I INTRODUCTION

i Applicable rules

French employers are required to comply with various mandatory rules, such as the French Labour Code (interpreted by case law), national industry-wide collective bargaining agreements (CBA), company collective agreements, employment contracts and company customs.

In general, when more favourable, the provisions of a CBA prevail over those of the Labour Code. However, a CBA may not derogate from compulsory public policy provisions.

The reform enacted by Law No. 2017-1340 of 15 September 2017 has restructured the relationship between CBAs and company collective agreements. This Law gave precedence to company agreements over industry-wide CBAs in all aspects of labour law, with the exception of 13 points on which the CBA takes precedence over company agreements (in particular the issues of minimum wages, classification, measures relating to working hours, their distribution and adjustment, the term and renewal of fixed-term contracts).

On all other points, collective agreements entered into at company level may include provisions differing from those of the applicable CBA.

ii Employment law jurisdiction

In the event of a dispute between an employee or former employee and his or her employer, the court of first instance is the labour court, which is composed of both employer-elected and employee-elected non-professional judges. A judgment rendered by a labour court may be appealed to the court of appeal with territorial jurisdiction. Finally, subject to certain conditions, a final appeal may be made to the Court of Cassation (France's equivalent of a supreme court), which does not examine the substance of the matter referred, but only considers points of law.

iii Government agencies tasked with enforcing employment law

The French labour inspection system comprises:

  1. central agencies – the National Council of the Labour Inspectorate and the Directorate-General of Labour; and
  2. decentralised bodies – the regional directorates for companies, competition consumption, labour and employment (known as DIRECCTE), which include inspection units.

The Labour Inspectorate is tasked with:

  1. ensuring the application of the legal provisions governing working conditions and the protection of workers in the exercise of their profession;
  2. providing technical information and advice to employers and workers concerning the most effective means of complying with legal provisions; and
  3. bringing deficiencies or abuses that are not specifically covered by existing legal provisions to the attention of the relevant authorities.

II YEAR IN REVIEW

One of the principal measures of the past year is the PACTE Law (Law No. 2019-486 of 22 May 2019 on the growth and transformation of companies). This Law aims to remove obstacles to the growth and transformation of companies in France and contains multiple provisions, some of which are of particular interest to labour and employment law, and specifically:

  1. a change in the method for calculating workforce thresholds: since companies nearing the thresholds were afraid of crossing them because of the obligations this would trigger and as a result did not wish to hire new employees, the legislative branch decided to pass more flexible provisions to limit this 'threshold effect';2
  2. measures to promote employee savings schemes: provisions concerning mandatory profit-sharing schemes, employee savings schemes and optional profit-sharing schemes; and
  3. other labour and employment law measures, such as provisions relating to night work and better employee representation in management bodies.

Another principal measure of the past year is the publication of an ordinance dated 20 February 2019 that transposes into French law Directive (EU) 2018/957 of 28 June 2018 concerning the posting of workers. The provisions of this ordinance will enter into force on 30 July 2020.

This reform provides that a set of core French statutory and collective bargaining provisions must apply to the posted employee to the same extent that they apply to local employees in that organisation or branch. Thus, it provides that the employer of an employee posted to France must guarantee him or her the same treatment as local employees. The core French rules will apply to 'remuneration' and no longer merely to minimum wages. Furthermore, a new point will be added to the list of core rules: the reimbursement of all professional expenses relating to a secondment (transport, accommodation and meals).

Moreover, as of 30 July 2020, after a period of posting exceeding 12 months (that could be extended to 18 months), in addition to the reinforced core French regulations, the full provisions of the French Labour Code will apply to posted employees, subject to some exceptions that are mainly related to conclusion, performance, transfer and termination of the employment contract, fixed-term employment contracts and specific employment contracts.

Another key measure is unemployment insurance reform. The new rules governing unemployment insurance are set out in two executive decrees (Decree Nos. 2019-796 and 2019-797 of 26 July 2019). This reform is designed to meet several major objectives, in particular to fight against unjustified or excessive reliance on short-term contracts by introducing a bonus and penalty system for the unemployment insurance contributions paid by companies to encourage them to hire employees in long-term positions, but also to ensure that work pays more than inactivity by establishing new unemployment insurance compensation rules that incentivise inactive workers to return to work.

III SIGNIFICANT CASES

In a 5 April 2019 decision of the Full Court, the Court of Cassation reversed the case law concerning the harm caused by anxiety relating to asbestos.

In its decision, the Court of Cassation reversed its own case law limiting the possibility of suing for damages for anxiety resulting from exposure to asbestos solely to employees of those establishments recorded on Acaata3 lists.

