I INTRODUCTION

French labour law is mainly based on the laws and regulations that constitute the Labour Code, the reference work for labour law practitioners.

Moreover, collective agreements are particularly important in labour law. They may be binding on an employer even where it is not the signatory, if the Ministry of Labour has extended the negotiated and signed provisions by the employers and employees' representatives.

The employment contract remains important but it must comply with the law, regulations and the applicable collective agreement. In addition, the French Constitution as well as European and international norms are frequently referred to as the guarantees of the fundamental rights of employees.

The coexistence of these norms is governed by the general principle of the hierarchy of sources: laws prevail, followed by regulations and finally collective agreements. Company-wide agreements prevail over sector-wide agreements except for 13 topics (including minimum wages, classification scheme and professional equality) on which a company-wide agreement can only prevail over a sector-wide agreement if it provides for a similar level of guarantees.

Individual disputes between employers and employees arising from an employment contract fall under the jurisdiction of employment tribunals. This instance is composed of non-professional judges, who are designated upon proposition by trade unions. The courts are divided into sections by sector of activity. Each formation consists of an equal number of employers and employees with the final decision taken by a professional judge.

The Ministry of Employment, represented at regional level by the regional agencies for business, competition, consumer affairs, work and employment (DIRECCTE), has an important role in supervising the application of labour law. At a local level, the assigned contact for the employer is the labour inspector. In addition to a supervisory mission, in particular in the fields of health and safety and ensuring that social relations are operating properly, the labour inspector has the power to make decisions in certain areas, such as the dismissal of protected employees or derogations from the rules on the duration of work.

ii YEAR IN REVIEW

The Macron Ordinances, which have impacted numerous fields of employment law, were ratified on 29 March 2018. Some practical details of the application of these ordinances are yet to be determined, in particular by the administrative and employment courts, courts of appeal, and the labour authorities.

On 25 May 2018, the General Data Protection Regulation (GDPR) came into effect. Many formalities of the French Data Protection Authority (CNIL) have since disappeared. In return, the responsibilities of the employers have been strengthened. They must now ensure optimal data protection at all times and be able to demonstrate it by documenting their compliance.

The Professional Future Law was enacted by the President on 5 September 2018. The Law provides for new rules and principles in the following areas:

  1. Unemployment insurance: this insurance will now be available every five years for people who resign, provided that the individual justifies his or her resignation with a serious career plan. Independent contractors whose activity is subject to bankruptcy will be entitled to a fixed allowance. The creation of a penalty for companies that have recourse to precarious contracts is currently under discussion.
  2. Professional training: the government has modified the provisions regarding the professional training account and aims to facilitate access to training, in particular through free career transition counselling for employees who wish to have feedback on their professional situation.
  3. Apprenticeships: the Law has significantly modified the way that training facilities are administrated and financed. Apprenticeships have also been modified to make them more attractive – the upper age limit for registering has been raised, there is a more generous allowance and financial contributions have been created to encourage small companies to offer apprenticeships.

III SIGNIFICANT CASES

The Supreme Court has recently issued important decisions on the principle of equal treatment between employees. On 4 April 2018 the Supreme Court ruled that an employee who alleges that he or she is being treated unequally must first demonstrate that the employee with whom he or she is comparing himself or herself to is in a similar situation.

In another ruling, the Supreme Court stated that the principle of equal treatment is not applicable to employees who are part of two separate job safeguarding plans. In the Court's opinion, the employees dismissed in the context of a second job safeguarding plan are placed in a different situation from the employees targeted in the first plan, to the extent that they cannot claim for social measures at the same level.

The Supreme Court also ruled on 14 November 2018 that retail companies specialising in furniture sales are allowed to open on Sundays. The Court stated that given the nature of the companies' business and the consumer habits of French households, these companies can open on Sunday. The Court added that this specific exemption to the Sunday rest provisions is compliant with ILO conventions.

Finally, the Supreme Court issued numerous decisions regarding the conditions of validity of settlement agreements. For instance, it has ruled that a settlement agreement concluded before the notification of a dismissal letter is null and void; that the agreement can only cover the disputes that are mentioned in the document; and that the settlement indemnity is exempted from social contributions only if the parties are able to prove that it compensates for a prejudice that is unrelated to the termination of the employment contract.

Iv BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

The hiring of an employee results in the execution of an employment contract. An employment contract may be recorded in the form desired by the parties, since the formation of the contract is not dependent on a written document being drawn up. However, it is preferable to record this instrument in writing to avoid disputes regarding the scope and content of the agreement, and prevent any problem of proof. Many collective agreements require the agreement to be formalised in a written contract, and the Labour Code itself requires the execution of a written contract in certain situations.

