Employment Update, France - May 2008

06 May 2008

Christopher Ivey

Employees who accept personalised redeployment agreement can still dispute the grounds of their termination

Background

An employee terminated on economic grounds in a company with less than 1,000 employees or in the process of winding up must be offered a personalised redeployment agreement ("convention de reclassement personnalisé" (CRP)) at the time of their preliminary meeting (companies with more than 1,000 employees are required to implement redeployment leave provisions). This CRP replaced the previous provisions of the Labour Code, enabling the employee to obtain similar benefits under what was called a "congé de conversion".

This personalised redeployment agreement is an agreement with the unemployment bodies for a period of 8 months from termination, whereby the employee benefits from psychological and professional support, the evaluation of their skills, and increased assistance in finding a new job.

In the event that an employee took advantage of this possibility, the termination of their employment contract was considered to be by mutual agreement rather than on the basis of economic grounds. It was therefore considered that there was no need to provide detailed grounds for termination if the termination letter had not been sent at the time of the employee's acceptance.

New case law

A redundant employee who accepted the CRP offered to him filed a claim before the employment tribunal to dispute the grounds for his redundancy. However, given the drafting of the Labour Code, the employment tribunal and Court of Appeal both rejected his claim on the basis that having accepted the CRP, his contract was terminated by mutual agreement rather than on economic grounds.

The case was appealed to the Cour de Cassation, which held that by combining articles L.321-1 and L.321-4-2 of the Labour Code, although an employee's acceptance of the CRP would result in termination considered to be by mutual agreement, this should not prevent the employee from disputing the economic grounds behind the termination.

This case, dated 5 March 2008, is reminiscent of case law with respect to previous redeployment provisions (the "congé de conversion"), in that back in 1992, the Cour de Cassation held that the application of the "congé de conversion" implicitly required termination on economic grounds. It was therefore up to the courts to identify the economic grounds in the event that the employee disputed their termination at a later date.

What this means for you

Although the termination by mutual agreement resulting from the employee's acceptance of the CRP means that no actual termination letter is required, as with the "congé de conversion", it is advisable to send a letter to the employee confirming the termination by mutual agreement, but stipulating the economic grounds for the initial envisaged redundancy, as would have been done in the termination letter had the employee not accepted the CRP. In the event of a dispute, this letter will provide the company with evidence to demonstrate the grounds on which the decision to terminate was based.

"Solidarity Day": Working on Whit Monday no longer a given

Background

“Solidarity Day” was initially instigated by a law dated 30 June 2004, which, following the deaths related to the 2003 heat-wave, required employees to work an additional day every year, the proportion of the company’s profits resulting from this additional day’s work being contributed by the company to fund assistance for old-aged and handicapped persons. The legislation stated that unless a company collective agreement was executed to modify its application, the default additional day worked would be Whit Monday (“lundi de Pentecote”).

Due to the absence of such collective agreements, 70% of companies were open on Whit Monday. However, in part due to the majority of the civil service including schools being closed, less than half of all employees were present, the others having taken time off (either taking leave or time off in lieu).

New legislation

The new legislation, which was definitively adopted on 9 April 2008, removes all reference to Whit Monday from the law. While maintaining the requirement to work an additional 7 hours to contribute to “solidarity”, the new text stipulates that (i) it is up to unions to negotiate the implementation of this additional day, either in individual companies or at business sector level. If this is not possible or simply does not happen, (ii) the employer is free to define its application after consulting the works council or employee delegates. Where no such bodies exist, the employer is free to take a unilateral decision.

What this means for you

The agreement or unilateral decision may provide for one of the following options:

  • Employees work on a public holiday to be defined except Labour Day, 1 May,

  • In companies granting time off in lieu (RTT), employees work on one of these days,

  • Any other application of the law enabling 7 hours of work to be “contributed” to the cause

Where no decision has been made on a business sector level, in the collective bargaining agreement for instance, companies must define how they intend to apply “Solidarity Day” provisions as soon as possible, particularly as many employees are likely to query this matter coming up to Whit Monday this year (12 May 2008).

Overhaul of the Labour Code

Background

Since the Labour Code in its current format was first published in 1973, new provisions have been incorporated, but the Code has never had a significant overhaul. As a result, certain provisions are particularly difficult to understand and apply to the modern business environment and current understanding of labour principles. The regular modification of certain articles and frequent legislative changes has resulted in discrepancies between certain provisions, and difficulties in interpreting and applying the law.

New legislation

As of the 1 May 2008, the re-codified Labour Code will enter into force. This re-codification has been carried out in an attempt to simplify the current drafting of the Code.

The re-codification exercise has involved the transfer of specific provisions related to certain business sectors to the appropriate codes (for instance the Education Code, the Mining Code, the Social Security Code, the Sport Code, etc.). Certain provisions which were considered to be obsolete or useless have been purely and simply removed.

In addition, the attempted simplification has resulted in certain articles being split, in particular the well known Article L.122-12 on ARD transfers, which has been split into 4 separate articles (Articles L.1234-7, L.1234-10, L.1234-12 and L.1224-1), despite the fact that the drafting of the relevant points has not been significantly changed. Article L. 1224-1 now defines the automatic transfer of employees, using almost identical wording to that in the second paragraph of the previous Article L.1122-12.

It is important to note that certain articles of the previous Labour Code will remain in force, either because although no longer appropriate, certain employees are still eligible for the provisions, or because they are to be codified in a new code (in particular the Transport Code and the Energy Code) to be published at a later date.

A Ministerial Order dated 12 March 2007 (n° 2007-329), ratified by Law n° 2008-67 dated 21 January 2008 indicates which article or part of an article corresponds to which new article after codification.

What this means for you

Considerable confusion to start with…

The related terms referring to specific articles of the new Labour Code have now been published. As from its entry into force on 1 May 2008, any new document, letter, decision or minutes referring to an article of the Labour Code must exclusively refer to the new numbering. Individual decisions and minutes related to claims or events that occurred prior to 1 May should refer to both the previous and the new numbering, i.e. "Article X of the Labour Code (previous), now Article Y of the Labour Code (new)". This drafting should be applied systematically until 1 July 2008. Beyond this date, the need to continue to refer to the previous numbering will be assessed on a case-by-case basis. However, the Circular letter with respect to the application of the new Labour Code indicates that reference to the old or new numbering will have no effect on the legality of any document, provided that the substantive law applied is correct.

While this re-codification is not intended to modify the substantive law, it remains to be seen whether the redrafting will in practice alter the legal interpretation of certain articles. In the meantime, a correlation table has been published by the Ministry for Employment and Labour, which should at least help compliance in the future.