Memorandum. General Overview Employment Law/France

Transcription

1 Memorandum General Overview Employment Law/France

2 1. General In France, employment law affords employees a good level of protection. Nevertheless, this legal environment is constantly changing as a result of government reforms and case law evolution. Recent trends relate in particular to: (1) union representation and collective bargaining agreements; (2) working time; (3) mutual termination agreements; (4) senior management compensation; and (5) termination packages in listed companies. In France, choosing the wrong option may result in costly individual or collective litigation. Key Points All non-eu citizens need a work permit to work. Employers and employees are free to negotiate the terms and conditions of their employment relationship. However, employees have various minimum rights under the law, regardless of any provision to the contrary in their employment contract. Usually, employees work 35 hours per week. Only hours worked at the request of the employee s superior will be regarded as overtime. French Employment Law provides wide powers to the so-called representative trade unions. Indefinite term contracts: there must be real and serious grounds for dismissal (two types of valid grounds). Severance payments are only awarded if the employee has the minimum length of service and the relevant CBA provisions. 1. Brief Introduction In France, employment law affords employees a high level of protection. Nevertheless, this legal environment is constantly changing as a result of government reforms and evolutions in case law. The most important change occurred in June 2013, when a law aiming to increase flexibility in the French labour market and to confer a number of rights on employees entered into force. 2. Legal Framework Employment law in France is based primarily on the following sources, set out in order of priority: 1) The Constitution. 2) European legal instruments: Consisting of EU Law (including Treaty provisions, EU regulations and Directives and the case law of the European Court of Justice) and the European Convention for the Protection of Human Rights and Fundamental Freedoms. 3) The Labour Code: Made up of laws, regulations and decrees, the Labour Code determines nearly every aspect of French employment law. 1

3 4) Case law: The provisions of the Labour Code are interpreted through decisions of the employment law section of the Supreme Court ( Cour de cassation ). 5) Collective Bargaining Agreements ( CBAs ) ( Conventions collectives ): Collective Bargaining Agreements are written agreements, entered into between one or more employee representative trade unions and one or more employer representative organisations. They govern individual and collective employment relationships, working conditions and employee benefits in a given industry (e.g., the chemical, banking and pharmaceutical industries). Collective bargaining agreements can be binding on all employers whose line of business is covered by the agreement. 6) Collective company agreements ( Accords d entreprise ): These agreements, which apply to specific companies, are signed by the employer and, in principle, trade union representatives present in the company. 7) Atypical agreements: At company level, agreements may be entered into with the staff delegates or the Works Council rather than with trade union representatives and, in such a case, they are defined as atypical agreements. They do not come under the category of collective company agreements. They are considered binding by the case law as a unilateral commitment ( engagement unilateral ) of the employer. 8) Common practices ( usages ): These are the general, fixed, and constant practices of the employer. They concern, in particular, benefits granted to employees and some details regarding the operation of staff representative bodies. The Company may revoke those common practices at any time, subject to notifying the staff representatives and each individual employee concerned, along with respecting a reasonable notice period (normally three months) between the notification of the employees and the revocation of the common practice. 3. Recent Amendments to the Law a. Pension Rights Pension rights have been thoroughly revised. As a result of the revision, most of the employees who have paid the required contributions (i.e. for a fixed number of years) can enjoy pension benefits beginning at age 62 (changed from age 60). Employees who have not paid the required contributions may enjoy the full-rate pension beginning at age 67 (changed from 65). b. Law on the Security of Employment A new law was passed on 14 June 2013 regarding the security of employment ( loi de sécurisation de l emploi ). The objective of this law was to increase flexibility in the French labour market in exchange for a number of employee rights, both individual and collective. 2

