national unemployment insurance

To encourage the unemployed to resume going back to work, the law now makes it possible for a worker returning to work after a period of unemployment to retain the remainder of his rights to unemployment insurance. This provision allows the worker to add these rights to newly acquired rights if he were to lose his job again.

Additional healthcare and social welfare cover generalisation

A mandatory additional healthcare and social welfare cover will have to be set up before January 1, 2016, allowing the worker to be reimbursed for costs incurred by accidents, maternity, or sickness, therefore further securing the employee’s job or transition period in between jobs and during a subsequent job search.

By granting more flexibility to the employer, this reform has, at the same time, lessened the binding force of the individual contract of the worker when its provisions conflicts with those of a collective agreement and strengthened the role of such agreements when faced with legal provisions. Even though a small number of uncertainties remain, the text definitely creates new opportunities. It is now up to the industries and the companies to prepare in order to face the deadlines established by this new law.

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