The parties are free to include any clauses on which they agree, provided they: do not restrict individual freedoms; respect his or her personal life; and comply with the law, regulations and collective agreement. Certain general clauses (such as the nature of the contract, the date on which the employee takes up his or her position and his or her professional category or remuneration), feature in virtually all employment contracts. Other clauses are only the reproduction of contractual provisions applicable to all the staff and relate to the probationary period, the duration or hours of work. Lastly, the employment contract may contain certain specific clauses relating in particular to the consequences of termination or allocating certain benefits to the employee.

As regards the amendment of the contract, under general contract law the agreement of the parties is required. Therefore, the agreement of the employee is required if the amendment relates to an element of the contract without which he or she would not have entered into the contract, or that is intrinsically part of the employment contract. In contrast, an employee cannot object to an amendment decided by the employer if such modification is provided in his or her contract or if it constitutes a simple change in working conditions decided by the employer in the scope of his or her managerial powers.

The parties may also enter into a temporary contract. However, a temporary contract cannot be used to supply labour on a long-term basis in connection with the normal and constant activity of the firm. Consequently, it may only be used for the execution of a precise and temporary task, in particular for the replacement of an employee, a temporary increase in the activity of the firm, the execution of a job of a seasonal nature or for which it is customary to enter into a temporary employment contract. The contract must be in writing and contain certain mandatory information such as the term of the contract or the reason for its use. Fixed-term employment contracts can be renewed twice. The total length of the contract should not exceed 18 months (renewal included).

ii Probationary periods

The employer and the employee can provide that the employment contract shall only become definitive upon the expiry of a probationary period, which must be expressly provided in the employment contract. Otherwise, the hire is deemed to be definitive as of the date of execution.

The maximum duration of the probationary period – unless contractual provisions are more favourable – is two months for employees, three months for supervisors and four months for executives. If provided by the contract and by the applicable collective bargaining agreement, the probationary period may be renewed once.

During the trial period, each party has the option of terminating the contract at any time without having to comply with a specific procedure – other than a notice period – or having to provide any reasons for the termination. However, this freedom is not unlimited since it is not possible to terminate the probationary period in a vexatious manner. Such abuse is punished by the award of damages.

iii Establishing a presence

Employers whose firms do not have an establishment in France are allowed to hire employees. They satisfy their obligations relating to declarations and payment of social contributions to the Organisation for the Payment of Social Security and Family Allowances (URSSAF) of Alsace. Once completed, the URSSAF transmits the information required to all social security bodies with which the firm is registered. A representative who is resident in France must be appointed in order to liaise with labour inspectors, tax and customs agencies, and the police, being noted that per the Supreme Court it cannot be the employee.

The remuneration paid to an employee by his or her employer is subject to social contributions. The contributions due from the employee and withheld from his or her remuneration are usually between 20 per cent and 25 per cent. The employer must also pay a certain number of contributions in addition to the salary, which average between 40 per cent and 45 per cent of the gross remuneration.

Temporary employees may also be hired subject to a certain number of specific conditions. In the long term, such employment could constitute the existence of a stable establishment.

A foreign firm may also hire an independent contractor to carry out certain assignments. This category of worker is outside the scope of application of the Labour Code and the fees paid to him or her are also excluded from the basis of social contributions. However, to avoid any reclassification of the contract into an employment contract, which would create a risk of an adjustment of social contributions, the contractor must not be in a relationship of subordination; should be free to manage the affairs entrusted to him or her; must not work for the company on an exclusive basis; and must also have his or her own working tools.

If a company establishes itself in France on a permanent basis, the income generated by that establishment is taxable. French taxation rules shall apply to determine the taxable income and the procedures for the calculation and recovery of the tax due. The firm must also carry out the registration formalities with the competent authorities.

v RESTRICTIVE COVENANTS

Throughout the entire term of the employment relationship, the employee is bound to his or her employer by an obligation of loyalty, which prohibits him or her from directly competing against the interests of the employer. An exclusivity clause may also be inserted in the contract of employment, only if the legitimate interests of the firm and the nature of the tasks carried out by the employee justify it. The purpose of the clause is to forbid the employee from carrying out any other professional activity.

In principle, the employee will be free of any restrictions upon the termination of the work relationship. However, the parties may decide in the employment contract that the employee shall remain under a non-compete obligation with respect to his or her former employer. The non-compete clause must necessarily be in writing and appear either directly in the employment contract or in an amendment signed by both parties. Collective bargaining agreements can also include specific provisions regarding the content and the terms of non-compete clauses. The validity of the non-compete clause is subject to the cumulative conditions below, failing which it is null and void:

  1. It must be absolutely necessary in the legitimate interests of the firm. The firm must be likely to suffer actual harm if the employee were to exercise his or her professional activity with a competing firm.
  2. It must be limited in time and in space. The employer must set the temporal and geographical scope of the non-compete obligation in a precise and limited manner. In order to do so, he or she must take into account all the components of the clause.
  3. It must take into account the specificities of the employee's job. The employer must take into account the functions exercised by the employee, his or her category, strategic positioning within the firm and the difficulties he or she is likely to face in finding alternative employment.
  4. It must provide for financial consideration. The amount of the consideration must be proportional to the extent of the constraint imposed and notably the problems involved in seeking new employment.