Employees of unlisted establishments that can demonstrate such exposure, however, are also allowed to sue their (current or former) employer, provided an employee is able to prove that the employer was in violation of its safety obligation, and the reality and extent of the harm the employee suffered. Further, by eliminating any link between entitlement to the Acaata system and the harm of anxiety, the High Court removed the main obstacle to date to claims for reparations based on exposure to substances other than asbestos.4

The Court of Cassation also ruled this year on the 'Macron' scale, which imposes a statutory fixed scale of minimum and maximum damages that employees may be awarded in the event of unjustified dismissal depending on (1) their seniority at the company and (2) the size of the company. Following the refusal of certain French labour courts to apply the new scale introduced by the Macron Ordinances, the matter was referred to the Court of Cassation. In its opinion, the Court found that the scale complied with international and European labour conventions and treaties. Indeed, certain labour courts had refused to apply the scale on the grounds that it does not allow for adequate compensation as provided for by Article 10 of International Labour Organisation (ILO) Convention No. 1585 and Article 24 of the European Social Charter.6

The Court set aside Article 24 of the European Social Charter as it deemed Article 24 without direct effect, reasoning that it is insufficiently precise and unconditional to be considered self-sufficient. The Court found that Article 10 of ILO Convention No. 158 was to be of direct effect and may therefore be invoked. The Court of Cassation deemed that the terms 'adequate' and 'appropriate' employed in Article 10 of ILO Convention No. 158 leave a certain margin of evaluation to the state.

The Court thus considers the Macron scale to be compatible with Article 10 of ILO Convention No. 158.7

The Court of Cassation also rendered a decision relating to termination by mutual agreement and psychological harassment. On this matter, the Court ruled that acts of psychological harassment recognised by the courts do not automatically require the nullity of the termination agreement.

In other words, the existence of proven psychological harassment does not in itself suffice to invalidate a termination agreement entered into in such a context, as it does not automatically imply vitiated consent. Under French law, only vitiated consent can invalidate mutually agreed termination (fraud, error, violence).8 This decision is in keeping with the case law of the Court of Cassation, the aim of which is to stabilise the legal framework for termination by mutual agreement.

IV BASICS OF ENTERING INTO AN EMPLOYMENT RELATIONSHIP

i Employment relationship

The formalisation of permanent employment contracts in writing is not required by law. Any non-written employment agreement is deemed to constitute a permanent contract of employment.

In practice, it is advisable to formalise the agreement in a written employment contract to ensure that the parties both know and accept the terms and conditions of employment and to enable the employer to add specific clauses, such as a probationary period and, if relevant, a non-competition clause.

While the content of a permanent employment contract remains fluid, a collective bargaining agreement applicable to a company's activity may contain provisions that must be included in the employment contract and be applied in the employment relationship.

Employees may also be hired under fixed-term contracts, but only in a limited number of specific cases (mainly for the replacement of absent employees or a temporary increase in activity).9 Notably, non-compliance with applicable rules can lead to the redesignation of a fixed-term contract as a permanent one.

A fixed-term employment contract must be set out in writing and must include specific mandatory provisions (notably specification of the grounds for recourse to a fixed-term contract; the name and status of the employee replaced if the contract is entered into for replacement purposes; the contract end date and any possibility of renewal; and the minimum term, where no definite term is specified). If some of these statutory provisions are not included, the contract may be designated as a permanent employment contract.

As a general rule, an employment contract may not be modified without the express written consent of the employee. Certain changes that qualify as simple modifications of the working conditions, however, do not require the employee's express consent (e.g., a change in the place of work if it is in the same geographical area, or changes to the employee's duties if they are still in accordance with his or her qualifications), and others qualify as amendments of essential elements of the employment contract (such as remuneration or status).10

ii Probationary periods

An employer may provide for a probationary period in an employment contract. Its duration may be freely fixed by the parties within certain limits provided for by the Labour Code and any applicable CBA. Standard probationary periods are two months for office and blue-collar workers, three months for supervisors and technicians and four months for executive employees.11

The trial period may be renewed once by mutual agreement of the parties, provided this is allowed by a CBA.

iii Establishing a presence

A foreign company can have employees in France without creating a company or a branch in France. In this situation, the foreign company must register with the French social security authorities (URSSAF) and complete an E0 form, after which it becomes an employer without an establishment in France (known as an ESEF).

A system has been put in place to allow employers with no place of business in France to declare their company and their employees subject to the French social security.

Companies are required to declare their employees' status to the National Centre for non-French Companies (CNFE), an entity within the URSSAF collection office in the Alsace region. The CNFE will forward the information to the other relevant social security institutions. Then, when an employer wishes to hire an employee in France to perform a contract in France, the employment relationship is subject to French employment law.

An independent contractor cannot create a permanent establishment (PE) unless it is regarded as a legally or economically dependent agent who possesses and habitually exercises authority to conclude contracts on behalf of the foreign enterprise in France. Business profits attributed to the PE would become taxable in France with transfer pricing obligations.

Finally, since the entry into force of tax reforms in January 2019, employers are now required to deduct income tax directly from employees' wages. Essentially, this means that income tax is directly deducted by the employer from the income of each employee prior to the payment of wages.

V RESTRICTIVE COVENANTS

As a general principle, an employee has to comply with a non-compete obligation during the performance of an employment contract. When the contract has ended, the employee must remain loyal to his or her former employer but will not be bound by the non-compete obligation, unless otherwise stipulated in the employment contract.

To be valid, a non-compete clause must:

  1. be justified by the legitimate interests of the company;
  2. be limited in time and place; and
  3. provide for financial compensation.12

Some CBAs also have these requirements, including, for example, the level of any financial compensation and the duration of the clause. In these cases, employment contracts must comply with these rules.

Should this clause be invalidated by a judge, the employee concerned is free to work for any competing company. The employee is also entitled to damages for any losses suffered.