4 Some of the key measures proposed by the law to increase flexibility where the company encounters a strained economic situation include: 1) Collective agreements ( accords de maintien de l emploi ): A company may enter into a temporary agreement with the relevant unions (representing at least 50% of the company s employees) for a maximum of 2 years to combat such difficulties. Such an agreement would entail changes in the company s organisation, such as an increase in working time and a reduction in remuneration. In return, the employer agrees not to render any employees who accept the changes redundant. On the other hand, if an individual employee refuses the changes, the employer has the right to render that employee redundant through a simplified procedure. 2) Internal mobility: A company may enter into collective bargaining agreements regarding internal mobility, within certain limitations: the work-life balance, health and handicap of employees should be taken into account; and the company should undertake to assist employees with geographical mobility. An individual employee may refuse the conditions of internal mobility, but this gives the employer the right to render that employee redundant. 3) External mobility: Long-standing employees (at least 24 months) of large companies (at least 300 employees) are entitled to request temporary unpaid leave in order to work for another company, whereby their contract of employment is suspended. Once this leave has expired, they either return to the company or are considered to have resigned. 4) Collective redundancies: In companies of more than 50 employees, a new system of collective redundancies applies. Of particular interest in this new system are the new time constraints imposed on consultative procedures and the reinforced role of the Labour Administration. See paragraph VI.4.b for more detail. 5) Litigation risks: the limitation period for the majority of claims regarding termination of the employment contract has been reduced to 2 years whilst the limitation period in relation to the payment of wages has been reduced to 3 years. In counterpart, some of the key rights conferred on employees include: 1) Individual learning accounts ( Compte personnel de formation ): Employees are entitled to individual learning accounts through which they have the right to a certain number of training hours. These accounts are now transferable (i.e. they are not confined to any particular company) and entitle employees to professional training throughout their careers. 2) Mandatory healthcare coverage: Companies that do not already provide healthcare coverage will be required to enter into negotiations regarding the implementation of such coverage, and where no conclusion is reached as a result of such negotiations the minimum healthcare coverage will be imposed as of 1 January

5 3) Collective rights: In addition, a number of collective rights for employees have been established, including annual consultation regarding the company s strategy, the establishment of a centralised database for all information provided to the Works Council, the imposition of fixed timelines on the consultation procedures and, for large companies, the right to representation in the company s organs of governance. c. Increased scrutiny of Forfaits annuels en jours Another evolution, arising from case law, concerns the regime of annual pay based on the number of days worked ( forfait annuel en jours ). Payment in forfait jours is only available in certain circumstances, notably where it has been authorised by means of a specific collective agreement ( accord collectif ). The Cour de Cassation has recently invalidated forfait jours conventions for failing to ensure the health and security of the employees subjected to a given forfait jours regime (see, for example, Cass. Soc., 29 June 2011, n ; Cass. Soc., 31 January 2012, n ; Cass. Soc., 24 April 2013, n ; Cass. Soc., 2 July 2014, n ; Cass Soc., 11 June 2014, n ). To avoid the invalidation of such a convention, a further accord collectif should be agreed so as to bring it into line with constitutional principles and EU directives aiming to protect employees health and safety. 2. Employment Contracts 1. Minimum Requirements Employment contracts are not generally required to be written, but certain forms of employment contract should be in writing (notably fixed-term contracts, part-time contracts and temporary employment contracts). The employer should provide the employee with a written statement of the essential terms governing the employment relationship. Oral fixed-term contracts are unequivocally deemed to be indefinite-term contracts and oral part-time contracts are deemed full-time contracts. Indefinite-term contracts should contain the following information: 1) Identification of the parties; 2) The employee s job title or a description of their duties; 3) Working time; 4) The employee s compensation; 5) The place of work; 6) The employment start date; 7) The length of the probationary period; 8) The holiday entitlement; 9) The applicable CBA; and Fixed term contracts should contain the same information as indefinite term contracts and, in addition, fixed term contracts should specify: 4