Certain industry-wide agreements determine the maximum term of application of the clause, the methods of calculating the financial consideration and the conditions under which the clause may be discharged by the parties.

If the employee does not comply with this obligation, the employer may apply to the courts to order him or her to cease his or her competing activity subject to a periodic penalty payment and to pay damages. The employee shall also lose his or her entitlement to financial consideration.

vi WAGES

i Working time

The statutory maximum duration of work in France is 35 hours per calendar week. In addition, the law provides other mandatory provisions with respect to the duration of work. Consequently, the maximum daily duration of effective work is 10 hours, but may be raised to 12 hours by a collective agreement for certain specific periods, such as an increase of the activity or for necessities of the organisation of the company. Employees are also entitled to a minimum daily rest of 11 hours, which may be reduced to nine hours by way of a collective bargaining agreement. As soon as the daily work time has reached six hours, the employee is entitled to a break of at least 20 minutes.

Employees are entitled to a weekly rest of at least 24 consecutive hours, in addition to the consecutive hours of daily rest. The rest day is usually Sunday. However, retail stores located in international touristic areas are authorised to open on Sunday subject to negotiating a collective bargaining agreement. A mayor can also authorise Sunday work up to 12 times every year. In addition to the restrictions connected with the statutory duration of work, employees are usually granted two consecutive days of rest.

Labour law mainly authorises two derogations to the aforementioned rules. First, it is possible to negotiate a collective agreement stating that working time is computed over a period of one year or less. This is subject to an annual quota of 1,607 hours. Employers may thus be exempted from the payment of additional wages for time worked over 35 hours per week but under the quota. Second, if this possibility is provided in the firm-wide or industry-wide agreement and complies with the terms set out in these agreements, the employer may enter into an individual flat-rate agreement with executives who have autonomy in the organisation of their work time, and with certain non-executive employees with effective autonomy. This agreement allows work time to be counted in days or half days. The courts have determined a certain number of conditions of validity for these agreements: the introduction of a mechanism to monitor days on which the employee has worked and those on which he or she has not, ensuring compliance with the minimum durations of daily and weekly rest, application of a reasonable daily and weekly duration of work, and the implementation of a procedure to keep track of the workload and the length of work days. Furthermore, employees benefit from a 'right to disconnect', meaning that the employer must establish rules to prevent employees from being permanently reachable by phone, emails or all other communication means outside of their daily working time.

Exceptionally, an employer may use night work (i.e., work performed between 9pm and 6am), either because this is necessary for the economic activity to continue, or because it concerns services of public utility. Night work may be organised only by way of a work agreement that must state the justification for the use of night work and the consideration for such work in the form of compensatory rest or wages. By way of derogation, workers may be allocated night work on the authorisation of a labour inspector, after verification of the reasons for using night work and the consideration that the workers will receive. Evening work (i.e., work performed between 9pm and 12am) is also lawful in retail stores located in an international touristic area. It is subject to the negotiation of a collective bargaining agreement, determining in particular the financial compensation offered to evening workers.

ii Overtime

The law allows firms to use overtime, which is defined as being hours worked over the statutory duration of work.

An overtime quota for each employee is determined by way of a collective agreement. Failing this, regulatory provisions have set this annual quota at 220 hours per employee.

Each hour worked in excess of the statutory duration of work entitles the employee to remuneration at an increased rate. This rate is defined in a collective agreement and cannot be less than 10 per cent. In the absence of such agreement, the rate is 25 per cent for each of the first eight hours of overtime, and an increase of 50 per cent for the following hours. Moreover, overtime worked in excess of the annual quota entitles the employee to compensatory rest in addition to the wage increases.

vii FOREIGN WORKERS

A foreign worker cannot be employed in France without a valid work permit, unless he or she is an EU citizen.

Employees seconded to France must be declared by the employer based abroad to the French authorities. The seconded employees are subject to French statutory and contractual provisions in the following matters: individual and collective freedoms, non-discrimination, the protection of employees in maternity and paternity situations, the duration of work, paid leave, overtime, minimum wage, and the rules relating to health and safety.

Concerning social protection, employees seconded to France are entitled, unless otherwise provided in bilateral treaties, to the benefits paid by the social security regime of their country of origin. The number of employees who may be seconded to France by an employer is not limited. However, unless otherwise provided in bilateral treaties, the duration of secondment generally cannot exceed two years.

Foreign workers hired directly by a firm established in France enjoy the same rights as French employees. Consequently, concerning social protection, the employer must attach foreign workers to the French social security regime, which allows them to enjoy the same benefits as the other employees.