The employer can include a provision allowing him or her to waive the non-compete clause within the framework of the termination of the employment contract within a certain period of time. The French Supreme Court requires that employers waive non-compete clauses within the period cited in the non-compete clause and at the latest on the date of the employee's effective departure, not on the date of termination of the employment contract. This means that if the employee is not required to complete his or her notice period, the employer must waive the non-compete clause before the last day of effective work.13 Otherwise, the employee is entitled to damages if he or she chooses to comply with this clause. The amount of damages is at the discretion of the judge.

VI WAGES

i Working time

Under the French Labour Code, the legal working time in France is 35 hours per week (equivalent to 151.67 hours per month).14

The 35-hour week includes effective working time, defined as the period during which the employee (1) must remain on company premises, (2) is under the supervision of his or her employer, and (3) may not go about his or her personal matters. Pursuant to French case law, breaks are not considered effective working time.

In the event that an employee works fewer than 35 hours per week, he or she is considered a part-time worker. Specific provisions must be included in employment contracts for part-time workers and specific rules are applicable.

There is also a specific working time arrangement that is both flexible and annualised, consisting of a fixed number of days to be worked per year (known as forfait jours). When an employee is subject to a forfait jours working time arrangement, his or her working time is calculated in days worked during the year rather than hours per week, and compensation represents a flat rate that does not vary in accordance with the number of hours worked per week.15 This system is especially appropriate for executives who enjoy greater autonomy in organising their work schedule and are not always in a position to abide by collective working hours. This type of arrangement has been extended to non-executives whose duties require autonomy in the performance of their work.

The conditions for implementing a forfait jours working time arrangement are relatively strict. The system must be provided for either by a collective agreement or by an applicable CBA, without which it is impossible to implement a forfait jours arrangement at the company, even with the employee's consent. The company agreement or the CBA providing for a forfait jours working time arrangement must stipulate certain terms, in particular a reference period for determining the number of days worked (calendar year or any other period of 12 consecutive months), and the fixed number of days to be worked during the reference period (up to a maximum of 218 days). Moreover, the employee's consent must be obtained by means of an individual annualised working time agreement, which must appear in a specific clause of the employment contract or in an amendment thereof.

Since the employee's working time is calculated in days rather than hours, the employer is required to implement a certain number of measures to ensure that the employee's workload remains reasonable (e.g., register the number of days worked, an annual meeting with the employee to discuss his or her work organisation and workload, a balance between his or her private and professional life, and his or her remuneration). These terms are customarily set out in the collective agreement providing for the forfait jours.

ii Overtime

The statutory working time for employees in France is 35 hours per week, meaning that any hours that employees are required to work in excess of this limit would normally be considered as overtime and paid at an increased rate. Overtime is calculated on the basis of actual hours of work (e.g., normal working time and performance of hours while on call).

The company must comply with the following working time limitations:

  1. maximum weekly working hours: average of 44 hours per week during 12 consecutive weeks with a maximum number of 48 hours per week;16
  2. maximum daily working hours: 10 hours;17 and
  3. maximum range of working hours: 13 hours (i.e., a minimum rest of 11 hours must be allowed to employees between two working days).

Overtime hours performed at the request of the employer also give rise to remuneration at an increased rate. Any CBA applicable to the company may provide for a specific increased overtime rate, which should be an increaser of not less than 10 per cent.

Where no company collective agreement on overtime is in place, or where a CBA does not include any such provision, the following provisions of the Labour Code apply:

  1. hourly rate increased by 25 per cent for each of the first eight hours of overtime (from the 36th to the 43rd hour, inclusive); and
  2. hourly rate increased by 50 per cent for each hour after that.

Overtime hours may not exceed a certain annual overtime quota. Every overtime hour performed above this limit must be compensated in the form of mandatory compensatory rest.

The CBA may provide for a such a quota. Where there is no CBA or the CBA does not provide for any quota, the French Labour Code provides for a quota of 220 hours per year.18

It is possible to replace the payment of overtime hours by their equivalent in compensatory rest. Compensatory rest in lieu of pay may be implemented at the company either by a company or establishment collective agreement or, failing this, by an industry-wide convention or agreement; or by a decision made by the employer (usually for companies lacking union delegates), if neither the social and economic committee (or CSE)19 nor the works council nor, in the absence of these, the staff delegates (if any), are opposed.

In the absence of any staff representatives, compensatory rest in lieu of pay may be implemented at the employer's sole initiative.

VII FOREIGN WORKERS

Although employers in France are not required to keep a register of foreign workers, they must comply with other requirements, such as keeping valid work permits on file. There is no limit on the number of foreign workers a company may employ.

For foreign workers, immigration status is limited and depends on the obligations under labour law. In principle, a work permit or visa is always required, although there are some exceptions. Further, the company is liable for taxes and local benefits for each foreign worker.

Foreign employers that post their employees to France are subject to the same statutory, regulatory and collective bargaining provisions as those that apply to employees working for similar companies established in France, including laws and regulations regarding:

  1. individual and collective freedom in the employment relationship, exercising the right to strike;
  2. working hours, compensatory rest, public holidays, annual paid leave, working hours and night work for young workers;
  3. minimum wages (national minimum wage) or, where more favourable, the minimum wage under the relevant CBA) and the payment of wages, including overtime increases and ancillary wages set by law or by the CBA;
  4. health and safety rules;
  5. discrimination and professional equality between women and men; and
  6. maternity protections, maternity and paternity leave, adoption leave, family-related leave.

