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Newsletter of Cazeau & Associés Law firm – January-February 2018

The last measures of the French labor law reform which were still to be implemented have entered into force on 1st January 2018, giving us a good opportunity to carry out a quick overview of the key aspects of the reform.

I. Redundancy

1. Grounds for redundancy

Decree No. 2017-1387 of 22 September 2017 on the predictability and securitization of the labor relations has mitigated the employer’s obligation to state the ground(s) for redundancy in the notification letter, putting an end to the systematic award of damages based on a breach of such obligation.

To that end, 6 template letters adjusted to various cases of redundancy and stating the rights and obligations of each parties have been provided to the employers by Decree No. 2017-1820 of 29 December 2017. Although the use of such templates is not compulsory, it is however highly recommended. The template letters may be viewed by clicking on the following link.

Furthermore, the grounds for redundancy may now be specified after the performance of the notification, either on the employer’s own initiative or at the request of the employee.

The decree also aimed at reducing the application scope of the ‘economic criteria’ for redundancy as the assessment of the difficulties experienced by a company is now limited to the French territory for both single and group companies – in which later case the assessment is performed regarding the shared business segment.

Concurrently, the scope of the obligation to reassign an employee was also narrowed to the sole national territory, whether in the controlling company or one of its affiliates. It is also important to note that reassigning offers no longer need to be individualized.

The Decree also enabled to set by means of a collective agreement the application scope of the different criteria used to determine the order in which to proceed with the redundancies. In its absence, the employer may set the scope, being noted that it cannot be lower than the perimeter of the jobs area in which the different sites of the company are located.

It is worth noting that it is now possible for any company with more than 50 employees to proceed with redundancies on economic grounds before the transfer of at least one of its autonomous economic entities. Such measure, which was previously limited to companies or groups of companies with more than 1,000 employees, derogates from the principle of statutory retention of employment contracts for the buyer.

3. Economic and Social Committee

One of the main contributions of the reform is the merging of the various employees’ representative bodies to form the Economic and Social Committee (ESC) which, as a result, concentrates the former prerogatives of each regarding redundancy.

II. Compensation for redundancy

There is a clear distinction between the statutory compensation which constitutes the minimum amount implemented by law or a collective agreement to be received by the redundant employee, and the scale of compensation set by the Decree to determine the amount of damages due by the employer when the redundancy is sanctioned by the Court.

1. Statutory compensation for redundancy

The decree also initiated some changes regarding the redundancy compensation. Indeed, the legal indemnity is now open to all employees having at least 8 months of seniority within the company (to compare with the former 1-year period). Furthermore, the calculation rate to determine the compensation has been reviewed and is now set to one quarter of monthly salary per seniority year for the 10 first years (previously a fifth) and a third for the following years.

2. Scale of compensation binding on Courts

It is undoubtedly the most emblematic measure provided by the labor law reform. The damages which can be awarded by a Court for redundancies without real and serious cause are now capped according to the seniority of the employee. It should be noted though that the minimum amount for the 10 first years differs on whether the company has more or less than 11 employees. It can be accessed to the scale of compensation implemented by Article L1235-3 of the Labor Code by clicking on the following link.

The compensation is determined on the basis of the gross monthly salary earned by the employee, but it is not specified which period of time should be considered to do so.

Regarding redundancies qualified as null and void (e.g.: discriminatory grounds), the employee may choose either to reintegrate the company or to obtain an indemnity in no case lesser than the salaries earned in the last 6 months.

As for procedural irregularities (e.g.: rules of convocation), the indemnity to be granted remains unchanged to a month salary.

III. Collective contractual termination

The Decree implemented a procedure of collective contractual termination (‘rupture conventionnelle collective’) for employment contracts through the establishment of a voluntary departure plan, which falls outside the legal framework set for redundancy and economic grounds. Such collective terminations are negotiated with the company’s representative unions and are subject to a prior authorization issued by the French administration after monitoring the compliance with some basic rules (minimum number of departures, requirements to benefit from the agreement, terms for the submission and review of the applications…). It should be noted that the compensation negotiated cannot be lower than the minimum amount legally provided.

IV. Statute of limitations

The Decree set a unified 12-month period to challenge the termination of the employment contract before the Labor Court (‘conseil de prud’hommes’), starting from the day of notification of the termination (as opposed to the usual 2-year period previously experienced). There are some legal exceptions though, particularly for claims related to salary (3 years), physical injury (10 years), discrimination (5 years) or moral or sexual harassment (2 to 5 years).

It should be noted that this new term directly applies to all cases which were not prescribed on 23 September 2017, without such term exceeding 2 years.