France’s Parliament passed a law on February 24, obliging companies with more than 1,000 employees to prove they have exhausted options for selling a plant (and so preserving all or some of the jobs there) before closing it. This is applicable to shut-downs initiated as from April 1st 2014.

The Works Council will have to be involved in the process.  It may give an opinion on the respective merits of the possible buyers and may help to formulate alternative proposals. The Works Council will be able to hire an expert (paid for by the employer) to analyse the information given to potential buyers, to study and report on the offers made by prospective buyers or even to help the Works Council make its own searches for a purchaser.

When and if the employer intends to accept a buyer’s proposal the Works Council will have to be consulted and render an opinion on the terms of that proposal.  If no buyer is found, or at least not on terms accepted by the employer, the latter will have to present a report on the “buyer research procedure” to the Works Council.  In other words, it will need to explain what steps it took to try and find a buyer and why (if it is the case) it rejected any particular offer made for the business.

The Works Council can within 7 days after the presentation of that report make a claim before the Commercial Court. If the judges find that the employer did not put enough effort into its search for a buyer, or unreasonably refused an offer for the business, they can fine it up to 20 times the national annual minimum wage per employee laid off up to a maximum amount of 2% of the employer’s turnover.

We expect this text to be examined by the Constitutional Court shortly and will report on any further developments.