Government’s retreat on recasting labour law confirmed

Thomas LESTAVEL, Avocat Associé, Eunomie Advocats writes: Thursday, March 24, 2016, the government bill aimed at recasting French labor law was adopted by the Council of Ministers.

According to the Minister of Labor, Myriam El Khomri, this bill will give « genuine impetus to social democracy. » The Minister considers that « the bill is walking on two feet; it is balanced. » According to her, the bill proposes « new flexibility for businesses aimed at increasing the competitiveness of our economy, along with new protections and rights for employees. »

This position is not shared by everyone. On the one hand, seven trade union and student organizations coordinated a large-scale mobilization on March 31 against the bill. On the other, employer organizations have spoken out against amendments to the bill that will notably be detrimental to small and medium-size companies. In their view, the bill has lost its main goal, which was to « create employment. »

The bill, which had been presented as boosting employment and France’s attractiveness for international investors, has taken a backward step on these fronts. The government has indeed reversed its stance on the following main topics:

Amending legal provisions on working hours
Contrary to what was laid down in its original version, the bill no longer amends provisions relating to maximum weekly working time, dressing and undressing times, part-time work or daily rest periods. Each company will have the opportunity to negotiate these questions with trade unions.

Unilateral management of working hours in small and medium-size companies
The bill’s original version would have authorized small and medium size companies to negotiate the organization of working time individually and directly with their employees (notably on the organization of the working time on a daily basis). This measure has been removed: a collective agreement negotiated with employees’ representatives, mandated by trade unions, will be necessary.

Regulations pertaining to economic redundancies
Genuine progress has been made in terms of economic redundancies. Indeed, reasons for an economic redundancy have been defined as: a fall in orders or a decline in turnover for four consecutive quarters, two consecutive quarters of operating losses, a significant deterioration in cash flows, or internal reorganization necessary to safeguarding a company’s competitiveness.

Furthermore, the group’s economic difficulties will be evaluated solely on its French subsidiaries.

However—and this constitutes a definite step backward— should any conflict arise, courts will need to verify that a company and its group are not organizing « artificial » difficulties to justify redundancies. If this were the case, the breach of the employment contract would be reclassified as a redundancy without real and serious reason, and would award punitive damages to employees.

In the event of redundancy without real and serious reason, courts are no longer required to set caps when awarding damages to employees. Such caps are therefore purely indicative, stripping them of any real meaning.

The bill will now be presented to the National Assembly, and debated from May 2, 2016.

In light of different opinions, the bill has provoked, it is likely to continue evolving in the course of discussions before the parliament, and probably not in favor of any significant liberalization in French labor laws. Unfortunately, this type of compromise may bring about a reform that could end up satisfying nobody.

Thomas can be reached at: (+33) 6 21 36 60 70;