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French labor law - Festival French Tech 2014

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Festival French Tech 2014

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French labor law - Festival French Tech 2014

  1. 1. 1 French Labor Law : Striking the right balance between flexibility and security Emmanuelle Wargon, General Director for Employment and Vocational Training (DGEFP)
  2. 2. 2 French Labor law : Realities vs Perceptions Less adaptable markets Longer hiring process Higher recruitments costs Unstable rules Divisive rules Well-suited rules Efficient rules Stable rules Lively but constructive social dialogue: rules defined by social partners Concrete examples of the balance between flexibility and security The probationary period to assess employees’ skills The termination of an open-ended contract by mutual consent The rules governing individual redundancies The rules governing collective redundancies PERCEPTIONS REALITIES A growing awareness of the need for more flexibility since the mid 2000’s Over the past 5 years: 2008 : Renewal of the social dialogue rules 2008 : Termination by mutual consent 2013 : Reform of the collective redundancies procedure
  3. 3. 3 Existing rules contributing to a flexible labour market : The example of probationary periods Permanent contracts An opportunity to assess an employee’s skills For all kind of contracts although not compulsory Must be clearly stated, either in the appointment letter or the employment contract in coherence with collective agreements If the contract is broken, no need to provide grounds or severance pay Fixed-term contracts Duration depends on the employment status of the employee (including renewal) : Up to 4 months for workers and employees Up to 6 months for supervisors and technicians Up to 8 months for highly skilled employees and managers Duration can be exdended without any justification Up to six months contracts : 1 day per week for up to 2 weeks For longer contracts: The maximum probationary period is 1 month
  4. 4. 4 Existing rules contributing to a flexible labour market : The example of individual redundancies Motive: Cutbacks or job changes or rejection of a contract modification in the wake of: financial problems; technological change; restructuring for competitiveness or a business closure Procedure: Individual or collective (up to 9 employees) Information of the works council if in place Preliminary interview with the employee (notice for convening : 5 working days) Notification letter of dismissal sent 7 days after the interview date, or 15 days in the case of supervisory personnel Notice period of at least : 1 month for employees with less than two years of service 2 months for employees with more than two years of service Severance pay At least 1/5 of the monthly pay for each year of service after 1 year Collective agreements may provide for higher severance pay ECONOMIC REASONS Motive: For misconduct on the part of the employee or for actions that fall short of misconduct but harm the company’s interests Procedure: A warning can be issued before initiating the dismissal procedure (at least 1 working day after the event and not more than 2 months) Preliminary interview with the employee (notice for convening : 5 working days) Notification letter of dismissal sent 2 working days after the interview Notice period of at least : 1 month for employees with less than two years of service 2 months for employees with more than two years of service Severance pay : Employees entitled to severance pay equal to that paid for layoffs for business reasons Employees not entitled in cases of serious misconduct PERSONAL REASONS
  5. 5. 5 Existing rules contributing to a flexible labour market : The example of terminations by mutual consent 320 000 amicable termination in 2012 95% of applications approved in 2012 (refusal if abuse of due process) Limited termination fee in 2011 : 6 660 € Mutually agree to negotiate a termination to an open-ended employment contract by mutual consent Agreement defining the termination date and conditions including the payment due to the employee At least one interview is required The employee may be assisted by a person of their choice from among the company personnel. The employer and employee sign a written agreement The employer and employee then have 15 days during which they can withdraw their position Approval by the employment authorities within 15 working days Administration checks the procedure and the consent MUTUAL CONSENT PROCEDURE PUBLIC INTERVENTION A win-win scheme : flexibility for the employer vs guarantees for the employee Consensus to avoid any appeal
  6. 6. 6 Redundancies of more that 10 employees in a 30-day period in a firm of 50 employees and more 2 options for the employer UNILATERAL DOCUMENT Established by the Management Information & consultation of Works Council Approved by the administration within 21 days COLLECTIVE AGREEMENT Negotiated within the firm Majority agreement (1 or several representative Unions gathering at least 50% of the votes cast) Validated by the administration within 15 days (limited control) Content Content of the Redundancy Plan is the single mandatory content Implementation of the dismissals (Number of dismissals and the concerned job categories, moderation and application perimeter of the dismissal criteria, ….) Content Content of the Redundancy Plan Implementation of the dismissals (Number of dismissals and the concerned job categories, moderation and application perimeter of the dismissal criteria,….) A trend of reforms to foster a flexible labour market : The example of collective redundancies for economic reasons (1/3)
  7. 7. 7 Restriction of the duration of the procedure The Works Council shall present its position concerning the economic rational of the project and the social measures in a time frame that cannot be superior, counting from the first meeting during which it has been consulted : 2 months if the number of dismissal is inferior to 100 3 months if the number of dismissals is equivalent to 100 and inferior to 250 4 months of the number of dismissals is at least 250 In the absence of the Works Council’s position, it is considered to had been consulted. Maximum duration includes the possibility to call upon an expertise As previously, le Central Works Council can consider to appeal to a certified public accountant during the first meeting The CPA shall present his/her report at least 15 days before the expiration of the time period of the Works Council to present its two notices A trend of reforms to foster a flexible labour market : The example of collective redundancies for economic reasons (2/3)
  8. 8. 8 A trend of reforms to foster a flexible labour market : The example of collective redundancies for economic reasons (3/3) Limited refusals: only 33 out of 450 reasoned decisions Priority given to negotiation: 40% of agreements Limited appeal rate : 7% vs 30%
  9. 9. 9 A strong and diversified public support to growth and innovation Well-suited to the size of the firm, its location, the type of project At every stage: to hire, to train, to confront with difficulties, to innovate, etc Diversified tools : subsidized or interest- free loans, grants for physical investment projects and R&D, tax credit, etc A win-win partnership based on negotiations between trade unions and employers organizations Aiming at reducing administrative, fiscal and social burden to unlock competitiveness Among the first measures: Tax credit for competitiveness and employment : Major tax saving of 6% of the wage bill (excluding wages superior to 2.5 times the minimum wage) Decrease of the labour cost for employees paid at the minimum wage starting from 2015 Decrease of the fiscal pressure, in particular corporate taxes EFFICIENT EXISTING SCHEMES FURTHER STEPS TO BOLSTER COMPETITIVENESS: PACT OF ACCOUNTABILITY
  10. 10. 10 QUESTIONS

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