Follow-up
on Labor Reforms in France
François
Vergne | Partner, Paris
As announced in our previous Newsletter, President Sarkozy, elected in May 2007, is trying to implement his social program and to reform the French labor market laws and regulations by introducing more flexibility and more “security”. In this respect, on January 11, 2008, a nationwide agreement was signed with most of the national trade unions which contained a large number of proposals meant to give more flexibility and to secure the French employment market. The nationwide agreement was not immediately effective and was subject to adoption of laws and regulations.
Six months after the signature of the nationwide agreement with unions’ representatives, it is now the time to review the main provisions of the law n°2008-596 of June 25, 2008 entitled “Loi de modernisation du marché du travail” (literally the “law modernizing the Labor market”) which applies some of the provisions of the nationwide agreement:
- Trial
period: A
new section is created in the labor code governing the trial period
for employees (articles L. 1221-19 and seq. of the Labor code). The
maximum duration of the trial period depends upon the level and category
of the employee concerned (from two months for lower-level employees
to four months for executive-level employees). The trial period can
be renewed once if such possibility is expressly provided for in
the initial employment agreement and if such possibility is allowed
by a collective agreement made for the sector of industry to which
the company belongs. The termination of the trial period is subject
to a notice period of between 48 hours and one month. While the maximum
duration of the trial period provided in the French labor code is
mandatory, some collective bargaining agreements, depending on the
date of such collective bargaining agreement (before or after June
25, 2008), may lawfully allow for a longer period.
- Amicable termination of the employment relationship: A new type of employment termination mutually agreed between the employer and the employee is created (“rupture conventionnelle”). Following one (ore more) preliminary meetings during which both the employer and the employee may receive assistance to discuss the terms and conditions of the termination, the employer and the employee may sign an agreement which provides the conditions of the termination. After the signature of the agreement, each of the parties has a right to retract his or her consent during a 15 day period. Following this 15-day period, the draft settlement must be sent to the labor administration for ratification. The labor administration has 15 working days to ratify the agreement. The absence of a reply within the 15-day period is equal to implied authorization by the labor administration. The settlement agreement must provide for the amount of the severance indemnity paid to the employee (which cannot be less than the legal severance indemnity due in case of dismissal) and the date of the termination (at the earliest, the day following the ratification by the labor administration). The validity and the terms and conditions of the settlement agreement can be challenged before the labor court during a period of one year following the ratification date. For protected employees (i.e., staff representatives, members of the works council, etc.), the validity of such procedure is subject to prior authorization by the labor inspector.
- New fixed-term employment contract: In order to foster the hiring of engineers and executives on certain projects for which it is not possible to predefine a term or a minimum duration, it is now possible to enter into a new fixed-term employment contract for a term that is not predetermined, but is entered into for the completion of a given task or project. This non-renewable contract may be entered into for a term of between 18 and 36 months. Recourse to this new contract is only available where an employer and union have agreed in their collective bargaining agreement to allow such contracts. This new type of fixed-term employment contract is implemented for a probationary period of five years following the application date of the law.
- Legal severance indemnity: The law of June 25, 2008 reduces the seniority required to benefit from a legal severance indemnity from two years to one year. An employee with more than one year’s service is entitled to a minimum severance indemnity of 1/5th of the employee’s average monthly salary.
- Portage salarial: Finally, it is worth mentioning the provisions introducing a new "working relationship" known as "portage salarial"—literally, "employment piggy-backing." Under this new legal instrument (which aims at facilitating employment of senior unemployed), companies called "sociétés de portage salarial" (literally "employment piggy-backers" or "employment carriers"), can enter into a triangular relationship with employees and employers. Piggy-backers may hire employees under an employment contract to perform work on behalf of the employee’s own clients. The salary paid to the employee is a part of the compensation obtained by the employment carrier from the client. This new piece of legislation introduces a variation from the temporary employment and reduces the risk of unfair loan of employees.
Simeon
Spencer
Condor House
5-10 St Paul's Churchyard
London • EC4M 8AL
Ph: +44 (0) 20 3201 5520
Fx: +44 (0) 20 3201 5600
simeon.spencer@
morganlewis.com
Dr.
Walter Ahrens
Guiollettstraße 54
60325 Frankfurt am Main
Ph: +49 69 714 007 34
Fx: +49 69 714 007 10
wahrens@morganlewis.com
François
Vergne
68 rue du Faubourg
Saint-Honoré
75008 Paris
Ph: 33 (0) 1 53 30 43 00
Fx: 33 (0) 1 53 30 43 01
fvergne@morganlewis.com