Focus on the recent changes in French labour legislation: the Macron and Rebsamen laws

The French government has recently focused on tackling the rigidities crippling the labour market in France, in order to stimulate growth. This has resulted in two major pieces of legislation, namely the "Macron" and "Rebsamen" laws, which came into force this summer.

You will find below a brief summary of the main changes introduced by these laws. It should be noted that some of the provisions thereof will only become enforceable after related decrees are published (which should occur in the coming months) and that certain measures have been postponed and will take effect as from 1st January 2016.

Economic dismissals: clarifications and changes

As part of the employer's obligation to seek reclassification for the employees to be dismissed, the employer was required to send a reclassification questionnaire asking the employees if they were interested in accepting a reclassification position outside France. Under the “Macron” law, and upon publication of a decree, the obligation to seek reclassification position abroad will only apply to employees expressly requesting to receive such reclassification proposals.

In case of dismissal of at least 10 employees within a period of 30 days (requiring the implementation of a job saving scheme or “Plan de sauvegarde de l'emploi”), the employers will be able to apply unilaterally the selection criteria for dismissals in a perimeter smaller than the company, provided that such perimeter is no smaller than each “employment area” within which the company's establishments are located.

New rules to maintain jobs agreements

In case of serious economic difficulties, since 2013, employers are allowed to conclude a fixed-term collective agreement under which they undertake to maintain the level of employment in the company during a certain period of time in consideration of changes in the work organisation (e.g. reduction in salaries or increase in working time). Such agreements may now be concluded for a period of 5 years instead of 2 years previously, and in case of dismissal of an employee refusing to be subject to such agreement, the employer will be exempted from the obligation to seek reclassification positions for such employee.

Changes to employees’ shareholding

The “Macron” law implemented major changes for free shares. The vesting period is now reduced and the retention period is made optional. Moreover, the employer’s specific contributions will be reduced to 20% of the value of the shares at vesting date (instead of 30%), and the obligation to make such contribution will be eliminated for certain small and medium-sized companies. The employee’s specific contribution will simply disappear.

Modifications to employees' saving schemes

The “Macron” law aims at facilitating the implementation and the ease of comprehension of employees’ saving schemes. In this respect, the time limits for the payment of compulsory profit sharing (“participation”) and voluntary profit sharing (“intéressement”) entitlements are realigned, and the implementation of pension saving scheme (“PERCO”) is facilitated. The social security contributions applicable to these schemes are reduced if certain conditions are fulfilled. The use and management of such scheme are also rendered more flexible, and the information available to the employees with regard to the various saving plans applicable within the company is improved.

A new procedure before the labour court

The employment tribunal procedure is amended with a view to making the procedure more effective and quicker, notably through a new possibility offered to the judges, during the preliminary hearing, to send the case to a specific judgement board responsible for rendering its decision in accelerated timeframes, or to a specific board presided by a professional judge.

Furthermore, new alternative dispute resolution procedures are now rendered accessible to employees and employers.

However, the principle of a maximum amount of damages to be granted by a court for unfair dismissal has partly been declared unconstitutional (for the part of the amount which depended on the company’s size) and will not enter into force.  The government will propose a new law in this regard.

Additional controls regarding secondment of employees to France

Any entity established abroad and seconding employees to France will be required to provide to the labour authorities a number of documents translated into French, evidencing compliance with secondment rules. Moreover, the secondment declarations which must be filed with the French authorities will need to be made online.

The French client also needs to obtain a copy of the secondment declaration filed by the foreign service provider to French authorities. If such document is not obtained, the French client will need to file a specific declaration to the labour authority within 48 hours form the start of the secondment.

Finally, the administrative sanction applicable in case of breach of certain of the secondment rules is raised to a maximum of 500,000€, and the labour authorities can order the temporary suspension of the provision of services in the event of breach of certain essential secondment rules.

Information of employees in the context of a transfer of business / shares

A law published on 31st July 2014 requires small and medium-sized companies to inform each employee individually before a sale of a business or a transfer of the majority of a company’s shares.

One of the most controversial parts of such legislation was the fact that breach of this requirement could trigger the voidness of the sale or transfer. The “Macron” law provides that such sanction will be removed, and replaced by a specific financial penalty of up to 2% of the sale or transfer price (subject to the publication of a decree by 6th February 2016).

It should be recalled that in the meantime, the Constitutional Court has declared unconstitutional the sanction of nullity applicable in the case of transfer of shares. However, it cannot be interpreted from such decision that the voidness of the transaction cannot be triggered in the case of sale of a business.

Changes to the sanctions applicable to hindrance offence

In cases of hindrance to the employees' representatives rights, the employer was liable to a penalty of up to 3,750€ and a jail sentence of up to 1 year. The “Macron” law modifies such sanctions, and provides that in case of hindrance to the functioning of the employees' representatives, the employer will only be liable to a fine of up to 7,500€. However, in case of hindrance to the elections / appointment of the employees' representatives, the jail sentence will still be applicable, together with a maximum fine of 7,500€.

Extension of the scope of the existing unique representative body

In companies employing less than 200 employees, it was up to now possible to set up a single employees’ representative body called the “délégation unique du personnel”, the staff delegates being considered as also carrying out the duties of members of the works council (WC). The “Rebsamen” law offers this possibility for companies employing up to 300 employees, and provides that the health and security committee may also be included into such single body.

The functioning of such institution is also clarified and simplified in particular through a reduction of the number of its mandatory meetings, a creation of a single agenda, the implementation of maximum timeframes to deliver its opinions or the possibility of carrying out a joint expertise.

