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Macron’s Labor Reform

August 31, 2017

After the presentation of the labor law executive orders  this morning, AmCham gives you an overview of the up-coming changes …

Do not forget to register to our Labor Law Webinar on September 28th and to our AmCham Confidential  avec Pierre André IMBERT on October 3rd to get an in-depth analysis on what these changes entail.

WHAT WILL CHANGE ?

  • Only a company’s French economic health will be used to assess whether good reason exists to terminate employees. The international performances will not be taken into consideration.
  • Dismissal Red-Tape: an employer will no longer be sanctioned by labor courts in case of procedural failures if the dismissal is justified.
  • A set scale for damages in the event of wrongful dismissal. The lower limit is set to 15 days of salary for very small business, and to one month for other companies. The upper-limit is set to 20 months of salary. Minimum legal damages for dismissal will also be increased by 25%.  This will not apply however to discrimination or harassment claims.
  • Creation of the Social and Economic Committee. Staff delegates, works council and health and safety committee will be merged into a single body.
  • A one year statute of limitations to bring cases to Labor Courts.
  • Small companies can collectively bargain without a trade union representative.
  • More issues will be discussed at the company level.

HOW WILL IT IMPACT INTERNATIONAL INVESTORS?

CLARITY  The government intends to clarify the French Labor Law, making it more comprehensible for employees, small business but also International investors. The labor code will be digitalized and some procedures such as the deadline to dispute contract termination will match EU standards.
PREDICTABILITY – Setting a damages scale for wrongful dismissals as well as limiting the timeframe to refer cases to Labor Courts is likely to give more visibility and security to international investors.
FLEXIBILITY – International companies choosing to invest in France will now be able to adapt to their economic environment with more agility as only their economic health in France will be taken into consideration.

WHAT HAPPENS NEXT?
September 22nd – Approval of the executive orders during a Cabinet Meeting. The executive order will then be signed by the President and immediately come into effect.
September 28th – Review by the Constitutional Council.

Other upcoming reforms that will impact France’s Competitiveness
September 27th – Presentation of the 2018 Budget (PLF). It will include a decrease of employees’ and employers’ contributions, said Édouard Philippe this morning.
Before the end of 2017 – Presentation of a Bill detailing the tax evolutions for the up-coming 5 years to improve predictability.