« Labour law »: the Constitutional Court confirms compliance with the Constitution, subject to some reservations

The « Labour Law » has been adopted by Parliament on 20 July 2016 and a group of Senators and Members of Parliament immediately referred its Article 64 – which creates a dialog forum within franchise networks – to the Constitutional Court.

The Court rendered its decision on August 4, 2016.

The Constitutional Court confirmed that Article 64 is globally compliant with the Constitution and that it infringes neither the constitutional principles of equality and entrepreneurial freedom nor the Preamble of the Constitution of 1946, contrary to what several Senators and Members of Parliament argued.

According to the Supreme Court, franchise systems are distinct from other forms of network organized businesses because of a higher degree of regulation concerning the organization and the activity of the franchisees. Therefore, the Court decided that the principle of equality had not been infringed.

With respect to the infringement of the entrepreneurial freedom, the Constitutional Court did not deny its existence but considered that the Parliament was entitled to limit that freedom for the sake of public interest. In the matter at hand, the Supreme Court considered that the purpose of the law was to improve the level of information of the employees of the franchisees about the decisions of the franchisor likely to have an impact on their working conditions. The Court decided that this goal was for the public interest.

Last, the Constitutional Court decided that the bill was not infringing the Preamble of the Constitution of 1946, which allows any worker to participate, by employee representation, in the collective determination of his working conditions and the management of the company, because it is only an information forum. The Supreme Court incidentally admitted that there was no working community between the franchisor and the employees of the franchisees, which goes well without saying but goes even better when it is clearly said.

The Constitutional Court however expressed two reservations relating to the interpretation of Article 64 and censured one of its provisions:

  • First reservation relating to the interpretation of Article 64: the Constitutional Court decided that this Article does not infringe the entrepreneurial freedom, subject however to the fact that franchisees must fully take part in the negotiation for the setting up and functioning of the dialog forum;
  • Second reservation relating to the interpretation of Article 64: the Constitutional Court noted that absent an agreement between the franchisor, the franchisees and the employees about the setting up of the dialog forum, the law granted authority to the Government to decide about the hours of delegation of elected employees in the dialog forum, and their conditions of use. The Constitutional Court underlined that such a power belongs to the Parliament only and cannot be delegated to the Government. The Government will therefore not be entitled to provide for supplemental provisions with respect to the hours of delegation in the upcoming implementation decree.
  • Censuring of the sixth paragraph of Article 64: the bill provided in its §6 that absent an agreement between the franchisor, the franchisees and the employees about who will bear the costs associated with the dialog forum, they would be borne by the franchisor only. The Constitutional Court censored the provision, considering that it was a disproportionate attempt to the entrepreneurial freedom. One can only approve that decision.

Following publication of the Constitutional Court’s decision, the Government announced that it was willing to enact the law very quickly.

However, with respect to Article 64, failing an agreement between the franchisor, the franchisees and labour unions about the setting up of the dialog forum, it will not be possible to implement the law until the Government issues a Decree containing all supplemental provisions. And as a matter of fact, due to the abovementioned second reservation of interpretation, the Decree will not be complete until the Parliament adopts additional legal provisions relating to the hours of delegation. Needless to say, that should save at least a few additional months to prepare for the implementation of the reform.