A new joint representative body for companies of at least 300 employees

The “Rebsamen” law establishes an option for such companies to merge the WC, staff delegates and health and security committee (or only two of these bodies) into a single representation body. Such possibility must be provided by a specific collective agreement signed at the company’s level with majority unions, which could also set modalities of functioning of this body (subject to certain limits).

Upgrading of the employees’ representatives meetings

The “Rebamen” law authorizes the employer to hold the meetings of the employees’ representatives through videoconference, subject to certain limits. Joint meetings will also be authorized, to combine various representative bodies in a single meeting.

Also, the recording and stenography of the debates during the WC meetings are now officially permitted. The timeframe and modalities of preparation of the WC meetings’ minutes are to be determined by agreement, or by decree (to be published) if no agreement is reached.

Streamlining the works council’ information and consultation procedures

The previous 17 recurrent obligations to inform and/or consult with the WC will be combined into 3 annual consultations concerning the strategic orientations, the economic and financial situation and the social policy, working conditions and employment situation. The WC can be assisted by a chartered accountant remunerated by the company during these three consultations. Also, it will no longer need to be consulted regarding draft collective agreements / amendments and termination of such agreements.

A collective agreement entered into at company level may set specific rules regarding the running of the WC (frequency of the meetings, modalities of preparation of the minutes, modalities of information and consultation and maximum timeframes for the delivery of its opinion).

Finally, the thresholds effects are mitigated as the employer will benefit from a specific period to comply fully with the recurrent information and consultation obligations when it crosses the staff number thresholds triggering the obligation to elect a WC (50 employees) or additional obligations towards the WC (300 employees). The suppression of the WC in case of reduction in the staff number is also simplified.

New rules on appropriate levels of consultation

In situation of coexistence of both a central WC and WCs in each establishment of the company, the establishments’ WC will only be consulted where a specific project requires adaptation measures specific to the establishment. In such cases, the opinion of each establishment WCs will be communicated to the central WC within a timeframe to be fixed by decree.

Amendments regarding the consultation of the health and safety committee

Up to now, when a project was common to several of the company’s establishments, the employer could set up a coordination body in charge of carrying out a single expertise for the account of the different health and safety committees concerned by the project (“ICCHSCT”). However, the employer still needed to obtain the opinion of each health and safety committees concerned on the project.

The “Rebsamen” law has created a similar regime as this provided for the central WC and the establishments’ WC, providing that only the ICCHSCT needs to be consulted on the adaptation measures common to the different establishments, the local health and safety committees being only consulted with on the adaptation measures specific to their establishment.

Finally, the ICCHSCT and the health and safety committee will be subject to specific timeframes for their consultation. Failure to provide an opinion on a project will be deemed to constitute a negative opinion. Such timeframes will be determined through a collective agreement or, in the absence of union delegates, through an agreement between the employer and the committee. In the absence of such agreements, the timeframes will be those fixed by decree (to be published).

Simplification of the negotiation of collective agreements

The various obligations to negotiate with unions will be combined into 3 negotiation themes. Moreover, a collective agreement signed at the company’s level with majority unions may adapt (within certain limits) the negotiation rules applicable to such mandatory negotiations, especially with respect to the frequency of the negotiations.

Furthermore, the “Rebsamen” law creates additional flexibility on negotiation of collective agreement in companies without union representatives, by opening more widely the negotiation with employees’ representatives or with an employee mandated by a representative trade union.

Promotion of the exercise of employees’ or unions’ representatives duties

Various provisions have been enacted by the “Rebsamen” law regarding employees’ and unions’ representatives. Certain representatives dedicating a substantial number of hours to their mandate(s) will benefit from a guarantee of evolution of remuneration, and to meetings with the employer when starting / ending their mandates.

Health and safety at the workplace and fixed-term employment contracts

The “Rebsamen” law provides that business related burn-outs may now be recognized as an occupational disease following the results of an individual expertise.

The procedure applicable to dismissal for physical inability is also amended. In case of physical inability caused by an occupational accident or disease, the employer will be exempted from its reclassification obligation provided that the occupational health physician expressly indicates that maintaining the employee within the company would be seriously harmful to his/her health.

Finally, the “Rebsamen” law also makes more flexible the use of fixed-term employment contracts by allowing the employer to renew such contract twice instead of one, the maximum durations for such contract being unchanged.

The Macron and Rebsamen laws are in addition to a certain number of provisions resulting from previous laws, which will become applicable on 1st January 2016.

The most important of these measures is undoubtedly the generalization of compulsory additional health insurance, provided by the law aiming at securing employment dated 16 June 2013, and the resulting requirement to be covered by an insurance allowing all employees to benefit from a collective insurance, the contribution of the employers to such scheme being at least 50%. Those companies which will not be covered by an industry wide collective agreement, or by an agreement entered into at company level, at 1st January 2016, may implement such coverage by unilateral decision.

Other measures will also come into force on 1st January 2016, namely the requirement for all companies to declare social security contributions using the “nominative social declaration” (déclaration sociale nominative), and the implementation of the simplified pay slip.

These new pieces of legislation faithfully reflect the current political policy of reforming and upgrading employment legislation in France in order to restore the competitiveness of the French economy. However, these new laws do not address the issue of the ever-growing thickness of the French labour code and its approximately 3,000 pages.

It seems the government has heard the criticisms, as it now wishes to implement an even more far-reaching law, aiming at reforming the entire French employment code, on the basis of the recent “Combrexelle report”. Such reform would notably give priority to collective agreements to set the main rules applicable to the employment relationship (e.g. working time, remuneration, overtime, etc.). Due to the potential impact this could have, we will need to follow closely its preparation and vote.