The employer does not have to draw up a special registry of foreign employees and it is not restricted as to the number of foreign employees working at the company. However, the employer does have to keep a registry of all the staff it employs in which, in particular, nationality and, if relevant, the employee's work permit number must be stated.

In any event, the employer must ensure that the foreign employee has a work permit, where this is required. Failing this, the employer may apply for authorisation to the administrative authorities. In order to make this application, the employer must demonstrate that it is not possible for the post to be filled by an employee established in France. The success of the application is at the discretion of administrative authorities, which must take into account certain criteria in their decision such as the employment situation, the category of the foreign employee and his or her terms of employment. If the work permit is granted, the employer must pay a fee to the French Immigration Office, the amount of which will depend on the term of the contract and the contemplated remuneration.

On 29 May 2018, a revision of Directive 96/71/EC on seconded employees was definitively approved. The purpose of this Directive is to reduce the wage gap between seconded and local workers, and to decrease the duration of secondment in the European Union down to one year. It came into force on 30 July 2018 and Member States of the European Union have two years to transpose it into national law. The French government has included an amendment in the Professional Future Law to transpose this directive in the coming months.

viii GLOBAL POLICIES

Internal regulations are required for any firm with 20 or more employees. This document is drafted in French by the employer and applies to all employees.

The content of internal regulations is strictly regulated. Certain provisions must by expressly set out therein: rules relating to health, safety, discipline (such as the nature and scale of disciplinary sanctions), the rights of defence of employees (procedural guarantees during disciplinary proceedings), and the protection of victims and witnesses of moral or sexual harassment and sexist conduct. The employer may also, under certain conditions, provide a 'neutrality principle' in order to prevent the employees from expressing their religious, political and philosophical beliefs on the premises of the company when justified, in particular, by the functioning of the company. Any other provision is unlawful.

When drafting the internal regulations, the employer must consult the works council as well as the health and safety committee for matters relating to hygiene and safety. Once their opinion has been obtained, the regulations are submitted to the labour inspector who will verify the lawfulness of the regulations. The document must also be filed with the court clerk of the competent employment tribunal. Finally, the document must be displayed on the work premises and at the area where employees are hired.

ix TRANSLATION

When entered into in France the employment agreement, the ancillaries thereto (in particular the variable remuneration plans) and more generally all the documents required by the employees for the performance of their work, must be drafted in French. If these documents contain foreign terms, they must be explained clearly in order to avoid any ambiguity. The Labour Code also requires firm-wide or establishment-wide agreements to be drafted in French.

However, a foreign employee may ask for these documents to be translated into his or her native language, which the employer cannot refuse. There are no particular formalities required by law to carry out this translation. Any clause to an employee's disadvantage that is not drafted in French will not be binding on him or her.

x EMPLOYEE REPRESENTATION

The Macron Ordinances have merged the employee representative bodies into one single representative body called the social and economic committee. Companies will have to implement this new single committee at the next electoral process and, in any event, before 31 December 2019.

Until then, companies will continue dealing with the former representative bodies.

i Staff delegates

Staff delegates are elected in companies with 11 employees or more.

The employer negotiates a pre-electoral agreement with the trade union organisations to determine the terms and conditions of the electoral procedure. If no agreement is reached, the statutory provisions shall apply.

The employer must draw up the list of voting employees in the firm as well as the panel to which they belong. Two or three panels are organised depending on the professional category to which the employees belong (workers and employees, supervisors and executives). Each employee votes in the panel of his or her professional category. Voting is by secret ballot. Voting by correspondence is possible as well as electronic voting with strict respect of the secrecy of the vote of each employee.

The trade unions have a monopoly in presenting candidates for the first round of elections. If there are no trade union candidates at the first round or if the quorum of electors was not reached, a second round must be organised within 15 days to which all candidates of all types may present themselves, irrespective of whether they are members of a trade union.

The term of office of staff delegates is four years (unless provided for differently in a collective bargaining agreement or an in-house collective agreement). Their mission is to ensure that labour law is complied with and to pass on to the employer the claims of the employees. To this end, the employer convenes a staff delegates' meeting at least once a month to enable them to present the questions to which the employer is obliged to respond.

ii Works council

Works councils are set up in firms with more than 50 employees and its members are elected by way of an electoral procedure similar to the one applied for staff delegates. Members of the works council are also elected for a term of four years.

The works council constitutes the employee representative body of choice since its main mission is to give opinions on behalf of the workers on all the decisions of the employer of a financial nature or relating to the working conditions of the employees. For this purpose it is informed or consulted, on all the decisions of the employer relating, for example to the duration of work, working conditions or professional training. It is convened once a month in firms of more than 150 employees or once every two months in firms with fewer than 150 employees. It must also be convened for the purpose of extraordinary meetings if the employer intends to implement a project affecting the working community.

