Employment Update France February 07

12 February 2007

Christopher Ivey

New legislation

The law for the development of employee profit sharing and shareholding:
This law, passed on 14 December 2006, widens the scope of profit sharing and shareholding for employees by implementing a number of new provisions. These provisions include, for certain companies, the simplification of intéressement and participation profit sharing schemes, the requirement for negotiations to take place on the implementation of profit sharing schemes, employee savings plans and employee pension savings plans. The law also encourages employee shareholdings by providing tax breaks for both employees who choose to participate and for companies that provide training on employee savings plans and business economy. Another major development to be implemented by this law is the progressive removal of the Delalande tax on the dismissal of any employees over the age of 50. This tax was a considerable financial burden for companies dismissing older employees as the tax could be as high as 12 months salary in addition to any payments due to the employee. The Delalande tax is no longer applicable for the dismissal of employees hired after 31 December 2006 and will be totally removed for all dismissals as from 1 January 2008.

The law for the modernisation of labour law dialogue: The bill for the modernisation of labour law dialogue was passed on 17 January 2007. It implements new procedural requirements; in particular it requires that compulsory discussions take place between the government and trade unions before any draft reforms to labour law are made. It also makes provisions for employment and professional training. The law requires the government to present its plans to the National Collective Bargaining Committee on an annual basis as well as providing Parliament with a report on all discussion procedures. The aim of the law is to open up national and inter-sector negotiations. However, it remains possible for the government to avoid applying the law if it can demonstrate an urgent need for so doing.

Decree enforcing smoking bans in the workplace: As across Europe, France has seen new legislation passed banning smoking in public places. Decree n° 2006-1386 dated 15 November 2006 applies to all enclosed and covered public places and workplaces (the Health Minister has indicated that individual offices are also covered) as well as public transport and uncovered school premises. This ban will come into force on 1 February 2007. An extended deadline of 1 January 2008 applies to cafés, bars, restaurants, tobacconists, discotheques and casinos. No smoking signs must be put up in all workplaces and employers must take all reasonable steps to prevent smoking in the workplace. Employers can designate a specific room as a smoking area (but there is no obligation to do so), subject to a number of conditions. These conditions include the biennial consultation of either the company's health and safety committee or employee delegates and an occupational health doctor. Employers who do not comply with the legislation will be subject to fines of up to €750 per offence.

Case update

Notice for a pre-dismissal meeting:
Article L. 122-14 of the Labour Code stipulates that a pre-dismissal meeting with an employee must not take place less than 5 weekdays after the presentation of the registered or hand-delivered invitation to the employee. In the case of Marina Services, the Cour de Cassation held that this 5 weekday period must be considered as 5 whole days, and that the day on which the invitation is presented cannot count as the first day. The 5 days are therefore calculated starting on the day after presentation of the invitation letter. The Cour also reiterated the fact that the term "weekdays" does not include Sundays. Failure to comply with procedural rules may give rise to the payment of damages to the employee.

Trial period - Pregnancy and termination: The Cour de Cassation (21 December 2006) held that the provisions of the Labour Code, (Article L. 122-25-5) which prescribe that dismissals of pregnant employees (as well as employees who find out that they are pregnant within 15 days of receiving notice of dismissal) are to be held void, do not to apply to the termination of an employment contract within the initial probationary period. However, in this instance a dismissal was held to be invalid due to the fact that at the time that the employment contract was signed it was agreed that the probationary period would definitely be renewed. Such a renewal is not legally permitted until an employee has commenced work.

Unfair employment of trainees on internships: A small business which employed 5 trainees on unpaid internships has been fined €25,000 and sentenced to a 6 month suspended prison sentence for undeclared work. The Paris Court of First Instance held that the trainees were placed in a position whereby they were subject to hierarchical control which could only be justified by an employment contract. They had received no formal training, and had been carrying out work for which clients were invoiced, and which was referred to in the company's objects clause.

Employment contracts with corporate officers: The Cour de Cassation (21 November 2006) has reiterated the fact that an employment contract signed by a corporate officer already in office is void. Although an employee may continue to hold their employment contract if subsequently appointed as a corporate officer, Article L. 225-44 of the Commercial Code prohibits the reverse.