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President Macron’s Labor Law Ordinance of September 22, 2017

NEW RULES FOR UNFAIR DISMISSAL IN FRENCH LABOR LAW

(By Petra Cramer – Nederlands advocaat in Frankrijk)

Since French President Macron Ordinance of 22 September 2017 concerning the “Predictability and security of employment relationships”, compensation for unfair dismissal is capped by both a minimum and a maximum scale.

Some practical examples in a company of more than 10 employees:

  • an employee who has 10 years’ seniority in a company unfairly dismissal will now obtain a compensation in between 3 months and 10 months of salary maximum;
  • an employee working for at least 5 years in the same company will obtain a maximum compensation going from 3 to a maximum of 6 months’ salary in case of unfair dismissal;
  • for an employee with less than 2 years seniority in the same company, unfair dismissal is the best outcome for the employer who will now owe a maximum of 3.5 months of salary (6 months beforehand)

 

Capping will thus play in favor of companies in France compared to the former measures, which were extremely penalizing for companies in a financial environment that was no longer favorable for a lot of them.

On the other hand, the new rules lead to a certain insecurity of those employees that are unfairly dismissed: once capped, the “penalty” of what was initially considered as a “reasonable amount” however high it was, is no longer admitted.

As shown above, the employees with less than 5 years in the same company are suffering the most important reduction.

Employees in France are getting organized in several ways to get away with a more important sum, whenever the dismissal was unfair or not.

We will come back to the most often used strategies proposed by employees in a future article.

 

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We refer to a previous article concerning the new rules applicable on unfair dismissal of employees in France since Macrons’ Ordinance of 22 September 2017.

The most often used strategies looked for by senior and executive managers is a contractual compensation (the famous “golden parachute”).

Such a clause is today most often written as follows:

« In the event of dismissal or termination of the employment contract at the initiative of the employer, the employee will receive a contractual dismissal compensation of 6 or [12] or [18] or [24] months of gross salary which adds to the conventional dismissal compensation of the collective agreement applicable to the contract. »

 

This contractual clause is most often claimed for by newly hired top class Managers, but there is a tendency to claim this special treatment by less higher ranked employees today.

A « golden parachute » is very difficult to avoid once convened upon in the contract, and has therefore to be used parsimoniously by employers in France.

It allows to avoid the Macron compensation scale provided for by existing, but also future ordinances, and has to be applied in addition to the possible compensation for unfair dismissal according to the Macron Ordinance of September 2017.

Managers that do not have such a contractual protection in their initial labor contract will now try to negotiate the existing contract in order to avoid future surprises.

Although these « golden parachutes » are penal clauses and thus can be reduced in court if they are considered as excessive, we advise employers to convince these employees to accept other forms of compensation: a “parachute” can always be negotiated once the employee is effectively –and according to him, unfairly – dismissed.

We’ll come back to you about the compensation clauses we propose in a future article.

Even if today, this kind of clause is rather reserved for the executives, any employee whose know-how is sought, as it is dismissed by his employer, can negotiate a « golden parachute » in order to avoid the Macron scale and thus dissuade his employer from dismissing him.

Example of « golden parachute » clause to insert in your employment contract:

Another possibility to increase the compensation due in the event of a break-up is the negotiation of a longer contractual notice (préavis) than that provided by the applicable collective agreement or the law.

Longer contractual notice (préavis contractuel) (for example 6 months, 9 months, 12 months) ensures that the employee’s remuneration is maintained during this period in order to amortize his dismissal and, if necessary, to seek a new job more peacefully.

2) Tip n ° 2: Plead in court that you are in one of the 8 cases of exclusion of capping provided for by Article L. 1235-3-1 of the French Labor Code.

Cases of exclusion from the capping of compensation for dismissal without real and serious cause are expressly provided for in Article L. 1235-3-1 of the Labour Code (art.2 ord n ​​° 2017-1387 of September 22nd, 2017).

In this respect, Article L. 1235-3 is not applicable when the judge finds that the dismissal is tainted with one of the 8 nullities provided for in the second paragraph of Article L. 1235-3-1 of the Labour Code.

The « nullities » (nullités) are those relating to the violation of a fundamental freedom (violation d’une liberté fondamentale), to acts of moral or sexual harassment(harcèlement moral ou sexuel) under the conditions mentioned in Articles L. 1152-3 and L. 1153-4, to a discriminatory dismissal under the conditions provided for Articles L. 1134-4 and L. 1132-4 or following an action in court, for gender equality at the workplace under the conditions mentioned in Article L. 1144-3 and in case of denunciation of crimes or misdemeanors, or the exercise of a mandate by a protected employee mentioned in chapter I of title I of book IV of the second part, as well as to the protections of certain employees in application of articles L. 1225-71 and L. 1226-13.

In these cases, when the employee does not request the continuation of his employment contract or his reinstatement is impossible, the judge awards him an indemnity, paid by the employer, which cannot be less than the wages last six months (no matter the size of the company).

The indemnity is then payable without prejudice to the payment of the salary, which would have been collected during the period covered by the invalidity when it is due pursuant to the provisions of Article L. 1225-71 and the protective status and, where appropriate, legal, contractual or conventional compensation.

  • Case 1: Nullity related to the violation of a fundamental freedom (liberté fondamentale)

The Macron scale (Barème Macron) will be rejected as soon as such dismissal is pronounced in violation of a fundamental freedom.

