On January 11, 2013, three national trade unions entered into a National Inter-professional Agreement for a more secure employment market (“ANI sur la sécurisation de l’emploi”). A draft bill prepared by the French Labor ministry based on the provisions of this agreement is currently in discussion before the French Parliament. The French government intends for this new law to be voted on and come into force before summer 2013.

The draft bill provides for several measures, some of which appear to give greater flexibility to employers. These measures cover in particular external and internal mobility, increased employer social security charges for fixed-term employment agreements, pre-determined levels of damages for Labor court conciliations and significant reductions to the limitation periods for labor claims.

One of the two main measures in the draft bill provides companies in significant economic difficulties with the opportunity to negotiate a collective agreement to reorganize working time and change remuneration (within certain legal limits including in particular the minimum wage for a temporary period.  In exchange, the employer would have to undertake to maintain in the company those affected by the new, temporary measures.

The draft bill also sets out new procedures for collective dismissals when the employer contemplates dismissing 10 employees or more over a 30-day period.  If the proposals are brought into force, employers would have two options when carrying out collective dismissals.  Some aspects of the dismissal procedure and the measures of the employment protection plan could be determined by either (i) a company collective agreement or (ii) a document unilaterally drafted by the employer following works council consultation.  However, the French Labor administration (“Direccte”) would still be involved in the process since both documents would need to be approved by the Direccte.

According to the draft bill, the maximum duration of the information and consultation procedure would be no more than 2 to 4 months, depending on the number of contemplated dismissals.  Indeed, contrary to the current legal provisions, in the absence of the works council’s opinion within this timeframe, the works council will be deemed to have rendered an opinion.

Whilst these proposals seem to promise an easier and more flexible dismissal process, employers must wait and see if the new law does indeed deliver on that.   The current wording of the bill is not entirely clear.  According to the initial National Inter-professional Agreement (ANI), employers should be able to choose freely between the two options . However, the current wording of the draft bill provides that in the event that no company collective agreement is reached on the issue, the employer can then unilaterally determine the content of the employment protection plan and some aspects of the dismissal procedure.  This can be read as giving priority to negotiations with the unions, so that the employer is only in the position to draft a unilateral document where the negotiation of a company agreement has failed.  Employers should watch for developments.

We expect the new law to be voted on and come into force before summer 2013.