It is the employer's responsibility to inform employees of any national CBA applicable to them during their posting to France. The title of this CBA must appear on the employee's payslip.

In addition, posted employees are entitled to occupational health services, unless the employer, established in a Member State of either the European Union or the European Economic Area (EEA), demonstrates that those employees are subject to equivalent monitoring in their home country.

VIII GLOBAL POLICIES

Companies with 20 or more employees must establish internal regulations. This requirements remains optional in companies with fewer than 20 employees.20

These internal regulations must consist of a written document, drawn up in French by the employer (and which may, if necessary, be accompanied by translations into other languages if the company employs staff who do not speak French), setting out the following rules:21

a measures for the application of health and safety regulations at the company, in particular instructions on the conditions of use of work equipment, means of protection, dangerous substances and preparations;

  • the conditions under which employees may be required to participate, at the employer's request, in restoring working conditions that are protective of employees' health and safety, when these appear to have been compromised;
  • general and permanent disciplinary rules, in particular the nature and scale of the sanctions the employer may impose;
  • provisions relating to the employees' right of defence during disciplinary proceedings; and
  • a reminder of the provisions of the Labour Code relating to psychological and sexual harassment and sexist acts.

The draft internal regulations must be submitted for the opinion of the CSE. This draft and the opinion of the CSE are then communicated to the local labour inspector, who examines the legality of the clauses therein.22 Finally, the internal regulations must be filed with the competent labour court.

The internal regulations must be brought to the attention, by any means, of all persons having access to the workplaces and premises where hiring is carried out (public posting, intranet, email, or delivery by hand delivery).

The internal regulations are binding on all employees of the company, even those who were hired prior to the date the regulations were implemented.

The internal regulations must be updated regularly.

IX PARENTAL LEAVE

Pregnant employees are entitled to maternity leave for a period starting six weeks prior to the expected due date and ending 10 weeks after this date.23 At the employee's request, and subject to the approval of the healthcare professional monitoring the pregnancy, the period during which the contract of employment is suspended that starts prior to the expected due date may be reduced by up to a maximum of three weeks.24 The period following the birth of the child is then extended by the same amount of time.

While on maternity leave, the employee receives substitute income in the form of daily benefits. The employer is legally required to prepare a certificate of wages and to forward it to the Primary Healthcare Insurance Fund (or CPAM)25 so that the fund can determine the amount of the daily benefit.

Certain collective agreements or industry-wide CBAs provide that an employee's wages continue to be paid throughout the period of leave. In this case, the CPAM must pay the daily benefits directly to the employer by a process of subrogation. Daily benefits are paid every 14 days.26

The right to health insurance benefits is subject to prior registration with the social security administration and performance of a minimum period of work.27 In addition, the employee enjoys protection from dismissal throughout the entire term of her pregnancy, and in particular during her maternity leave, as well as for 10 weeks following the end of this leave.28

The child's father or, more generally, the mother's partner, is entitled to 11 consecutive days of paternity leave.29 This leave must be taken within four months of the birth of the child. During his paternity leave, the employee may receive daily benefits from the CPAM. These daily benefits are calculated under conditions identical to those used in determining maternity leave benefits.30

Finally, to extend the period available for welcoming the child, parents may choose to take parental leave. This leave allows any employee with one year or more of service at the company to take leave or reduce his or her working time to take care of a child under three years of age, with the guarantee that, at the end of this leave, he or she may take up his or her previous position, or one similar to it.31 Parental leave comprises an initial phase of one year, which may be extended twice.32

Parental leave is not compensated by the employer, and either the contract of employment is suspended throughout this period or working time is reduced.

X TRANSLATION

Contracts of employment must be drafted and drawn up in French.

When the employment contract concerns a position that can only be designated by a foreign term without any equivalent in French, the contract must contain a French explanation of the foreign term.

If the employee is not a French citizen and the contract is established in writing, a translation of the contract in the employee's native language is drafted at the employee's request. Both versions are equally legally valid. In the event of a discrepancy between the two versions, only the text drafted in the employee's native language may be invoked against him or her.

The employer may not invoke clauses of an employment contract entered into in violation of Article L. 1221-3 of the French Labour Code against an employee to which those clauses are prejudicial.

According to Article L. 1321-6 of the French Labour Code, other documents must be drafted in French, such as internal regulations and, more generally, any document that (1) imposes obligations on employees, or (2) contains provisions essential to the performance of the employees' work, or both.

If these requirements are not fulfilled, the document is not enforceable in court. However, this requirement is not applicable to:

  1. foreign employees: such documents may also be drafted in their native language; or
  2. documents received from abroad, provided that the employees understand their content perfectly.

XI EMPLOYEE REPRESENTATION

Following the introduction of Ordinance 2017-1386 on the organisation of social dialogue and its ratification by the law of 29 March 2018, a reform of staff representative bodies has progressively eliminated staff delegates, works councils and workplace health and safety committees within French companies.

The election of a CSE is now mandatory for any company that has employed 11 or more people during the past 12 months.33 The members of the staff delegation are elected for a term of four years (unless a collective agreement provides for a term of office of two or three years).34

The purpose of the CSE is to present individual or collective demands to the employer relating to wages, the application of the Labour Code and other legal provisions, in particular those concerning social protections, as well as collective bargaining agreements and company agreements. The CSE contributes to promoting health, safety and the improvement of working conditions at the company and carries out investigations into occupational accidents and diseases.