The works council also manages the social and cultural activities of the employees, such as family assistance programmes and holiday retreats. The council receives a contribution from the employer to run these activities.

Furthermore, in order for the works council to carry out its functions, the employer must provide a subsidy equal to 0.2 per cent of the gross overall wages paid out.

iii Health and safety committee

A health and safety committee is set up in companies employing 50 or more employees.

The procedure for appointing members of the committee is different from the procedure for the election of staff delegates and members of the works council. A panel composed of the elected members of the works council and staff delegates is in charge of appointing the members of the committee, who are elected for a term of four years.

The mission of the committee is to ensure compliance with the rules of the health and safety of employees at the firm and, in this respect, it holds a meeting at least once every quarter. The committee members may also carry out inquiries or investigations in case of imminent danger or serious risk to the health and safety of employees.

iv Joint representative body

Firms with fewer than 300 employees can set up a joint representative body that regroups and consolidates the staff delegates, the works council and the health and safety committee.

A decision would be taken unilaterally by the employer, subject to prior consultation with each of the three representative bodies. This decision may be taken either when one of the three representative bodies is implemented or when the mandates of either one of these three representative bodies end. The staff delegates, the works council and the health and safety committee retain their previous prerogatives as part of the joint representative body.

Furthermore, in firms with more than 300 employees it is only possible to regroup a minimum of two representative bodies. This must be negotiated and provided in a collective bargaining agreement signed by a majority of the representative trade unions. The collective bargaining agreement determines the functions, composition and modalities of the joint representative body. The institution exercises all of the prerogatives the representative bodies it incorporates.

v Trade union representatives

The representative trade unions may appoint representatives if the firm employs more than 50 staff.

Trade union representatives are appointed by the trade unions that have obtained at least 10 per cent of the vote at the last professional elections and are chosen from among the candidates who themselves have obtained at least 10 per cent of the votes. Consequently, the mandate of the trade union representative must be renewed on the completion of each new election.

The mission of the trade union representative is to represent the interests of the trade union that appointed him or her. He or she negotiates the various agreements to be applied in the firm. In this respect, certain one-off or periodical negotiations are required under the Labour Code:

  1. negotiation of salaries, work time and the distribution of added value each year;
  2. negotiation of professional equality and work life quality each year; and
  3. negotiation of employment and career management every three years.

All the staff representatives of the firm have certain means to perform their duties, such as:

  1. dedicated hours for the performance of their representative duties, which correspond to working hours and are paid as such. The number of hours varies between 10 and 24 per month depending on the type of mandate and the size of the firm; and
  2. protection from dismissal throughout the term of the mandate and for a period of six months after its expiry. Consequently, the employer must consult the works council and then procure authorisation from the labour inspector before dismissing staff representatives.

Companies with fewer than 11 employees are covered by a joint committee implemented by a sector-wide collective bargaining agreement or, by default, by a regional inter-professional joint committee.

vi The social and economic committee

The members of the social and economic committee are elected according to the same electoral process than the process previously applied for staff delegates and works council members' elections.

The committee must be set up in companies that have at least 11 employees. In this instance, it will perform the same tasks as those carried out previously by staff delegates. In companies with more than 50 employees, the committee will carry out the same tasks as those currently devolved to the staff delegates, the works council, and the health and safety committee.

The social and economic committee is composed of an equal number of titular and deputy members (these numbers are yet to be defined by ministerial decree).

In companies that have at least 300 employees, a specific committee commission dealing with health, safety and work conditions must be established by way of collective agreement. This collective agreement determines the number of members sitting at this commission, the tasks of the commission and the means by which they are allocated.

The committee members are elected for four years and cannot have more than three consecutive mandates unless provided otherwise by collective agreement.

vii The company council

The Macron Ordinances have also made it possible for companies to appoint a company council by way of collective agreement.

In addition to the social and economic committee prerogatives mentioned above, the company council has the power to negotiate, conclude and revise collective bargaining agreements. In addition, it is possible to foresee that, on some topics, the employer's decisions will have to be submitted to the council before their implementation.

The composition of the council is yet to be determined by way of ministerial decree. However, it is likely that the elected social and economic committee members and the trade union representatives will sit on the council.

xi DATA PROTECTION

i Requirements for registration

A major change brought about by the GDPR is that, for most of the processing, data controllers no longer have to file declarations or authorisations with the CNIL. In return, the responsibilities of the employers are strengthened; they are now accountable for proving that they comply with the requirements of the applicable regulations (e.g., notification of data breaches to the data privacy agency, implementation of internal policies and appointment of a data protection officer).

