On 31 August 2017, the administration revealed the five draft executive orders issued pursuant to the law authorizing consolidation of labor-employer discussions, which the Constitutional Council (Conseil d’état) upheld with no reservations on 7 September. The orders are expected to be adopted by the Council of Ministers (Conseil des ministres) on 22 September and published in the Journal officiel on 25 September. They would enter into force the next day, save for provisions that cannot be implemented without regulatory measures being adopted. Moreover, to have the force of law the orders must be ratified by the French Parliament, and the Constitutional Council could be called on to review the constitutionality of these provisions a second time, as it pointed out in its 7 September decision.

These orders lay the groundwork for revamping France’s social model as announced during the presidential campaign.

Although they may undergo minor changes before they are adopted, the draft orders heavily revise the French Labor Code. The purpose of this note is to present a summary of the most significant measures under consideration. Further notes will be sent with regard to each measure.

Collective Bargaining

Relationship between company or branch agreements and industry-wide agreements Except as regards a limited number of listed topics, company/branch agreements prevail over industry-wide agreements. Exceptions to this rule are provided only in certain areas, for which:

  • the industry-wide agreement prevails at the company level (in particular for wage minimums); or
  • the industry-wide agreement may provide that it prevails over company agreements.
  • It must be noted, however, that in these areas, company agreements will apply when they provide protection that is at least equivalent to that afforded by the industry-wide agreement. Determining whether an agreement’s provisions are at least equivalent will probably raise issues of interpretation.

    Majority and non-majority agreements The El Khomri Act of 8 August 2016 provided for majority-approved agreements to become the general rule as of 1 September, 2019, but such generalization has been moved up to 1 May 2018. Non-majority agreements, i.e., agreements signed by the representative union organizations that obtained more than 30 percent of the votes, may be validated by referendum at the employer’s initiative, unless the signatory union organizations object.

    Mandatory collective bargaining The draft order provides that a collective agreement may set out the terms for mandatory collective bargaining, and in particular specify the topics requiring negotiation and their contents, frequency, and negotiation schedule. If there is no such agreement, the default legal provisions governing annual, triennial, and five-year negotiations apply.

    Exempted agreements A new type of agreement has been created to meet companies’ operating needs by making it possible to adjust work-performance terms (e.g., working-time reduction and job-saving agreements). The provisions of such an agreement will replace any conflicting and inconsistent clauses in the employment contract ipso jure. An employee who refuses the implementation of the agreement can be subject to a sui generis dismissal that would have real and serious cause.

    Negotiating in companies that have no union representative In companies with fewer than 20 employees that have no elected representative on the Social and Economic Committee, the employer may submit a draft agreement to the employees that must be ratified in a referendum by a two-thirds majority of the personnel. In companies that have between 11 and 50 employees and those with more than 50 employees but no union representative, collective bargaining may be conducted with an authorized employee or a member of the Social and Economic Committee’s personnel delegation, who must be expressly authorized for this purpose in companies that have more than 50 employees. The negotiated agreement must then be ratified by the employees or the members of the Social and Economic Committee.

    Entry into force The provisions related to collective bargaining would enter into force on the date their implementing decrees are published, and no later than 1 January 2018.

    Employee represention

    Merging of the employee representation bodies A new body, called the Social and Economic Committee (SEC), is created to replace the employee representative (ER), works council (WC), and health and safety committee (HSC). Such a committee is mandatory in companies that have at least 11 employees, and will take over the duties of the ER or the combined duties of the ER, WC, and HSC, depending on the company’s size (less than or more than 50 employees). A health, safety and working conditions committee will be set up in companies with at least 300 employees. It must include elected members of the SEC and may include outside members, such as the occupational physician and the labor inspectorate. In companies or branches that have fewer than 300 employees, the labor inspectorate may require such a committee to be set up when necessary, in particular due to the nature of the business activities or the premises’ layout or facilities. The SEC may retain an expert but, except in certain areas, must pay 20 percent of the cost, while the employer pays the remaining 80 percent. A majority company agreement or an extended industry-wide agreement may provide for the creation of a single body, a Company Committee, that would have the authority, among other things, to negotiate collective bargaining agreements in certain areas concurrently with the union representatives, who would continue to be elected.

    Transitional measures The draft order provides for transitional measures for companies that have employee representation bodies (ERBs) on the date the orders are published. Such companies must set up a SEC at the end of the current ERB terms, and in any event by no later than 31 December 2019. The draft also provides that any ERB terms expiring between the date the orders are published and 31 December 2018 may be extended for at most one year if the employer so decides after consulting such bodies. The terms of any ERBs that may be renewed after the date the orders are promulgated but before the decrees are published would automatically terminate on 31 December 2019.

