a. Severance pay
Employees under permanent employment contracts will be entitled to severance pay if they have been in the company for at least eight months (versus one year before).
In addition, legal severance pay has been increased by a decree published on 26 September 2017. Starting now, minimum legal severance pay will be 25% of a month’s salary per year of seniority up to 10 years of service (versus 20% before). After 10 years of service, severance pay will remain unchanged (i.e. 1/3 of a month’s salary per year of seniority above 10 years of service).
However, collective bargaining agreements may provide for higher severance pay which do not fall within the scope of this increase.
b. Dismissal letters
Currently, when employees challenge their dismissal before a labour court, employers may only rely on the reasons set out in the dismissal letter. If the reasons invoked are considered insufficient, the dismissal is deemed unfair and the labour court must award damages to the claimant.
Under this reform, companies will be able to clarify the reasons justifying a dismissal at a later stage (i.e., after the notification of the dismissal letter), at their own initiative or at the employee’s request.
If the employee does not request clarifications, the fact that the dismissal letter does not provide sufficient details on the grounds for the dismissal will no longer result in the dismissal being declared unfair and damages will be limited to a maximum of one month’s salary.
c. Redundancies
Economic grounds and definition of a business sector
When a company belongs to a group, the economic grounds for the redundancy are assessed at the level of the group or, if there are several business sectors within the group, at the level of the business sector to which the company in question belongs. This currently includes foreign companies operating in the same business sector.
Under this reform, only the situation of group companies established in France will be taken into account to evaluate the economic justification.
This reform also provides a definition of a business sector: a common business sector is now defined by the nature of the products, goods or services delivered, the target customers, the network and the distribution methods pertaining to the same market.
Redeployment
Until today, in case of redundancy, companies had to first try to redeploy impacted employees. This involved searching for redeployment positions within the company and the group it belongs to in France and abroad, provided the employees expressly request to be redeployed abroad. Individualized redeployment offers had to be made in writing and be sufficiently detailed.
Under this reform, companies will still have a redeployment obligation. However, if a company belongs to a group, this obligation will be limited to companies located in France whose organization, activities or location result in their staff being interchangeable. In practice, this means that employees will no longer be entitled to request redeployment offers abroad.
Moreover, a new means of communicating available positions will be added. Redeployment offers will still have to be made in writing, but the employer will be have the option to provide a list of available positions to all of the employees by any means (additional conditions shall be defined by an upcoming decree).
d. Voluntary departure plans
The purpose of a voluntary departure plan is to downsize a company’s workforce by eliminating jobs while avoiding redundancies. Employees are encouraged to voluntarily leave the company by offering them measures to assist them to find new employment. The departures take the form of terminations by mutual agreement and not redundancies initiated by the employer.
The implementation of voluntary departure plans is currently subject to the collective redundancy procedure (i.e., a very burdensome procedure).
Under this reform, by means of a majority collective agreement concluded with labour unions and validated by the labour authorities, these voluntary departures (now referred to as “rupture conventionnelle collective”) will have their own formal legal framework (i.e., a less burdensome procedure). Additionally, it will no longer be mandatory to offer redeployment leave (“congé de reclassement”), which represented a significant cost for companies.
Finally, it will not be necessary to provide a valid economic justification at group level or at the level of the group’s sector of activity to which the employer company belongs, which will simplify the process and make communication easier with labour unions, elected staff representative bodies, employees and labour authorities.
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