Emmanuel Macron was elected one month ago promising to reform France’s employment regulations. It’s too early to determine if Mr. Macron will succeed in opening up the French labor market and much will depend on the result of parliamentary elections that will be held in mid-June 2017. However, what are the main reforms that have been proposed by Mr. Macron?

The three principal points are:

(i) Unfair dismissal compensation

Since 2016, the French Labor Code sets out suggested “unfair dismissal damages” to be paid to an employee if his/her dismissal is deemed as “unfair” by the labor court (the amount of these damages varies according to the employee’s seniority. For example: an employee, with 9 years’ seniority would benefit from dismissal compensation equal to 8 months’ salary). However, the judges are not bound by this table and may award a higher amount to the employee. This existing table of recommended indemnities is to become mandatory. The aim is to provide greater certainty for employers when faced with this problem. This reform should be technically easy to implement but could face opposition from the labor unions.

(ii) Simplification of employee representation

At the moment, only companies with fewer than 300 employees may merge the three employee representative organizations (works council, staff delegates, health and safety committee) into one body to simplify communication with management. The new government proposes to extend this possibility to companies of all sizes.

(iii) Negotiation of collective agreements

The government proposes extending the possibility for companies to negotiate on an individual company basis rather than on an industry wide basis. The objective is to provide greater flexibility at the company level and to reduce the rigidity of the existing collective bargaining agreement, which is negotiated for each field of activity.

This reform is technically complex and challenges one of the core missions of the labor unions. Therefore, the implementation of this reform could be long and complicated.

The government has not revealed when and how it will manage to implement these reforms.

There remains today a high degree of uncertainty concerning the above reforms: Will government supporters win a majority in the upcoming parliamentary elections? How will the government push through these reforms? Will other political parties and public opinion support these reforms?

We will continue to update you on progress but, if you are looking at doing business in France or want assistance in understanding the implications of Mr. Macron’s reforms for your existing businesses, please get in contact.