The staff representatives are consulted before the implementation or modification of certain automated processing. The employees are individually informed of the purpose of the procedure, the recipient of the data, the length of time for which the files will be kept and the rights attached to setting up such processing (right of access, rectification, to data portability, to object). Employers must take all useful precautions to maintain the security of the data and, in particular, prevent unauthorised third parties from gaining access thereto.

Processing personal data without complying with the above formalities is punishable by administrative sanctions by the CNIL and criminal sanctions of up to five years' imprisonment and a fine of €300,000, or €1.5 million if the offender is a company. The GDPR creates significant fines if it is breached (up to €20 million or 4 per cent of the undertaking's total annual worldwide turnover).

A law dated 6 January 1978 relating to computers, files and freedoms was aligned with the GDPR by a new amendment, adopted by Parliament on 14 May 2018. The French government announced that an ordinance – which will focus on rewriting the entirety of the above-mentioned law in order to simplify the text, include formal corrections, and promote consistency with the implementation of the GDPR – will be adopted next year.

ii Cross-border data transfers

Data transfers within the European Union are subject to the same conditions as the national process.

If the personal data processed is transferred outside the European Union, the employer must state this on the declaration or request for authorisation.

The country of destination of the data must be recognised by way of a decision of the European Commission as offering a sufficient level of protection. This is the case, for example for Argentina, Canada, Israel, Uruguay and Switzerland.

If the country to which the data is transferred does not offer such a level of protection, the employer must mention in its declaration either (1) the standard contract clauses adopted by the European Commission and signed by the entity importing and exporting data; or (2) the binding corporate rules (BCR) that constitute an intra-group code of conduct for transfers of personal data.

The CNIL now proposes to issue a single authorisation decision to each group that has implemented BCRs. The group's affiliates that are data controllers and bound by the BCRs will then need to submit only a simplified registration for all their data transfers outside the European Union, based on the group's BCRs. The affiliates do not need to obtain the CNIL's prior authorisation for each data transfer. It was previously possible for companies based in the United States to transfer the data when the company was compliant with Safe Harbour principles. However, the European Supreme Court decided that the Safe Harbour system does not ensure an adequate level of protection of personal data, so this mechanism was made invalid. As a consequence, companies cannot use this system to transfer their data any more.

Employees whose data is transferred must be informed of the transfer and have a right of access and rectification, as well as the right to object to the transfer of the data pertaining to them. Their consent is, however, not required. All onward transfers must guarantee the same level of protection as the original transfer.

These elements have changed since the GDPR came into effect on 25 May 2018. The GDPR notably allows data transfers to countries identified by the European Commission located outside the European Union when they ensure an adequate level of protection.

In the absence of a decision from the European Commission, data can also be transferred to a country located outside the European Union when the company is covered by binding corporate rules or a code of conduct complying with GDPR principles.

iii Sensitive data

Data that discloses information on the racial origins, political, philosophical or religious opinions, trade union membership, health or sex life of the employee is regarded as sensitive data of which the processing is prohibited.

It is possible to derogate on an exceptional basis from this prohibition where the processing concerns data that the employee in question has himself or herself made public, where such processing is necessary to safeguard human life or for the recording, exercise or defence of a right before the courts.

iv Background checks

The employer may ask the candidate for various information and for a certain number of documents. However, the information requested must be used solely for the purpose of assessing his or her ability to perform the job and it must have a direct and necessary connection with such post.

An employer should never seek information on the state of health of the employee or his or her credit report, as such practices could be held to be discriminatory. However, a criminal record extract may be presented during the recruitment procedure if the job in question could make such a requirement legitimate, for example if it involves handling funds.

xii DISCONTINUING EMPLOYMENT

i Dismissal

The employer must invite the employee for an interview before dismissal by letter, which the employee must have received at least five days before the date of the interview, unless the applicable collective agreement provides for different time frames. It may also be contractually provided that this letter should include certain information.

The interview provides the employee with the opportunity to state his or her point of view on the accusations of his employer. He or she may be assisted by a third party, who in principle should be an employee of the firm.

The employer then notifies the employee of his or her dismissal by registered mail at least two days after the interview. The letter should state the grounds for the discontinuation of the contract. The letter should be precise as this document will determine any litigation that may ensue. The Macron Ordinances have made it possible for the employer to specify the terms of the letter after it has been sent.

The dismissal must be based on real and serious grounds that may take several forms. For example, the employment contract of an employee may be terminated for professional incompetence, as a result of the reprehensible conduct of the employee, or even where the employee's situation affects the due operation of business (in particular where the occupational doctor has found that the employee is physically unsuitable for the job).

If the employee is dismissed on grounds that are not serious, the employer is liable to sanctions. The employee can be reintegrated into the company. If either party refuses, the judge will grant an indemnity, which will be defined by a compulsory sliding scale of capped damages depending on the employee's seniority. For companies with less than 11 employees, the minimum indemnity is reduced. This scale does not apply if the termination of the employment violates a fundamental right of the employee, results from moral or sexual harassment or is discriminatory.

