New Social and Economic Committees

New Legislation Enacted

The labor law reform created the new “Social and Economic Committee” (SEC), to replace various staff representative bodies, i.e., staff delegates, Works Council, and the Health and Safety Committee. The SEC must exist in every company of 11 employees and more. The SEC’s financial resources and missions vary according to the company’s headcount. If provided for under a collective agreement signed by the majority of unions, all of the SEC’s missions can be exercised by a “company committee” which has the additional power to negotiate, amend and adopt collective agreements.

Collective Bargaining at Industry and Company Levels

New Legislation Enacted

The labor law reform sets forth three blocks of negotiation areas for collective bargaining. Accordingly, industry-level agreements prevail over those on company-level agreements if they fall within one of 11 specific areas (i.e., minimal wages, job classification, work duration and hours, equality, etc.). In four other areas, and only if it is expressly provided for in the industry-level agreement, the latter can prevail over a company-level agreement. On all other matters, the company-level agreement prevails. As of May 1, 2018, all bargaining agreements must be signed by unions representing more than 50% of employees. Legal challenges of agreements must follow new special rules.

Easing of Dismissal Rules

New Legislation Enacted

The labor law reform eases the dismissal rules. First, although employers must continue providing the personal or economic grounds of termination on the dismissal letter, the employer is now entitled to modify those reasons, either on its own or at the employee’s request, even after sending the letter. A dismissal cannot be judged as unfair only due to the absence of reasoning on the dismissal letter, or because the employer failed to provide a limited-term or temporary work contract or failed to follow all procedures pre-dismissal. In such cases, the damages award is limited to one month salary. If the dismissal is found to be unfair, even after modifying the reasoning for termination, the damages award must meet the new mandatory damages scale. The statute of limitations to challenge a termination is reduced to 12 months, instead of 24.

Damages in Case of Employment Termination

New Legislation Enacted

The labor law reform created a new mandatory damages scale, which varies based on company size and employee seniority. Courts apply this scale when the employer’s misconduct or failure caused the employee’s resignation, as well as when the employee seeks to terminate the contract. If the dismissal was discriminatory or in violation of the employee’s fundamental rights, the damages awarded must be higher than six monthly salaries, with some exceptions. The employer’s failure to rehire a redundant employee is sanctioned by the award of one monthly salary, instead of two. If the redundancy plan is found to be lacking, insufficient or not validated by the authorities, the damages awarded to the employee must amount to six monthly salaries, instead of 12. The required seniority for severance is eight months.

Collective Redundancies and Mutual Termination Plans

New Legislation Enacted

Under the labor law reform, if a dismissal is due to the company’s economic grounds, the employer may provide an economic justification for the French location only. The duty to make job offers to employees whose positions are threatened extends only as to the French territory and to companies within the “same group of companies” (as defined by law), where job positions are interchangeable with the suppressed ones. Furthermore, the criteria to select employees for dismissal must be limited to specific employment areas. To reduce their headcount, companies are allowed to set forth a collective mutual termination plan that is distinct from the redundancy procedure and is agreed on by both parties.