Strategic anticipation: using French rules to anticipate restructurings and adapt to the market

December 2017 | EXPERT BRIEFING | LABOUR & EMPLOYMENT

financierworldwide.com

President Macron’s executive orders, published in late September, allow employers to negotiate new types of collective agreements.

The so-called “competitiveness agreements” will replace the former “preservation”, or “development” or “maintaining of employment” agreements, which were created in 2013 and 2016. Those agreements were designed to enable employers to anticipate reorganisations; however, they were neither 100 percent effective, nor fully suitable to many companies’ needs. They were subject to the demonstration of economic or financial difficulties, and despite some improvements in 2016, were always limited in time and effects.

Apart from the introduction of competitiveness agreements, president Macron’s executive orders also provided for two new types of mutual terminations, which may be collectively provided for in a collective agreement concluded outside of any economic difficulty or mass redundancy plan.

Using competitiveness agreements to adapt a company’s organisation to the market

Competitiveness agreements allow the employer to negotiate with unions on working time, remuneration and mobility leave. The provisions of the competitiveness agreement replace the opposite or conflicting provisions of employees’ contracts on the same subjects.

This means that within the scope of a competitiveness agreement, a company may adapt employees’ contracts without negotiating with each employee, but by negotiating with the unions.

On working time, competitiveness agreements may implement the annualisation of working time, forfeits or may amend unprofitable overtime schemes.

Competitiveness agreements may also adapt remuneration schemes. For example, in a company where employees do not all have the same remuneration packages, because of mergers, changing remuneration policies or because of individual negotiation, it is now possible to provide a unified remuneration policy for all employees or for a category of employees.

Competitiveness agreements may also determine the conditions and ways to organise professional and geographical mobility inside the company.

The new competitiveness agreements can also be negotiated and concluded without any reference to economic difficulties or competitiveness. Furthermore, they are no longer subject to time limitations.

After having been signed by the parties, published and advertised in the company, the provisions of a competitiveness agreement will replace the conflicting provisions of employees’ contracts on remuneration, working time and geographical and professional mobility inside the company.

Employees may refuse the amendment of their employment contract resulting from the application of the competitiveness agreement. In order to do so, they must inform the employer of their refusal within one month of the employer advertising the agreement within the company. In the event of a refusal, the employer may dismiss the employee for his or her refusal to allow the competitiveness agreement to be applied to his or her employment contract. Furthermore, the employer is no longer required to follow the specific redundancy procedure, even if several employees are dismissed because of their refusal.

These new competitiveness agreements may prove effective as they will allow companies to modify existing working time schemes and remuneration policies. They will likely serve as an important tool which may be used as early as needed, before companies face any financial or economical difficulty.

Using collective mutual consent terminations

President Macron’s executive orders have also implemented two new types of terminations: mobility leave and collective mutual consent terminations. Mobility leave may be concluded within the jobs and skills forecast management negotiations (GPEC).

Mobility leave is a scheme in which the employer and employee agree to implement a “mobility period”. During this period, the employee can reorient his or her career by undertaking training, an internship or find temporary work in a different field or job. During this time, the employee will not be working in his or her previous position, but is still considered employed by the company which will pay the employee an indemnity – a minimum of 65 percent of their average gross salary, as stated in the mobility leave agreement.

At the end of the mobility leave (the duration of which is stated in the agreement), if the employee has found a new job, the employment contract is terminated under mutual consent, and is not considered a dismissal.

Mobility leave agreements aim to encourage support measures, training and working periods in order for the company to eliminate redundant positions, and for the employee to find a new and stable job.

These types of agreements may be relevant, for example, in cases where a company intends to definitively cut a position or a job category. Mobility leave may enable companies to achieve this goal in the short or mid-term, without necessarily using redundancy, and by supporting the employee’s wish to reorient their career and will help them to find employment elsewhere. The agreement shall determine the conditions and accession procedure, as well as the amount of indemnities served by the company. The agreement enables those employees fulfilling the conditions (such as position, category, remuneration and so on) to apply for mobility leave and benefit from support measures, redeployment facilities and mobility indemnity.

Employers and unions may also negotiate a collective agreement determining the framework of mutual consent terminations. These new agreements are voluntary departure plans, independent from any redundancy plans, which will enable companies to downsize their workforce using mutual agreement terminations.

Mutual termination agreements do not require any economic ground or any internal redeployment measure. The agreements will determine the maximum number of terminations, the conditions and procedures, the admission criteria, the amount of indemnities and outplacement measures.

The administration should be informed of the negotiation with the unions, and the agreement must be submitted to its validation. The agreement should also provide revitalisation measures.

Employees may apply for a mutual termination under the agreement, in order to benefit from the specific indemnities and outplacement measures it provides for. If the company accepts an employee’s application, the employment contract is terminated under mutual consent.

This reform softens the labour relation legal framework, and enhances collective agreements. It gives prominence to collective negotiations between employers and unions, and reconciles France with the culture of negotiation familiar to foreign investors.

Grégory Chastagnol and Barbara Mollet are attorneys at Fromont Briens. Mr Chastagnol can be contacted on +33 (1) 4451 6380 or by email: gregory.chastagnol@fromont-briens.com. Ms Mollet can be contacted on +33 (1) 4451 6380 or by email: barbara.mollet@fromont-briens.com.

Grégory Chastagnol and Barbara Mollet

Fromont Briens