Unless discharge is granted, the dismissal becomes final on the expiry of a notice period that may vary according to the provisions of the contract and the applicable collective agreement being noted that its usual duration varies between one and three months depending on the length of service and professional category of the employee. By way of exception, an employee who has been dismissed because of serious misconduct will not benefit from any notice period.

The dismissed employee receives dismissal indemnity, except in the event of serious misconduct. This indemnity is equal to at least a quarter of the monthly wage for each year of seniority under 10 years, to which is added a third of the monthly wage over 10 years' seniority. The dismissed employee is also entitled to payment in lieu of leave for any outstanding paid leave (employers were previously exempted from the payment in lieu of leave. Yet, this measure was declared unconstitutional by the French constitutional council).

Once the employment contract has been terminated, the parties may terminate any disagreement between them by way of settlement negotiations that will end the dispute and prevent the employee from referring the matter before any court. The employer will agree to certain concessions, notably of a financial nature.

If an employer dismisses an employee on discriminatory grounds (i.e., if it is in breach of a freedom, such as non-discrimination or the right to strike), a judge may hold the dismissal to be null and void. Pregnant women and employees who have suffered from an occupational accident or disease are also protected. Most importantly, the dismissal of a staff representative, who has been elected or appointed by a trade union, requires the prior consultation of the works council and administrative authorisation from the labour inspector. If the dismissal is held to be null and void, the employee is entitled to be reinstated and to receive payment of the wages lost between his or her dismissal and his or her reinstatement. If reinstatement is not possible or not requested the employee shall be entitled to dismissal indemnities and to compensation equal to at least six months' wages.

ii Redundancies

Individual redundancy

An employee may be made individually redundant on economic grounds, in particular if the firm has suffered financial losses, in the event of technological changes, the need to safeguard competitiveness or even the discontinuation of the activity. Financial losses are defined, essentially, as a significant drop in orders, turnover, cash flow or gross operating profits, or as an operating loss going for a certain period of time, which varies depending on the size of the company. These economic difficulties are assessed at the level of the sector of activity of the group to which the firm belongs, taking only the companies established in France into account.

An employee can be made redundant only after every effort of training and adaptation has been made and where it is not possible to provide alternative employment within the company or with the companies of the group established in France. If these attempts are unsuccessful, an interview prior to dismissal is held and the employer may then notify the employee of his or her redundancy. The following specificities are features of redundancy:

  1. The employee is entitled to priority for rehiring for a period of one year from his or her dismissal.
  2. In companies with fewer than 1,000 employees, the employer must offer employees with at least one year's seniority the opportunity to take out a professional security contract with unemployment insurance agencies which provide him or her with the benefit of a set of measures to facilitate his or her reinstatement in the employment market and the partial payment of his or her previous remuneration.
  3. In companies or establishments with at least 1,000 employees, the employer must offer the employee redeployment leave of between four and 12 months, funded by the company and that, in addition to maintaining remuneration, provides the employee with training and the assistance of a specialised team in his or her search for work.

Collective redundancies

The procedure is different depending on the number of employees dismissed within the same 30-day period and the size of the company:

  1. In a dismissal of at least 10 employees within the same 30-day period in companies with fewer than 50 employees, the staff delegates must be consulted. The delegates hold two meetings that cannot be more than 14 days apart. They are provided with certain information and documents (e.g., economic reasons, number of dismissals, professional categories affected, number of employees, expected timetable of dismissals and the social measures contemplated). The administrative authorities are also kept informed of the various stages of the procedure.
  2. In a dismissal of at least 10 employees within the same 30-day period in companies with more than 50 employees, the employer must establish an employment safeguard plan to avoid dismissals or limit their number. There are two ways in which this employment safeguard plan may be adopted, as detailed below.

First, the employer and trade unions may enter into a majority agreement setting out the content of the employment safeguard plan and the conditions under which the redundancies may take place.

Negotiations may be opened before the launch of the procedure for the consultation of the works council. Alternatively, the employer may announce its intention to open negotiations at the first meeting of consultation of the works council, or a trade union can request such negotiation at any time during the consultation of the works council.

Moreover, in negotiating the agreement, the trade unions may receive assistance from the accounting expert usually appointed by the works council to provide assistance during the consultation period.

The labour authorities must be informed immediately that negotiations have been opened.

To be valid, the employment safeguard plan must be signed by the trade unions who have received at least 50 per cent of the votes cast at the first round of the last professional elections. Finally, the majority agreement is submitted to the works council for its opinion before signature.

Alternatively, if a collective majority agreement is not reached, a document drafted by the employer in which the content of the employment safeguard plan is set out as well as the conditions for dismissal. The employer discusses the content of this document with the works council and then finalises the document on completion of the consultation procedure.

