Analysis French labor reform

16/10/2017

Iñigo Sagardoy de Simón is the president of Sagardoy Abogados. Professor of Labour Law at Francisco de Victoria University

If there is an issue in which all European heads of state with future vision agree on is the need for making more flexible our labor market in order to provide Europe with chances to compete in a globalized and increasingly competitive world. Sooner or later, labor reforms have been on the agendas of Europeans heads of state, following the so called European flexisecurity approach, looking for the removal of obstacles on labor regulation so that enterprises improve their performance and employment grows. France, with all its peculiarities and difficulties, has not been the exception.

Following his great campaign promise, this summer, president Macron announced he will propel French economy towards the grandeur it naturally belongs to in the European setting. Part of his strategy means a deep and ambitious labor reform. And that is what has happened.

In order to deeply analyze the reform objectives and try to compare it, since it is very interesting, with our labor reform of 2012, it is necessary to draw from the premise that French labor relations and its legislation (almost 3.000 pages of labor laws) have an inner component which makes them incomparable with its European counterparts. Its historical background —which is still present today— lays on a labor model highly intervened by the administration and on labor unions widely present in enterprises with ample legal and negotiating faculties. To sum up, French model is flexible in the individual domain (for instance, job contracts) and very protectionist in the collective domain (collective bargaining). The latter point is the epicenter of the legal changes Emmanuel Macron wants to implement. There is no doubt that our Spanish labor reform and its positive effects on employment have inspired France.

Secondly, Macron general guidelines have not still come into force. Even though minor measures (the ones related to hiring) have become effective, the most important changes, all of them related to collective bargaining, are still undefined and unimplemented. Hence, social opposition —which also took place with Hollande’s reformist attempt— is intense and hard trying to avoid the expected reform to come into force. There is no doubt that social mobilization in France is very powerful, especially in the labor realm, having labor unions a lot of power in enterprises and the ability to effectively paralyze the country. This being so, they will probably achieve some conquest.

Going into details about the French government proposal, it is convenient to begin with the changes in the domain of job contracts, which have two main objectives. The first one, to ease dismissals, specially at the collective level. In this sense, as in Spain, reasons justifying collective dismissals will need to be analyzed at the company or group level in France (against the former situation in which it was necessary to turn out to a worldwide level to appreciate if an enterprise could use an economic argument to justify collective dismissal). The second one, contrary to the Spanish case, creating a process of collective bargaining (which is not subject to the collective dismissal formal proceeding, so its costs are much lower) where, by mutual agreement with the worker, it will be possible to do a voluntary resignation with freely agreed conditions, easing the dismissal of workers in a non-traumatic way. By the same token, in collective dismissals, the mandatory relocation is eased, placing it now at the company level but in “French soil”.

On the contrary, in an uneven way of what is happening in other European countries (Spain included), the termination of the contract and dismissal compensations are increased in two ways: compensations will be paid to all workers who have been on the enterprise for more than 8 months (prior to the reform, it was a year); and the aforementioned compensation will be of a minimum (with the possibility of being raised by collective agreement) of 25% of the monthly salary for each year of service (in the past, it was 20%), until 10 years of antiquity. From 10 years on it will be 1/3 of the monthly salary, without any limit. This is still less costly than the Spanish legislation (and less protective, since it only applies to workers with certain antiquity), although in Spain we have a compensation ceiling of 24 monthly pays. In cases of unfair dismissal, it is possible to obtain a compensation for damages, apart from the dismissal compensation, which could cover up to 20 months of salary in the case of big enterprises. This compensatory increase is the argument Macron has used to justify the equilibrium (flexisecurity) of the reform.

Moreover, there will be some formal changes regarding the dismissal claim (possibility to sue against the dismissal in a period of 12 months, contrary to the Spanish case which is 20 working days) and that in the legal proceeding the enterprise can argue motives of the letter of dismissal which have not been considered before.

Changes made in the field of collective bargaining and collective working relations are more important and interesting, and very similar to the ones in our labor reform of 2012. We draw from the premise that the structure of collective bargaining is very similar to the Spanish one, that is, sector collective agreements, enterprise collective agreements and enterprise agreements with application prevalence and priorities similar to the Spanish regulation. In this sense, the French reform has taken a step forward (as in the case of Spain) so in certain labor conditions the enterprise agreement can prevail against the sector one. Thus, a key flexibility element or the labor market is introduced. It is also possible to conclude enterprise agreements (without the intervention of trade unions) with workers directly elected (by themselves) in those enterprises where there are not trade unions. Finally, a new representative figure is created, the Comité Social et économique (Social and Economic Committee), that brings together all the workers representations of the enterprise (security and health, personal delegates, enterprise committee, etc.) to achieve a higher negotiation flexibility.

To sum up, we face an important step (but not definitive) towards a framework of more flexible labor relations and that goes in hand with new demands in the labor market, but it does not distort a very French preexisting labor regulation. 


Translate by María Maseda Varela

#Economy #France #Europe #Macron #ReformaLaboral #mercado de trabajo