6 1) The reason why the company is using a fixed term contract; 2) The date on which the contract is to end, or its minimum duration if an exact termination date has not been fixed; and 3) The name and job description of the absent employee, if the reason for using a fixed term contract is to replace a temporarily absent employee. In addition to the general requirements for employment contracts listed above, part-time contracts should state the following: 1) That the contract is for part-time work; 2) The employee s working hours; 3) Any conditions relating to possible changes in working hours; and 4) The amount of overtime permitted according to statute or the relevant CBA. Further, since the law of June 2013 on the security of employment, part time contracts must be of a minimum duration of 24 hours per week unless an exception applies (for example branch agreements, at the request of the employee in order to address a personal situation or to undertake various work activities, students under 26, certain employers and intermediary associations). Moreover, part time working hours have been rendered more flexible, as remuneration may now be modified with major modifications (hours exceeding 10% of the contractual hours) to be approved by a branch agreement, and with the possibility of temporarily increasing the contractual working time of a part time worker, again with approval through a branch agreement. Finally, where 1/3 of the company s workforce is employed part time, companies now have the obligation to negotiate part time working arrangements. 2. Indefinite Term/Fixed Term Contracts The indefinite term contract is the typical form of employment relationship. As a rule, the validity of an indefinite term contract is not subject to conditions regarding the content and form of the agreement. In that respect, French case law has held that a pay slip may be sufficient to formalise an indefinite term contract. A fixed term employment contract is an employment contract entered into for a defined duration, set in advance by the parties. This kind of employment contract is very specific, notably as neither party may terminate it prior to its end, except in the event of an amicable separation, serious misconduct ( faute grave ), force majeure or if the employee finds alternative employment under an indefinite term contract. In contrast with indefinite term contracts, the conclusion of a fixed term contract is subject to conditions of content and form. However, employees working under fixed term contracts have the same individual statutory rights as those working under indefinite term contracts. 3. Trial Period Rather than entering into the contract immediately, parties to the employment contract may agree to provide for a probationary period, which can only be renewed once and under 5

7 condition, during which either party may terminate the employment contract without any formality. If both parties are satisfied at the end of the probationary period, the employment contract becomes definitive. The probationary period is governed by statute. The legislature has introduced a maximum length for the probationary period and a minimum notice period, which varies according to the categories of employees concerned. The trial period that may be mentioned in fixed term contracts is fixed by the Labour Code according to the duration of the contract. 4. Notice Period Except for specific exceptions (e.g. dismissals for serious or gross misconduct), the parties should observe and cannot waive the required notice periods before an indefinite term contract is terminated. The length of the notice period is generally determined by the national CBA. Employees who are dismissed or made redundant are entitled to pay in lieu of notice if they are not required to observe their notice period. 3. AUTHORISATION FOR FOREIGN EMPLOYEES 1. Required Permits EU citizens, except for citizens of Croatia, do not need a work or residence permit if they hold a passport or other ID proving that they are EU citizens. Croatian nationals are subject to a transitional period, currently due to end on 30 June 2015, and require work and residence permits. However, they benefit from preferential treatment and can use a simplified work authorisation procedure to work in certain professions where recruitment is difficult. All non-eu citizens should obtain a work permit to work in France. The relevant prefecture ( préfecture ) (i.e. local government representative) will consider the employment situation within the relevant territory or department ( départment ) when deciding whether to grant a work permit. 2. Obtaining Permits If the foreign national is living abroad, the employer should apply to the local French unemployment authority. The application is then forwarded to the employment authorities. If they decide that the foreign national can work in France, they issue a temporary one-year work permit. 6

8 4. Working Conditions 1. Minimum Working Conditions Employers and employees are free to negotiate the terms and conditions of their employment relationship. However, employees have various minimum rights under the law, regardless of any contrary language in their employment agreement. These minimum working conditions are set forth in the French Labour Code and the applicable Collective Agreement, among other sources. 2. Salary As of 1 January 2015, the minimum gross monthly wage is EUR 1, (about USD 1.648) for a 35 hour work week. All employees who are employed under an ordinary employment contract (either indefinite or fixed term) are entitled to the minimum wage. CBAs also frequently provide minimum wages (depending on job categories). 3. Maximum Working Week Usually, employees work 35 hours a week. However, employers can agree a longer work week with their employees. In that case, any work over 35 hours a week is payable as overtime (although there is no entitlement to additional days off). In any event, employees should not work more than: 1) An average of 44 hours a week during any 12 consecutive weeks; 2) 48 hours during any given week; 3) 10 hours a day. It is possible to negotiate a more flexible working schedule for all employees with trade unions at company level. A law dated 20 August 2008 reforming working time ( Loi portant renovation de la démocratie sociale et réforme du temps de travail ) ( Working Time Law ) provides for working time to be reorganised at company level (subject to applicable CBAs). Working time can notably be reorganised on a multiple-week basis, i.e. the employee works an average 35 hours over 4 (or more) weeks, while his working time is each week different. However, statutory restrictions on working time should be met and the employees duly informed of the working schedule. Special rules apply to autonomous executives (that is to say executives of a certain level who freely organise their working time). 7