The members of the CSE are provided with premises for meetings, credit hours, as well as an operational budget and a budget for social and cultural activities.

As previously with works councils, CSE elections are held in two rounds: the first is reserved for trade unions, which may field candidates, and the second for independent candidates.

By 1 January 2020 at the latest, the works council, staff delegates and workplace health and safety committee will all be replaced by a single CSE, which will take over most of their duties. The means and role of the CSE depend on the company's headcount.

i For companies with fewer than 50 employees

In companies with between 11 and 24 employees, the staff delegation is composed of one delegate and one substitute. In companies with 25 to 49 employees, it is composed of two delegates and two substitutes.35 The provisions relating to the number of elected representatives may also be amended by agreement, as may the number of delegation hours they are granted. Meetings must be held at least once a month.

ii For companies with 50 or more employees

The number of delegates and substitutes varies depending on the number of employees and may be amended by agreement. The greater the workforce, the greater the number of representatives.

The annual number of CSE meetings (no fewer than six, of which at least four must focus on health, safety and working conditions) may also be set by collective agreement. In the absence of an agreement, the CSE must convene at least once every two months at companies with between 50 and 300 employees and once a month at companies with more than 300 employees.36

A commission on health, safety and working conditions must be created within the CSE at companies with 300 employees or more but is optional for companies with fewer than 300 employees.

In addition, each representative trade union at companies or establishments with 50 employees or more may designate a trade union delegate. It is through this delegate that the trade union informs the employer of its complaints, demands or proposals and negotiates collective agreements. The delegate is provided with the means to carry out his or her assignment. His or her office may be held in conjunction with others.

Finally, Ordinance 2017-1386 on the organisation of social dialogue also created the company council, which is a body whose purpose is to group together the negotiating functions of the trade union delegates and the CSE. This council therefore has all the powers of the CSE, but also a role in negotiating, entering into and amending company collective agreements.37 This new, optional tool is currently used very rarely in France, where only a handful of company councils have been set up.

Staff representatives, in particular CSE members and trade union delegates, enjoy special protection, which involves protection from dismissal without administrative authorisation for staff representatives. It also includes the right to reinstatement and special compensation in the event of non-compliance with this procedure or if the authorisation is cancelled.

Being informed and consulted by the employer are two of the central roles of the CSE. Certain consultations are recurring, whereby the employer is required to consult the CSE regularly concerning the company's:38

  1. strategic orientation;
  2. economic and financial situation; and
  3. social policy, working conditions and employment.

All the necessary data for these consultations is stored in the company's economic and social database. The procedures for organising these three consultations may be defined in a company agreement39 and the employer may thus define the dates for which these consultations will be scheduled.

The CSE must also be consulted as and when necessary, in particular concerning any new working practices, restructurings, redundancies, the introduction of new technology, significant adjustments that affect health and safety conditions or working conditions, and the like.40 

XII DATA PROTECTION

i Requirements for registration

From the perspective of the EU General Data Protection Regulation (GDPR) and French legal human resources (HR) data protection, no registration with the French data protection authority (or CNIL)41 or a government body is required for companies located in France processing HR data as an employer.

Article 30 of the GDPR42 requires that organisations, including companies located in France acting as an employer for the processing of HR data, must maintain records of processing operations.

When a company located in France acts as an employer and collects HR data, directly or indirectly, about its employees, the company's representatives must inform the employees about the purpose of the processing and the recipients or categories of recipients, and with other specific information (under Articles 13 and 14 of the GDPR).43

Companies located in France acting as an employer are likely to need to consider consent when no other lawful basis44 clearly applies, such as an employment agreement.

According to Article 32 of the GDPR,45 organisations, including companies located in France acting as an employer, must limit access to personal data, including HR data, by implementing appropriate technical and organisational measures to ensure an appropriate level of confidentiality and security.

ii Cross-border data transfers

From the perspective of the GDPR and French legal HR data protection, under Chapter V of the GDPR, there are several types of cross-border data transfers, each with different considerations. Cross-border data transfers, including cross-border HR data transfers, may only take place if the transfer is made either within the EEA (including the European Union), or to an adequate jurisdiction agreed as such by the European Commission or the data exporter, including a company acting as an employer, that has implemented a lawful data transfer mechanism (or an exemption or derogation applies) as an adequate safeguard.

As an example, binding corporate rules are one of the ways in which adequate safeguards (under Article 47 of the GDPR)46 may be demonstrated by a group of undertakings, or a group of enterprises engaged in a joint economic activity as an employer, for cross-border HR data transfers.

Employers in the EEA must comply with the GDPR's principles and local personal data protection rules and regulations, and ensure that employees located in EEA Member States are informed about cross-border data transfers and have access to their personal data, as required by local data protection law in their home countries, regardless of the location of the HR data processing and storage.

Beyond these individual rights, no notification to employees located in EEA Member States, or consent from employees located in EEA Member States, is required for cross-border HR data transfers from the EEA.