Specific rules govern the consultation of the works council (or the social and economic committee when it replaces the works council). The employer convenes the works council in an initial meeting and provides the works council with information on the dismissal project that is communicated in parallel to the DIRECCTE. During the first meeting, the works council may appoint an expert.

The works council must hold at least two meetings at least 15 days apart; the majority agreement or an agreement on procedure may provide for a greater number of meetings. From the first meeting onwards, the works council issues its opinions within one to four months depending on the number of dismissals contemplated.

If no opinion has been issued by the deadline, the works council shall be deemed to have been consulted. The works council issues an opinion on the contemplated operation and the procedures for its application. The works council also issues an opinion on the dismissal project, and this aspect covers the employment safeguard plan as well as the procedures for carrying out the dismissals, including criteria for the order of dismissals and the timetable.

Once the works council has issued its opinions, the labour authorities must, as the case may be, approve the majority agreement entered into with the trade unions or approve the unilateral document. The DIRECCTE issues a decision within 15 days for a collective agreement and within 21 days for a unilateral document. In the examination of a collective agreement, the DIRECCTE verifies the conditions under which it is adopted and the content thereof, as well as the procedures for the consultation of the works council. In the case of a unilateral document, the DIRECCTE carries out in-depth verification and, in particular, verifies the content of the employment safeguard plan.

The Macron Ordinances have created an alternative type of voluntary departure plan called the 'collective mutual termination'. A collective agreement, which must be approved by the Labour authorities, can define the terms and conditions of a mutual termination of the employment contract outside the framework of a dismissal and of economic justifications.

The Macron Ordinances have also provided employers with substantial leeway in adapting their employees' contracts of employment either to face the necessities of employment, or to preserve or develop employment. The new legal framework allows employers to adapt the contract on three levels: the remuneration, the geographical and internal mobility, and the working hours. The employee is free to refuse; however, a refusal constitutes a specific motive for termination, based on a real and serious cause.

xiii TRANSFER OF BUSINESS

French and European law regulate the effects of business transfer operations on employment contracts. Employees are protected from changes of employer arising from these operations by the maintenance of their employment contracts and their rights. In accordance with European case law, the maintenance of the employment contract with the new employer is thus guaranteed in all cases of the transfer of an autonomous economic entity that keeps its identity and continues its activity. An autonomous economic entity is understood as an organised group of persons and tangible (work equipment, premises) or intangible (goodwill, brand) elements. The entity must be identified and have staff specifically allocated to it as well as its own material means to carry out business.

The employment contracts are transferred automatically. The parties cannot object thereto, as the contract survives under the terms according to which it was performed at the time of the change of employer.

The transfer of a firm leads to the termination of the collective labour agreements. However, to avoid the sudden termination of the contractual benefits enjoyed by the employees prior to the transfer, the Labour Code provides that the collective agreement shall continue in force until the agreement that substitutes it enters into force, or failing that, for a term of one year.

Where the agreement in question has not been replaced by another agreement within these deadlines, the employees no longer keep the individual benefits they have acquired. Employers are only required to maintain employees' annual wages that must be at least equal to the wages earned during the past 12 months. The customs, atypical agreements and unilateral undertakings in force in the firm are transferred to the new employer and are automatically binding on him or her. The new employer is, however, entitled to terminate them.

A transitional agreement may also be signed between trade unions and both employers before the transfer of the business in order to delay the application for the employees that are transferred of the collective status in force in the new company for a maximum of three years.

There is no prohibition for dismissing an employee for economic reasons before the transfer. One or more employees may have their contracts terminated on economic grounds if the transfer operation is included in the employment safeguard plan to avoid discontinuation of the activity, and if these companies agree to a trade-in offer.

To ensure that employees who are allocated to the execution of a contract will keep their jobs on termination of such contract for allocation to another firm, collective agreements have been entered into in the main relevant industries to oblige the new service provider to take on all or some of the employees allocated to this contract. However, in such a case, the transfer of the employment contract requires the prior consent of the employee.

xiv OUTLOOK

Since taking office, the government has launched many reforms aimed at improving France's competitiveness while reducing the unemployment rate. Among the main projects are the PACTE Act (an action plan for growth and business transformation). This law's purpose is to give businesses the means to innovate, transform, grow and create jobs. Developed according to the method of co-construction with all actors, the bill was passed at the first reading in the National Assembly on 9 October 2018. At the time of writing, it is under review by the Senate.

Furthermore, the government announced that a law on occupational health should be presented in 2019. One of the most significant points raised during the pre-negotiation phase was the issue of daily allowances paid in case of sick leave. Additional points of discussion regarding occupational health and quality of life at work could be covered during the discussions on this new law.


Footnotes

1 Yasmine Tarasewicz is a partner and Paul Romatet is an associate at Proskauer Rose LLP.