9 4. Overtime Overtime is the hours worked in excess of the statutory weekly working hours. Only hours worked at the request of the employee s superior will be regarded as overtime, however, the employer has the duty to ensure that employees do not exceed the daily and weekly limits. Those who work overtime are entitled to compensatory payment involving a surcharge (which is generally 25% for the first 8 hours put in during the week, then 50%), and which cannot be less than 10%, of the employee s standard pay. Each overtime hour may either be paid or compensated with compensatory rest, i.e. every hour of overtime worked gives rise to either 1 hour of pay or 1 hour of rest, plus the relevant surcharge. All overtime hours performed are computed within the yearly overtime limit ( contingent ). According to French law, the employer is free to require each employee to work overtime up to an annual limit agreed in an applicable collective agreement, or in the absence of a collective agreement, up to a legal limit of 220 hours per year per employee. Provided the employer does not require the employee to work beyond the legal limits, the employee has no right to refuse to work overtime. Over this threshold, the employee is entitled to mandatory rest in addition to financial compensation. The employer can only request the employee to work in excess of the legally recognised overtime level if he has consulted the Works Council or, in the absence of a Works Council, staff representatives. The employee s total working hours in a given month should be recorded in writing on his/her pay slip, with overtime clearly indicated on a separate line. Failure to do so constitutes a criminal offense. 5. Holidays Employees are entitled to a minimum of five weeks paid holiday a year. In addition, there are approximately ten public holidays every year. The law and CBAs grant additional paid leave for employees who have reached a specific length of service and for family related events. Autonomous executives also benefit from additional days off. 5. Rights of Employees in Case of a Transfer of Undertaking 1. Legal Framework French law on the transfer of undertakings is virtually identical to the EU Directive governing the transfer of undertakings (Directive 2001/23/EC). Employment issues triggered by business 8

10 transfers are codified in article L of the French Labour Code (formerly article L ). 2. Information Procedure To date, there is no legal requirement in France to inform each employee before the transfer*, but there is a legal requirement to inform and consult the Works Council. However, in practice, employees commonly receive a brief letter advising of the change of employer, in an attempt to achieve a seamless transition and to build unity with the new entity. It is noteworthy that certain bargaining agreements may require informing transferred employees. Hence, except where this is a requirement under a collective bargaining agreement, there is no legal sanction if the transferred employees are not informed. * The relevant EU Directive requires employers to notify the employees of the transfer prior to their transfer when there are no workers representatives. However, this has not been transposed into French law. Hence, no legal sanction exists if this is not done (cass. soc. 18 November 2009, n and ). In July 2013, the French Government discussed, but did not pass, a bill requiring that the employee be informed of his transfer. 3. The Scope of the Automatic Transfer In France, an employee cannot object to a transfer as the transfer is operated automatically. A refusal could constitute grounds for dismissal for disciplinary reasons. The automatic transfer concerns any kind of employment contract (fixed term contracts, trial period contracts, suspended contracts for illness, etc.). Employees who enjoy a protected status (e.g. employee representatives) will also see their contract automatically transferred, with their representative role intact; however, when the transfer concerns only part of a business (a partial activity transfer), their transfer should be authorised by the Labour Inspector. The contracts will be transferred in their totality (seniority, remuneration, position, noncompetition, etc.), as well as unilateral commitments and practices, such as payment of a 13th month premium. The applicable collective bargaining agreement will continue to apply for a maximum period of 15 months, in the event that the company to which the employee is transferred applies a different collective bargaining agreement. 4. Employee Benefits and Pension Rights Employees will continue to benefit from any existing profit sharing agreement unless the change in legal status of the employer makes the implementation impossible for the transferee. In that event, open negotiations should be conducted in good faith to reach a profit sharing agreement, with an obligation to reach an agreement (articles L and L of the Labour Code). 9