For the United States, the Privacy Shield requires that an organisation processing personal data, including HR data, in the United States will cooperate in providing access to the personal data concerned, including HR data about employees, either directly or through an employer located in the EEA. The accountability for onward transfers provides that a contract (such as, for example, a contract that reflects the requirements of the standard contractual clauses adopted by the European Commission) is required when personal data, including HR data, received under the Privacy Shield is transferred either to a third party acting as a controller or to a third party acting as an agent.47

iii Sensitive data

From the perspective of the GDPR and French legal HR data protection, under Article 9 of the GDPR,48 'sensitive data' is defined as personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership, and the processing of genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning health, or data concerning a natural person's sex life or sexual orientation.

Medical information can only be obtained from an employee when the information is needed by the employer. This means employees have the right to keep their medical information private and confidential. But employers also have the right to know about their employees' illness or disability, and have the right to seek medical information to provide appropriate support or make special arrangements.

A person's social security number (SSN) benefits from specific protection. The use of SSNs for candidates or employees by organisations and employers is strictly regulated under French data protection rules and can be processed for specific HR purposes only.49

The processing of sensitive personal data by organisations, including employers, is prohibited unless the data subject, including an employee, has given explicit prior consent, or, as the case may be, the processing is necessary in the context of employment law, or laws relating to social security and social protection, or falls within other exceptions as detailed under Article 9(2) of the GDPR.50

iv Background checks

From the perspective of the GDPR and French legal HR data protection, an employer located in France may ask an applicant to provide information directly or through a third party to the extent that the information is necessary to assess the applicant's professional capacities that have a direct link with the position and the employee's skills (Article L. 1221-6 of the French Labour Code).

This means background checks in France are limited to verifications of a candidate's qualifications and experiences that are absolutely necessary, and to obtaining references.

Criminal background checks are limited to certain professions that entail security responsibilities or that involve working with children or sensitive information or materials. Credit background checks do not exist in France.

XIII DISCONTINUING EMPLOYMENT

In France, employment contracts can be terminated by the employer on either 'personal' or economic grounds.

i Dismissal for personal reasons

Dismissal for personal reasons is dismissal on grounds inherent to the employee's person, such as misconduct, serious misconduct or professional underperformance.

To be valid, the dismissal of an employee for personal reasons must be based on real and serious grounds.51 The employee may only be dismissed based on objective facts resulting from his or her personal actions. Consequently, the grounds for an employee's dismissal must be justified, in the event of litigation, with reference to written documents. It is also necessary to be able to establish that these facts are such that the contractual relationship between the two parties cannot continue.

Dismissal for personal reasons requires a specific procedure with specific deadlines. In particular, this procedure involves holding a preliminary meeting with the employee, sending a letter of dismissal containing certain specific provisions, and respecting a notice period (except in the event of termination for serious or gross misconduct), the duration of which is set by the law or by the applicable industry-wide CBA.

As mentioned above, under French law, special protection from dismissal is principally reserved for staff representatives. For these employees, a specific procedure must be implemented in the event of dismissal, requiring, in particular, prior authorisation from the French administration.52

Upon dismissal, the employer must pay the dismissed employee:

a severance compensation provided for by the Labour Code or the CBA (whichever is more favourable). Under French law, severance compensation is due only to employees with at least eight months of service.53 As an exception, French law provides that no severance pay is due for employees dismissed for serious or gross misconduct;

  • wages corresponding to the notice period, if the employer decides to release the employee from working during this period; and
  • compensation for any untaken days of paid leave acquired as at the date of the employee's departure.

Should an employee consider that his or her dismissal is not based on real and serious grounds, he or she may claim damages for unfair dismissal.

Since 23 September 2017, the Labour Code provides for a statutory fixed scale of minimum and maximum damages that employees may be awarded in the event of unjustified dismissal depending on (1) their seniority at the company and (2) the size of the company (whether it has fewer than 11 employees or more than 11) (known as the Macron Scale):54

  1. The minimum amount ranges from 15 days' salary (on completion of one full year of service) to three months' salary.
  2. The maximum amount ranges from one to 20 months' salary.
  3. The amount determined by the judge within the scope of this statutory fixed scale will depend on the loss suffered by the employee.

Should an employee consider that the employer has failed to comply with the legal requirements regarding the dismissal procedure, he or she may claim damages for unlawful dismissal (up to one month's salary).

French law provides that a judge may deem a dismissal null and void only in situations expressly provided for by law or when an employee's fundamental freedom has been infringed.55 In particular, a dismissal may be found null and void if it is based on an employee becoming pregnant, his or her status as a staff representative, participation in a strike, or discrimination.

Should an employee's dismissal be deemed null and void, that employee may be reinstated. If the employee's reinstatement within the company proves impossible, or if the employee does not wish to be reinstated, he or she is entitled to a greater level of damages (i.e., at least six months' salary, irrespective of seniority and the size of the workforce).

In the event of a dispute regarding dismissal, a settlement agreement may be entered into between the parties, and will have the effect of resolving the dispute between the parties. The validity of a settlement agreement, however, is subject to certain conditions:

  1. it must be drawn up in writing;
  2. litigation or pre-litigation proceedings must be pending;
  3. public social policy, which provides that one can only settle rights that are actually available but not future or potential rights, must be respected;
  4. the parties' consent must be valid; and
  5. both parties must make mutual concessions.

