French Employment Alert - Emmanuel Macron & Labour law reforms

25 May 2017

Benjamine Fiedler, Alexandra Stocki, Nathalie Devernay

Emmanuel Macron's economic views have included for quite a long time the need to liberalize the French employment market. During the presidential campaign, his manifesto highlighted labour reform as a top priority. The new President is already moving to fulfill his pledge by the end of the summer and planning to go far beyond the reforms he initiated in 2015 and 2016.

He will be assisted by Muriel Pénicaud, recently appointed Minister of Labour and Employment, who was previously CEO of Business France, an agency that fosters international development, exports and inward investment in France and promotes France’s international business image and attractiveness as an investment location.

Emmanuel Macron’s five main labour law reform objectives are:

  • Adjusting employment rules to economic reality: Macron wants to extend the list of matters on which agreements entered into at company level would prevail over those at industry level. This should bring more flexibility to companies and allow them to adapt certain rules to the reality of their economic environment.
  • Simplifying employee representative bodies: Macron is planning to merge the works council, staff representatives and the health and safety committee into a single employee representative body.
  • Reducing the cost of employment: During the campaign, Macron talked about reducing employee-side social security contributions deducted from gross pay as well as employer’s social security contributions under certain conditions. He is also planning to reduce social security contributions on overtime payments.
  • Promoting equality and preventing discriminations: Emmanuel Macron is pushing for the implementation of random testing campaigns in companies to unveil discrimination. He is also considering publishing the names of companies that do not comply with the rules on equal pay between men and women.
  • Making labour litigation more foreseeable: As attempted in 2016 but invalidated by the Conseil constitutionnel, he is keen to try again to implement a cap on the amount of damages that can be awarded by labour courts for unfair dismissal.

During the campaign and since his election, Emmanuel Macron has repeatedly explained he intends to pass through accelerated reforms on such matters, resorting to “ordonnances” (decrees). This would allow him to bypass extensive parliamentary debates and quickly implement labour law reforms. He would still need to get the Parliament to allow the use of decrees and to ratify the bills afterwards.

This strategy will depend on the results of the two-round legislative elections to be held on 11 and 18 June and in President Macron’s ability to deal with the already difficult relations with the unions he has to confer with before any reform on labour matters.

Given the tight timeline, we will provide you with regular updates on this upcoming reform and its consequences on companies and employment in France.