As announced several months ago, the Act on growth, activity and equal economic opportunity dated July 9, 2015 ("Macron Act"), modifying the Act dated July 31, 2014 ("Hamon Act"), has relaxed the employees' right to prior information in the event of the transfer of the business employing them.
As a reminder, the stated purpose of the Hamon Act was to enable the employees to participate in the transfer process, and if desired, to make a buy-out offer. For that purpose, the Hamon Act requires any undertaking wishing to sell a business, or a majority interest in a company, to provide prior information to their personnel within certain limits (in particular, undertakings having less than 250 employees).
These provisions have drawn considerable criticism, regarding both the unsuitability of the measure to the stated purposes and the uncertainty it created for transfer transactions.
The Macron Act has taken some of such criticism into account, and amended the Hamon Act notably as follows:
- whereas the legislation referred to the ambiguous term "transfers" (cessions), the only transactions henceforth subject to the duty of prior information are "sales" (ventes). As a consequence, the information obligation no longer applies to contributions or mergers, or for transfers concluded for no consideration;
- the information duty is no longer imposed if, during the twelve months preceding the sale, periodic information has been given regarding the sale of the business, in accordance with the Hamon Act which requires the provision of information to the employees regarding possible acquisitions of their business every three years;
- in accordance with the Decree dated October 28, 2014, information could be provided to the employees in various ways; however, if the information was provided by registered mail (return receipt requested), the letter had to be actuallydelivered to the employee and if the employee did not receive the letter, it was necessary to involve a bailiff. Henceforth, information to the employees may be considered complete upon the mere presentation of notice by registered mail;
- the sanction for failure to comply with the duty of prior information is no longer the nullity of the transfer, but rather, a civil fine capped at 2% of the amount of the sale. In addition to the fact that this amendment improves the certainty and security of the transactions, it also renders unnecessary the post-closing notification of the employees, which had been the starting point of the two-month period during which the nullity could be claimed.
In conclusion, while the information to employees provided for under the Hamon Act has been substantially simplified, it remains necessary to ascertain, in connection with the sale of a going concern or a majority interest, whether the obligation to inform the employees applies, and most of all, to incorporate the information obligation into the timetable for completion of the transaction.
It should also be borne in mind that despite unanimous criticism of this point, and even though it is not justified by the stated purpose of the Act, the information obligation does indeed apply in the event of a sale of a going concern or a majority interest between affiliates (and not simply to transactions between unrelated third parties).
The above mentioned provisions will enter into force at a date which will be set by Decree and at the latest within six months following the promulgation of the Macron Act, which is still subject to the review of the Conseil Constitutionnel following the referral for review initiated by members of the Parliament against other dispositions of the act.