Termination may also come about by mutual agreement between the parties.56 If this is the case, no grounds for terminating the employment contract need to be specified but a specific procedure must be followed and, in particular, the labour administration's approval is required. The employee will be entitled, as a minimum, to the severance compensation provided for by law or by the CBA. No notice period will apply as the parties must agree on a departure date.

Whenever an employment contract is terminated, the employer must deliver an employment certificate, a completed form for the French unemployment insurance office, and a receipt for full and final payment to the employee.

ii Redundancies

Under French law, dismissal on economic grounds is dismissal for reasons unrelated to the conduct of the employee and resulting from the termination, transformation or substantial change in the employment contracts, resulting, in particular, from economic difficulties, technological transfers, the necessary reorganisation of the company to safeguard its competitiveness, or the definitive suspension of the company's activities.57

If a company belongs to a group, any economic difficulties, technological transfers or a need to safeguard competitiveness must be assessed at the group level and across the business sector that is common to the companies within the group that are established on French territory.

It should be noted that the French courts are quite strict in their assessment of the grounds for redundancy and, consequently, it is quite common for redundant employees to sue their former employers. As a result, specific efforts must be made to justify the grounds for redundancy, which must be supported by written documents.

Redundancy involves a specific formal procedure, which is far more complicated than the procedure involved in cases of dismissal on personal grounds. This procedure varies depending on the number of redundant employees, the company's headcount and the existence of staff representatives.

Individual redundancy

Individual redundancies do not require, in themselves, consultation with the CSE, unless they concern a staff representative.

If the employee meets the required conditions, the employer must give him or her the opportunity to:

  1. enter into a professional safeguarding contract, if the employee works for a company or group employing fewer than 1,000 employees within the European Union; or
  2. take reclassification leave or mobility leave, if the employee works for a company or group employing 1,000 employees or more (with specific provisions for non-French groups regarding the location of the employees).

Once the redundancy has been decided, the employer must inform the administration the decision.

'Small' collective redundancy of fewer than 10 employees

The employer must consult the CSE. In the context of its economic functions, the CSE of companies with at least 50 employees must also be consulted in due time on the restructuring and workforce reduction project. Thus, two separate consultations must be carried out.58

Once an employer has decided on the redundancy of between two and nine employees, it must inform the DIRECCTE of its decision within eight days of sending out the letters of dismissal.

Collective redundancy of 10 employees or more

Should the dismissals concern more than 10 employees during a period of 30 days, a specific, burdensome procedure must be implemented, involving the implementation of a job protection plan (or PSE).59 A PSE is established either by a majority-ratified collective agreement validated by the DIRECCTE, or by a unilateral document drawn up by the employer and approved by the DIRECCTE.60

The PSE must contain certain provisions and in particular a reclassification plan aimed at facilitating the internal reclassification or national outplacement of employees, professional training or vocational retraining, and monitoring the effective implementation of this reclassification plan.61

In the event of redundancy, the statutory severance compensation is the same as that paid in the case of dismissal on personal grounds. The employer may also include certain specific support measures in the PSE. The redundant employee is given priority in the event of rehiring for a period of one year.62

Finally, since 23 December 2017, a new form of collective termination has been put in place: mutually agreed collective termination.

This method of termination is negotiated by way of a collective agreement entered into at company level and sets out the targets in terms of job cuts while excluding any dismissals.63 The DIRECCTE is informed without delay of the opening of negotiations and, once they are finished, the agreement is submitted to the DIRECCTE for validation.

Once it has been completed and validated by the administration, the employees wishing to leave under this agreement present their departure application, which is studied by a commission. The employer's acceptance of the employee's application in the context of the collective termination agreement results in the termination of the employment contract by mutual agreement of the parties.

XIV TRANSFER OF BUSINESS

The transfer of an enterprise or business in France, or a part of an enterprise or business, to another company is governed by European Council Directive 2001/23/EC (known as the Acquired Rights Directive), by Article L. 1224-1 of the French Labour Code, and by both national and European case law.

Article L. 1224-1 of the French Labour Code provides that where there is 'a modification of the legal situation of the employer, chiefly in case of succession, sale, merger, transformation of the business . . . all the employment contracts in effect at the time of the modification remain applicable between the new employer and the employees attached to the business'.

Therefore, Article L. 1224-1 of the Labour Code is applicable in the event of a change in an employer's legal status. These types of changes mainly occur in the event of succession, sale, merger, transformation of business or incorporation of a company (according to the wording of Article L. 1224-1).

The French Court of Cassation has defined the general notion of a transfer as 'a transfer of an autonomous economic entity that keeps its identity and whose business continues after the transfer'.64 It should be noted that case law considers that Article L. 1224-1 of the Labour Code should also, under some circumstances, be applied to insourcing operations. French case law considers that these provisions apply when:

  1. the entity involved in the transfer may be considered an autonomous economic entity; and
  2. the entity concerned continues its activity within the company to which it is transferred.

According to French case law, any 'combined and organised unit of staff and tangible and/or intangible assets enabling the entity to carry on an activity that pursues its own objectives' may be considered an autonomous economic entity.

When Article L. 1224-1 of the Labour Code applies, contracts of employment fully or partly dedicated to the transferred business are necessarily and automatically transferred to the new employer under the same individual terms and conditions. The contracts remain valid, and under the same conditions as those prevailing prior to the transfer (e.g., length of service resumed, same salary).