This would be the case, for example, of a dismissal based on the exercise by the employee of his right to strike.

  • Case 2: Nullity related to acts of moral or sexual harassment (harcèlement moral ou sexuel) under the conditions mentioned in Articles L. 1152-3 and L. 1153-4

Capping on compensation will also not apply each time the dismissal of the employee is made in a context of moral or sexual harassment.

However, the courts are (and probably will be) very strict in the assessment of moral or sexual harassment or violation of a fundamental freedom.

  • Case 3: Nullity relating to a discriminatory dismissal (licenciement discriminatoire) under the conditions provided for in Articles L. 1134-4 and L. 1132-4

Similarly, no capping will apply to dismissals that are discriminatory, that is to say, pronounced because of the origin of the employee, his sex, his morals, his sexual orientation, his gender identity, age, family status or pregnancy, genetic characteristics, particular vulnerability resulting from economic status, true or assumed belonging to an ethnic group, a nation or an alleged race, its political opinions, its trade union or mutual activities, its religious beliefs, its physical appearance, its surname, its place of residence or its bank domiciliation or because of his state of health, loss of autonomy or disability and ability to express himself in a language other than French.

  • Case 4: Nullity of dismissal following a lawsuit

The employee who is dismissed consecutively to the exercise of a legal action to assert his rights cannot oppose against the scale provided by the ordinances.

  • Case 5: Nullity of a discriminatory dismissal in the matter of professional gender equality under the conditions mentioned in Article L. 1144-3 of French Labour Code

In the same way, the scale will be rejected in the case of a dismissal following a legal action taken by the employee on the basis of provisions relating to professional gender equality.

  • Case 6: Nullity of dismissal in case of denunciation of crimes and misdemeanors

An employee who has been dismissed as a result of his denunciation of crimes or misdemeanors of which he is aware, cannot be opposed to the scale of Macron ordinances.

This is particularly the case of whistleblowers who would be sanctioned following the denunciation of the practices of their employer.

  • Case 7: Nullity of dismissal linked to the exercise of a mandate by a protected employee (salarié protégé) mentioned in Chapter I of Title I of Book IV of Part Two (see « Tip 4 »)
  • Case 8: Nullity related to a dismissal because related to the protections of certain employees in application of articles L. 1225-71 (dismissal related to the state of pregnancy) and L. 1226-13 (accident at work or illness)

Finally, dismissal in breach of special protection such as protection against dismissal in case of pregnancy or accident at work or occupational disease will avoid the ceiling.

3) Tip n° 3: Make claims to labour courts other than a claim for compensation for the prejudice caused by your unfair dismissal: ex: request for overtime payment, allowance for covert work (travail dissimulé), damages for moral harassment, recall bonus, salary reminder related to unequal treatment, etc.

Example 1: Requests for overtime (heures supplémentaires) and covert work (travail dissimulé)

Overtime claims are not included in capping provided by Macron Ordinances.

For employees whose working time is determined on the basis of a certain number of days (forfait jours), it is possible to ask for the cancellation of the working time organization if there is no control of the workload (charge de travail) related to this organization; in this case, the employee can obtain payment of his/her overtime within the limit of the prescription, provided he can prove it.

Similarly, a salaried executive who does not fulfill the 4 legal conditions relating to this status (ie: autonomy, great responsibility, salary among the highest of the company and belonging to the management of the company) may request nullity of this status and get the payment of his overtime (heures supplémentaires) if he can prove it (proof by an agenda with the start and end time each day, emails sent early in the morning and late at night etc.).

Example 2: Request a bonus

A bonus request may also be added to dismissal requests. An employee may request a bonus if the targets assigned to him/her are unrealistic and not reasonable, or if they were not brought to his attention at the beginning.

In such a case, the employee is entitled to claim 100% of the bonus he could have claimed if he had achieved all of his objectives. Again, no capping applies.

Example 3: Claim for damages for harassment (harcèlement moral ou sexuel)

Likewise, the employee who demonstrates that he is in a situation of harassment, whether moral or sexual, is entitled to claim damages to the Labour Court for the damages suffered.

To do this, the employee must provide elements likely to suggest the existence of a situation of harassment.

In this case, the damages may be cumulated with the dismissal compensation without capping limit.

Example 4: Salary reminder related to unequal treatment

The employee may also make a request for salary reminder based on unequal treatment, as long as he demonstrates that he received a lower salary than his colleagues in the same position with equivalent qualifications and seniority.

Once again, no cap applies to such a request.

4) Tip n°4: Get a union mandate (représentant syndical), a staff delegate (délégué du personnel) or a workers council member (membre du comité d’entreprise) to make it harder to fire

A warrant is the best way to deter your employer from firing you.

Your employer may reproach you to « instrumentalize your mandate » but he will not be able to do anything except to challenge your election or appointment to the Court (Tribunal d’instance).

Protected employees (union mandate or staff representative) cannot be dismissed without authorization from the labor inspectorate (Inspection du travail).

However, labor inspectors are reluctant and very strict to grant the authorization of dismissal of a protected employee.

An employee who warrants a mandate will therefore be in practice better protected against dismissal.

He will also be better compensated if he is dismissed without authorization since, if necessary, his dismissal will be void and he will be able to apply for reinstatement and an eviction indemnity corresponding to the wages he should have received between the date of his dismissal and the expiry of the period of protection.