11 Regarding pension rights, the transfer will have no impact on the social security system. However, the transfer of undertaking could require a harmonisation of the complementary system (managed by AGIRC/ARRCO pension funds). The rules of harmonisation depend on how the undertaking is transferred (merger, sale, etc.). 5. Cross-border Transfers In the case of a cross-border transfer out of France, theoretically, employees originally employed in France should benefit from the French rules on transfer. Nevertheless, as the transfer could have the effect of changing their place of work, they are entitled to refuse the transfer of their contracts. It would be wise, in the event of a cross-border transfer, to analyse the law of each country involved. Hence, in practice, an employee will be able to object to a transfer in the event that: - The transfer triggers a modification of his work contract, as such a modification requires the prior consent of the employee; or - The transfer is agreed on a voluntary basis, as the legal conditions for an automatic transfer are not met. 6. Termination of Employment Contracts In the case of an indefinite-term employment contract, there should be real and serious grounds for dismissal. There are two types of valid grounds: personal grounds and economic grounds. 1. Personal Grounds Personal grounds can include: 1) Poor performance or unsatisfactory professional skills; 2) Inability to perform the assigned tasks; 3) Misconduct within the company; and 4) An employee s repeated absence or absence over a long period of time (which is not related to a work-related accident or illness) which, in certain circumstances, can also constitute valid grounds for dismissal. 2. Economic Grounds The Labour Code permits two main economic grounds for dismissal: 1) Economic difficulties facing the relevant business sector at a group level; and 2) Technological changes. 10

12 As the above list is merely indicative, case law allows a third economic ground for dismissal, namely where it is necessary to safeguard the competitiveness of the relevant business sector at group level. Whatever the size of the redundancy plan is, companies with less than employees in France, and that do not belong to a a Community-scale group of undertakings within the meaning of the EC Directive 2009/38/EC of May 6, 2009 will be under a duty, as a mandatory external redeployment measure, to offer the affected employee a redeployment scheme called Contract of Professional Security ( Contrat de Sécurisation Professionnelle CSP). The CSP scheme consists in redeployment services (skills assessment, training, etc.) provided by the French Unemployment authorities to redundant employees for up to 12 months, during which the employee is entitled to an allowance. If at the conclusion of this 12 months period the employee is still seeking durable employment, the employee will be entitled to unemployment indemnities (Allocation d Aide au Retour à l Emploi - ARE allocations), within certain limits. 3. Procedural Requirements for Individual Dismissal/Redundancy Once an employer believes that there is a valid ground for dismissal, it should send a letter giving the employee five working days notice of a meeting. This letter should set out the time and place of the meeting and the employee s right to be accompanied by a fellow employee or a third party. During the meeting, the employer should state why it intends to dismiss the employee and take note of the employee s explanations if the dismissal is based on the employee s performance or misconduct. The employer should notify the employee of its decision and, if appropriate, specify the grounds for dismissal in a letter delivered by registered post. The employee should acknowledge receipt of the letter and may dispute the grounds for dismissal before an employment tribunal. If the contemplated dismissals are based on economic grounds, the employer should elect which employees to make redundant by considering: 3) The number of the employees dependants (especially for single parents); 4) The employees length of service; 5) Potential difficulties that the employees may face in finding new employment (such as age or disability); and 6) The employees professional skills. The employer should also make every effort to find employees facing redundancy another position within the same company or group, worldwide. It should also ensure that employees can adapt to the changes in their job position by way of training programs. Non-compliance with these rules may render the redundancy unfair. The employer should inform the Labour Administration of its decision to make the employee redundant within 8 days of the formal notice of dismissal. 11

13 4. Procedural Requirements for Collective Redundancy a. For companies of less than 50 employees In collective redundancies on economic grounds involving companies of less than 50 employees, the company should present an economic note to the workers delegates, presenting the reasons for the redundancies and the measures to be taken. This procedure must be followed regardless of whether the company is dismissing more or fewer than 10 employees. b. For companies of more than 50 employees dismissing at least 10 employees A new system of collective redundancies applies as a result of the law of 14 June 2013 on the security of employment ( loi de la sécurisation de l emploi ). As such, in companies of more than 50 employees dismissing at least 10 employees, the employer should undertake the following steps: i. Establish a Job Preservation Plan ( PSE ) The PSE should provide concrete, accurate and detailed measures and, notably, any alternative to redundancy such as the reduction of working time, redeployment opportunities or training. The employer may then formalise the PSE by: - Entering into an agreement with the relevant unions; or - Where this is not possible, make a unilateral decision. In both cases, the plan must be approved by the Labour Administration. ii. Consult the Workers Representatives and Provide Information The employer should meet with the Works Council to announce the proposed plan and inform it in writing of the reasons for the restructuring project and of the number and the category of workers to be made redundant. The consultation procedure is now limited to: - 2 months where the number of redundancies is less than 100 employees; - 3 months if the number of redundancies is between 100 and 250 employees; and - 4 months if the number of redundancies is above 250 employees. iii. Seek the Approval of the Labour Administration The agreement or unilateral decision on the PSE should be approved by the Labour Administration. 12