    Entry into force The provisions related to the SEC and company committee would enter into force on the date their implementing decrees are published, and no later than 1 January 2018.

    Securing labor relations

    Compensation scale for dismissal without real and serious cause In its most publicized measure, the draft order sets out the mandatory scale of minimum and maximum compensation to be paid in the event of dismissal without real and serious cause. This scale would not apply if the dismissal is invalid, in particular due to a violation of a fundamental freedom, harassment or discrimination. In such cases, a minimum of six months’ salary applies, and there is no maximum. We can therefore expect increased litigation on these topics, which may make it possible to remove all limits on compensation. The scale provides for minimum compensation ranging from half a month’s to three months’ salary, depending on the employee’s seniority and the company’s size (i.e., under 11 employees or over). The order also sets out a cap, from one month’s salary for less than one year of seniority to 20 months’ salary for an employee with 30 or more years of seniority. Unlike the current scale, which is provided for information purposes only (French Labor Code, Art. R. 1235-22), the new scale does not take the employee’s age into account. The scale would apply to dismissals for which notice is given after the orders are published.

    Legal compensation for dismissal It is contemplated that the seniority threshold for an employee to be able to claim the dismissal compensation provided by statute will be reduced from twelve to eight months. Although the orders are silent on the issue, the administration announced it would increase this compensation by 25 percent pursuant to a decree that may be published at the same time as the orders.

    Procedural flaws The draft order makes it possible for employers to specify or further explain the grounds for dismissal set out in the notice of dismissal, either at its own initiative or at the employee’s request. If the employee does not make such a request and challenges the dismissal’s validity, s/he cannot seek compensation for dismissal without real and serious cause by claiming that the grounds for dismissal were not adequately explained. Instead, s/he would receive only compensation of up to one month’s salary based on a procedural flaw. These provisions would apply to dismissals for which notice is given after the orders are published.

    Time limit for legal action The time limit for bringing an action based on the termination of the employment contract would be decreased from 24 to 12 months. This provision would apply to statutes of limitations that are already running on the date the orders are published.

    Reassignment for unfitness for work When an employee is found to be unfit for work, the territorial scope of the employer’s obligation to reassign the employee is limited to France. These provisions would enter into force on the date their implementing decrees are published, and no later than 1 January 2018.

    Voluntary layoffs The draft order provides for codifying voluntary layoff plans that, subject to a majority collective agreement, provide that the employment contracts of employees who agree to leave the company in the scope of such an autonomous plan may be terminated by mutual agreement, but refusal of such employees cannot give rise to dismissal. The collective agreement must be validated in advance by the administrative authority, as is the case currently for contract termination. These provisions would apply as of the day after the orders are published.

    Economic dismissal

    Scope of assessment of the economic reason For companies that are members of a group, the economic reason is no longer assessed at global level but at the level of the group companies operating in the same industry sector in France. These rules would apply to economic dismissals initiated after the orders are published.

    Obligation to reassign Reassignment offers may be notified to employees by any means, through a specific list and according to the terms of a decree. There would no longer be an obligation to notify them in writing to each employee individually. The scheduled abrogation of French Labor Code Article L. 1233-4-1 means employers would be able to limit the reassignment search to France. These provisions would enter into force on the date their implementing decrees are published, and by no later than 1 January 2018.

    Compensation for invalid economic dismissal The minimum amount of compensation an employee may claim if their economic dismissal is invalidated because the job-saving plan was inadequate or nonexistent, or because no validation or approval decision was issued with respect to the plan, will be decreased from the current 12 months’ salary to six.

    Specific types of work

    Teleworking Teleworking may be instituted through a collective agreement or a charter drawn up by the employer. When it is only occasional, teleworking may be implemented by mutual agreement between employer and employee, with no specific formalities. Any accident that occurs on the premises and during the hours the teleworking takes place is presumed to be a workplace accident.

    Limited-term contracts The requirements for using limited-term contracts may be set in an industry-wide agreement, which may in particular determine the total cumulative term of limited-term contracts or the maximum number of renewals.

    Other new provisions that deserve close consideration relate to the resources and careers of employee or union representatives, the occupational health-risk prevention account, the site- or operation-specific contract with an undefined term (CDI de chantier), and labor detachment (prêt de main-d’oeuvre).