On August 31, 2017, the Prime Minister and the Employment Minister presented the much awaited 5 draft Ordinances pursuant to enabling legislation to reinforce social dialog.

The 36 measures:

• Target favourably small businesses,

• Facilitate the functioning of staff representative bodies (SRB) allowing them notably to merge,

• Simplify the implementation of redundancies,

• Limit the financial consequences and secure the termination of employment contracts,

• Redefine the coordination of bargaining at the branch and company level.

After transmission to the Council of State and presentation to national joint bodies, these measures should be adopted in the Council of Ministers on 22 September 2017.

The chief measures likely to have an impact on French and foreign companies are described below.

Establishment and merger of Staff representative bodies (SRB)

By modifying the conditions of establishment of certain representative bodies while allowing the merger of others, the ordinances aim to enhance the quality of social dialogue. In this way, the establishment of an Economic and Social Committee (ESC) will be mandatory in enterprises with at least 11 employees which, in companies with less than 50 employees, will exercise the role of staff representatives (SR). In companies with at least 50 employees, the ESC will merge the current roles of SR, Works Council (WC) and the Hygiene Safety Working Conditions Committees (HSWCC). Under the terms of a majority agreement, the merger of SRB could include trade union representatives to create a Works Council (WC), competent in collective bargaining. Access to the training of trade union representatives will also be facilitated with the purpose of improving and guaranteeing their skills for a constructive social dialog.

Implementation of perimeters for redundancies

One of the major contributions of the reforms is the reduction in the scope of appraisal for determining an economic rationale (economic difficulties, technological change, safeguarding competitiveness). Except in cases of fraud, the reality of the economic reason of companies belonging to a group will be assessed in France at the group company level belonging to the same sector of activity. The reclassification obligation continues but the means of communication of available positions are simplified. For instance, it will be possible to render all the existing positions accessible via lists available on the Intranet. If the reason for the dismissal is inaccurately specified in the dismissal letter, it may be completed at the employer’s initiative or upon simple request of the employee. In the absence thereof, inadequate grounds becomes a mere procedural irregularity giving entitlement to an allowance of one month’s salary maximum, without removing real and serious grounds for the dismissal.

Capping damages and securing the termination of employment contracts

The judge is required to use a fixed scale of damages in the event of dismissal without real and serious grounds. The fixed scale may only be rejected by the judge in cases of discrimination, harassment or an infringement of the fundamental freedoms of the employee. The scale provides for maximum compensation ranging from one month of salary for the employee with less than a year of seniority to 20 months from the 29èam year of seniority. The scale also sets a lower limit of compensation ranging from a half to three months of salary depending on the seniority of the employee and also according to the size of the company (with more or less than 11 employees). In return, the legal compensation for dismissal will be granted as from eight months of seniority and the amount will be increased by 25 percent via regulations.The dismissal must be challenged by the employee within a maximum period of 12 months, regardless of the reason. In addition, a “collective contractual termination” procedure is implemented to enable the development of voluntary departure plans by collective agreement simply subject to validation by the administration.

Coordination of bargaining at branch and company level

The branch retains some areas of negotiation and is granted new ones according to the specificities of the sector of activity (such as having recourse to fixed term employment contracts or temporary work…). Overall, collective bargaining is entrusted first and foremost to companies. From 1 May 2018, company agreements will have to be in the majority. Under certain conditions, a non majority agreement could however be validated by referendum at the employer’s initiative. The establishment of a new type of majority agreement likely to have an effect on the work duration and organization, the remuneration and the geographical professional mobility of the employee is supposed to facilitate the adaptation of the company’s organisation to market evolution. The terms of such an agreement shall take precedence over the employment contract substituting ipso jure the clauses of the employment contract which are incompatible with those of the agreement. Refusal by the employee will justify a dismissal on “sui generis” grounds (neither economic nor personal), constituting real and serious grounds for ipso jure.

Opening up the possibility of negotiating to small businesses

Small businesses with less than 20 employees without SRB can propose agreements directly to employees for all of the themes open to collective bargaining.

To be valid, these agreements will have to be ratified by two-thirds of the personnel.