14 Time limits are imposed on the approval of the Labour Administration: - 15 days where an agreement has been reached; and - 21 days where a unilateral decision was made. In the absence of any response, approval by the Labour Administration is deemed to be given. iv. Notify Affected Employees Once the PSE has been authorised, the employer should make every effort to find employees facing redundancy another position within the same company or group, worldwide. If the internal redeployment is not possible, the employer should give each of the affected employees notice of his/her dismissal and indicate in each letter the reason for the redundancy. It is important to note that there is a specific procedure for the dismissal of protected employees, including staff representatives, trade union representatives, candidates to professional elections, and former staff representatives. Regardless of the type of procedure under way (for personal or economic grounds), the employer should, in most cases, inform and consult the Works Council (where one exists) and request the prior authorisation of the Labour Inspector for the proposed dismissal. 5. Specific duties applicable in case the French company is part of a Community scale group of undertakings within the meaning of EC Directive 2009/38/EC of May 6, 2009 i) Need to search for a buyer A law called Florange dated March 29th, 2014, which aims to avoid site closure where a buyer could be found instead the owner of the company who intends to shut down a site which would involve the redundancy of at least 10 employees must: - search for a buyer (set up a data room, draft an info-memo, formulate a report in relation to any relevant environmental issues); - update the WC regarding this process and provide it with a report in relation to this process; - where applicable, provide explanations in relation to the reasons as to why an offer (if any) was refused. Failure to comply with this duty would automatically lead the labor authority to refuse to validate the redundancy plan which will in practice prevent the shutdown from occurring. The labor authority may also request the reimbursement of any subsidy that the company may have received in relation to the site concerned by the closure. ii) Need to offer a redeployment leave Instead of the CSP scheme mentioned above, redundant employees must be offered a redeployment leave the duration of which (including the notice period) may be up to 12 13

15 moths, during which the employees will benefit from the assistance of an outplacement firm and will receive a monthly allowance beyond the notice period up until the end of the redeployment leave (which should represent no less than 65% average gross salary over the twelve months prior to notice of redundancy). iii) Duty to pay a specific contribution In case the French Authorities believe that the redundancy plan will affect the local area, the Company will have to help business in the local area, by implementing measures aimed at developing business and creating employment in the area affected (Articles L and following of the French Labor Code). An agreement entered into between the Company and the French Authorities of the administrative region will have to stipulate the measures in the collective redundancy plan aimed at developing business in the area. In this respect, the Company will have to pay a levy fixed by the authorities, that will normally correspond to a sum evaluated between two and four times the monthly minimum wage for each eliminated position. 6. Severance Payment Severance pay is only awarded if the employee has the minimum length of service required by the French Labour Code or an applicable CBA (typically one year). The amount of severance pay depends on the employee s length of service and the relevant CBA provisions. It is generally calculated on the basis of an employee s average salary (often including bonuses as well as basic salary) during the last year of employment. Employees receive statutory severance pay if no CBA applies or the CBA rate is lower than the statutory amount. Employment contracts can also provide for severance payments, as long as their rate is higher than those set by the CBA or the statutory amount. 7. Unfair Dismissal Employees who are unfairly dismissed can challenge their dismissals before an employment tribunal. If the judges find that the dismissals are unfair, they may grant compensation. An employee is entitled to a minimum of six months pay as compensation if the dismissal is deemed unfair, if he has worked for more than two years for his employer and if the employer has more than 11 employees. Compensation is usually financial, but in the case of dismissals that are void, but fair, employees have a right of reinstatement. Such dismissals include discriminatory dismissals, dismissal of employee representatives without the Labour Administration s authorisation and insufficient redundancy plans. 14

