Summer brings fresh crop of labor reforms to France…
France made front news (see editorial of 14 August) as the government announced that effective immediately small companies could hire staff in France on an “employment at will” principle for up to two years, or in other words to terminate without cause staff hired under such contract during this test period. Of course, there is an overall 10% tax on salaries and eligible companies need to comply with strict controls such as a notice period (15 days to 1 month), but this is already great improvement for employers. Also, though this law applies to companies of 20 employees or less, it disregards the revenue size and whether the company is part of a larger group, either in France or abroad. In practice therefore many international groups who want to enter the French market or who have operations in France but have the possibility of creating a separate entity to isolate certain activities will be able to use these arrangements.
The new laws passed in the spring and during the summer have lead to other major changes – most of which were passed unnoticed – which will undoubtedly prove making life easier for employers :
- Elections of employee representatives formerly every 2 years, will now only have to be organised every 4 years. As the election process lasted approximately 45 days, the news will be a relief for many HR people. Companies of more than 10 employees require to be represented by “Staff Delegates” whereas companies of more than 50 employees are entitled to a works council, both having consulting powers only (unlike say Germany).
- France is famous for its 35 hour week first introduced in 1998 and which has extensively been amended to provide more freedom and flexibility. As the latest reform of August 2005, companies may (subject to a collective bargaining agreement being signed) abandon any reference to working hours and refer to working days instead. This mechanism formerly reserved to members of staff at management level is now generalised and will avoid the headache of keeping track of working hours.
- Employees who wish to dispute their redundancy are now bound by a statutory 12 month limitation if this timeframe is indicated in the termination letter. Considering that the standard limitation is 30 years for employment claims (and 5 years for claims relating to salary), this provides considerable improvement and security for companies and may discourage employees from filing frivolous claims.
Finally, the labor code itself is being completely overturned.
The purpose of this reform is to make labor law “clearer and more excessible” (Virville Report of January 2004 on the simplification of employment law). The brand new labor code is expected to be released within the next few months, so don’t take your eyes of France.
By Ming Henderson-Vu Thi
Ming Henderson is counsel at Kramer Levin Naftalis Frankel LLP and heads their employment and labor law practice in Paris. (contact: mhenderson@kramerlevin.com)
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