16 7. Employee Representation It is important to note that staff delegates and staff representatives elected to the Works Council and to the Health and Security Committee discussed below benefit from a specific protection concerning dismissals. Further, under French law, an employer that does not respect the rules governing the designation, the functioning, the assignments or the protective status of the members of the institutions listed below is subject to criminal prosecution ( délit d entrave ). In order to assess whether the company meets the threshold of the number of employees mentioned below a specific rule will apply, which consists of assessing the size of the workforce for 12 consecutive months in the last 3 years. Particular rules will apply to include part time workers, fixed term contracts and also employees of third parties on the condition that they are physically working at the company premises. 1. Staff Delegates ( Délégués du personnel ) Staff delegates should be elected in any company employing at least 11 employees (the workforce of the company is calculated in accordance with specific rules). The number of staff representatives to be elected depends on the size of the workforce of the company. Staff delegates are elected for 4 years from among the company s employees. They are elected directly by the other employees, who are distributed between various bodies of electors. Staff delegates enjoy a very protective status. Indeed, the company should obtain administrative authorisation before launching a dismissal or disciplinary procedure against them. The main duty of the staff delegates is to represent the individual and collective claims of the employees with regards to salaries, the implementation of collective agreements, rules concerning insurance coverage, and health and safety. They may make submissions directly to the employer or to the employer s representatives. The staff delegates may also bring to the knowledge of the Labour Inspector any claim relating to the application of rules subject to the Inspector s jurisdiction. Finally, in companies which should have a Works Council but do not, the staff delegates exercise some of the functions of the Works Council. The employer should allow the staff delegates paid time off from their usual working hours in order to perform their duties. 2. The Works Council ( Comité d entreprise CE ) Each company employing at least 50 employees should set up a Works Council. 15

17 The Works Council is made up of: the company manager (who is chairman of the council), elected staff members (elected under the same conditions as staff delegates), and union delegates (if any exist). Members of the Works Council are elected for 4 years. In order to perform their duties they are granted time off during their working hours and may use the material and financial means legally offered by the employer. The Works Council has two types of functions: 1) Functions of an economic and professional nature: the company manager should inform (with supporting documents) and consult the Works Council on various matters; and 2) Functions of a social nature: the Works Council manages a certain number of social and cultural activities for the employees (or their family) (e.g. leisure, sports, housing). The employer should provide the Works Council with complete and written information. The Works Council and staff delegates of companies of more than 150 employees meet on a monthly basis. For companies of less than 150 employees, they meet once every two months, unless the employer has opted for a sole employee representative body ( delegation unique du personnel or DUP ). 3. Health and Security Committee ( Comité d hygiène, de sécurité et des conditions de travail CHSCT ) Each company employing at least 50 employees should set up a Health and Security Committee ( CHSCT ). In companies employing at least 500 employees, several CHSCTs may be created under certain conditions. Members of the CHSCT are elected by the elected members to the Works Council and the staff delegates for a two year mandate. The Committee meets at least every 3 months. The general missions of the CHSCT are the prevention of professional risks and the improvement of working conditions. The employer is bound to consult the CHSCT on several topics such as the health and safety regulations of the company. It has also a power of investigation and inspection, notably with respect to accidents and occupational diseases. 8. TRADE UNIONS Under French employment law, the function of the trade unions is to defend the rights and moral and material interests of their members. However, French employment law gives wide powers to the so-called representative trade unions, i.e. those which are recognised as representing a group of employees, no matter whether 16

18 these employees are members of the trade union or not. The trade union may be represented at several levels (in the company, on a regional level, on a national level, etc.). A 20 August 2008 statute modified the criteria for a union to be representative. As a result, a union should meet several statutory conditions and should be supported by a certain number of votes depending on which level of negotiation is concerned. To be representative at company level, a union should have received at least 10% of the vote during the first round of the last election for the Works Council or the staff delegates. Representative trade unions have wide powers: most notably, they have the exclusive right to introduce candidates at the first round of voting for the staff representative bodies. In addition, they appoint a representative to be a member of the Works Council. The main power of representative trade unions is the fact that they can set up intercompany union branches and appoint union delegates. The union delegates of a company must be invited each year to negotiate wages, working time and other items. Although there is no obligation for these negotiations to be successful, failure to enter into negotiations each year constitutes a criminal offense. 9. ASSOCIATIONS OF EMPLOYERS Articles in the French Labour Code and a circular from 20 May 1994 govern contracts of employment concluded with associations of employers. The relaxing of the conditions of membership to associations of employers since 1 November 2011 demonstrates the government s willingness to encourage companies to develop such alliances. 1. Different Kinds of Groups There are three different kinds of groups of employers that can be formed as associations (Law from 1901 and the Local Code or Artisanal Cooperative) or as cooperative companies developing certain activities related to social economy. The Labour Code distinguishes professional groups gathering members that fall into the scope of the same Collective Labour Agreement from the multi-sectorial groups gathering employers that fall into different Collective Labour Agreements. When employers fall under different Collective Labour Agreements, the group chooses, at the time of its creation, the Collective Agreement that will apply. 17

19 2. User Companies The employers permitted to seek membership with the group include private employers and territorial collectivises. Membership within a group is subject to certain conditions. To benefit from the services of a group of employers, the company should become a member of the group by paying an entrance fee and an annual subscription. A company can become a member of as many groups as it wishes, without any restriction. The employer should inform and consult his/her staff representatives before joining the group. The group has the quality of employer (as it pays the worker, makes the social declarations, pays the subscriptions, organises days off, handles the relations with labour doctors, etc.), but the user company nevertheless remains liable for the work conditions (everyday rest, health and security in the workplace, etc.). Except in the case of contrary provisions in the statutes of the group, members of the group are jointly liable for the debts of the group in respect of employees and creditor institutions to which mandatory subscriptions must be made, such as the URSSAF. 3. Workers of the Group Workers employed by these groups by means of contracts of indeterminate duration are simultaneously made available to two or three members of the group for a determinate or indeterminate period. Workers made available may work full-time or part-time, for several weeks, months or even permanently, on an indefinite term basis, as associations of employers are not allowed to employ workers on the basis of fixed term contracts or temporary contracts. Nonetheless, work relations should retain a degree of stability. As such, many groups have adopted a method whereby such a worker is employed full time and shared between various companies within the given group. That being said, there should be an equality of treatment (especially in terms of wage and social advantages, such as salary savings, canteen, etc.) between the workers of the group and the workers of the user company. 10. SOCIAL SECURITY Social security contributions in France are divided into employee contributions that are deducted from the employee s salary, and employer contributions that are not an element of remuneration and should not be included in the basis for/calculation of the contribution. 18

20 The average employer contribution can account for as much as 45 % of the gross salary of the employee, whereas the employee contribution may only count for as much as 20%. The contribution is based on the basic salary paid for work undertaken. Most of the indemnities, premiums, and monetary advantages are subject to contribution as well as tips, and under certain conditions benefits in-kind for private use. On the other hand, most of the indemnities and reimbursements to the employee for professional expenses are exempted from contribution. Professional expenses can be defined as the special costs inherently incurred by the employee in the fulfilment of his functions. For instance, a car allowance, which is a lump-sum granted periodically in order to compensate for all expenses in relation to the use of the employee s car for professional purposes, can be exempted from social security contributions. For such an allowance to be granted, two conditions should be met: 1) The expenses should be professional (it does not cover private mileage); and 2) The allowance should be used in accordance with its aim. Professional use of the car is a concept which has been strictly interpreted by judges. 19

21 Flichy Grangé Avocats L&E Global France Flichy Grangé Avocats is a leading employment and labour law firm in France and internationally. Working with companies and entrepreneurs, the firm s goal is to be a real partner for legal and human resources departments, proposing pragmatic legal solutions and taking accounting, financial or commercial aspects into consideration. The firm s 60 lawyers focus on collective negotiations, employee benefits, health and safety, litigation, ethics and diversity, and other key practice areas. Flichy Grangé Avocats has been recognised as a top-tier firm by The Legal 500 and Chambers Europe, and was recently nominated as Law Firm of the Year in France by The Lawyer. This memorandum has been provided by: Flichy Grangé Avocats 66 avenue d Iéna Paris, France P

22 Contact Us For more information about L&E Global, or an initial consultation, please contact one of our member firms or our corporate office. We look forward to speaking with you. L&E GLOBAL Avenue Louise 221 B-1050, Brussels Belgium Stephan Swinkels, Executive Director stephan.swinkels@leglobal.org This publication may not deal with every topic within its scope nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice with regard to any specific case. Nothing stated in this document should be treated as an authoritative statement of the law on any particular aspect or in any specific case. Action should not be taken on this document alone. For specific advice on any particular feature you should seek advice from the L&E Global representative stated in this memorandum. This document is based on the law as of May