Transferred employees are bound by the same obligations and are entitled to the same rights as those governing their contracts at the time of their transfer. More particularly, the employees retain their seniority entitlement, grade and salary.

Where CBAs are concerned (e.g., an in-house collective agreement or an industry-wide agreement), any agreements applied before the transfer will continue to apply after the transfer until a substitute agreement is entered into or, in the absence of such an agreement, for one year from the end of the notice period (i.e., three months) in accordance with Article L. 2261-14 of the Labour Code.

If no substitute agreement has been entered into after 15 months (three-month notice period plus 12 months), the employees are entitled to a compensation guarantee (preservation of their compensation prior to the transfer by virtue of the employment contract and the CBA).

XV OUTLOOK

The year 2020 will be marked by a new pension reform promised by the Macron government, which aims to create a universal pension system. The current French pension system is based on a system of professional statuses (42 different pension schemes, multiple rules and exceptions, and complex calculations).

The purpose of creating a universal pension system is to simplify and ensure equal treatment by developing rules based on clear, comprehensible and transparent principles.


Footnotes

1 Véronique Child and Eric Guillemet are partners at Deloitte | Taj Société d'avocats.

2 There are many thresholds under French employment law (roughly 200). The most relevant here are in respect of the obligation to set up (1) staff representatives (mainly 11 employees or 50 employees) and (2) compulsory profit sharing (50 employees).

3 Allocation de cessation anticipée d'activité des travailleurs de l'amiante (asbestos workers' early activity cessation allowance).

4 Court of Cassation, Full Court, 5 April 2019, No. 18-17.442.

5 Under Article 10, '[the courts] shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate'.

6 Under Article 24, 'the right of workers whose employment is terminated without a valid reason to adequate compensation or other appropriate relief'.

7 Court of Cassation, Full Court, 17 July 2019, Opinion No. 15013.

8 Court of Cassation, Social Chamber, 23 January 2019, No. 17-21.550.

9 French Labour Code, Article L. 1242-2.

10 Court of Cassation, Social Chamber, 10 July 1996, No. 93-41.137.

11 French Labour Code, Article L. 1221-19.

12 Court of Cassation, Social Chamber, 10 July 2002, No. 00-45.135.

13 Court of Cassation, Social Chamber, 13 March 2013, No. 11-21.150

14 French Labour Code, Article L. 3121-27.

15 id., at Article L. 3121-53.

16 id., at Article L. 3121-20.

17 id., at Article L. 3121-18.

18 id., at Article D. 3121-24.

19 Comité social et économique.

20 id., at Article L. 1311-2.

21 id., at Articles L. 1321-1, L. 1321-2.

22 id., at Article L. 1321-4.

23 id., at Article L. 1225-29; Court of Cassation, Assemblée Plénière, 20 March 1992, No. 88-17-028.

24 Court of Cassation, 2nd Civil Division, 25 April 2013, No. 12-17.769.

25 Caisse Primaire d'Assurance Maladie.

26 French Social Security Code, Article R. 331-5.

27 id., at Articles L. 313-1, R. 313-3 and R. 313-4.

28 French Labour Code, Articles L. 1132-1 and L. 1225-4.

29 id., at Article L. 1225-35.

30 id., at Articles L. 331-8, R. 331-1, R. 313-8, D. 331-3, D. 331-4.

31 id., at Articles L. 1225-47 and seq.

32 id., at Article L. 1225-48.

33 id., at Article L. 2311-2.

34 id., at Article L. 2314-33.

35 id., at Article R. 2314-1.

36 id., at Article L. 2315-28.

37 id., at Article L. 2321-1.

38 id., at Article L. 2312-17.

39 id., at Article L. 2312-19.

40 id., at Articles L. 2312-8, L. 2312-38, L. 2312-39, L. 2312-40, etc.

41 Commission Nationale de l'Informatique et des Libertés.

42 1978 French law on information technology, data files and civil liberties, in its latest version in force, Article  30.

43 id., at Article 48.

44 General Data Protection Regulation [GDPR], Article 6, corresponding to Article 5 of the 1978 French law on information technology, data files and civil liberties, in its latest version in force.

45 1978 French law on information technology, data files and civil liberties, in its latest version in force, Article 4.6.

46 There is no specific provision for this purpose under the French law on information technology, data files and civil liberties, in its latest version in force.

48 1978 French law regarding information technology, data files and civil liberties, in its latest version in force, Articles 6, 8-I-2°(c) and 44.

49 Application Decree No. 2019-341 dated 19 April 2019 about processing, including the social security number and its purposes.

50 GDPR, Article 9(2)(a) and 1978 French law regarding information technology, in its latest version in force, Articles 6, 8-I-2°(c) and 44.

51 French Labour Code, Article L. 1232-1 and seq.

52 id., at Article L. 2411-8.

53 id., at Article R. 1234-2.

54 id., at Article L. 1235-3.

55 id., at Article L. 1235-3-1.

56 id., at Article L. 1237-11 and seq.

57 id., at Article L. 1233-3.

58 id., at Article L. 1233-8.

59 Plan de sauvegarde de l'emploi.

60 id., at Article L. 1233-24-1.

61 id., at Article L. 1233-24-2.

62 id., at Article L. 1233-45.

63 id., at Article L. 1237-19.

64 Court of Cassation, Social Chamber, 7 July 1998, No. 96-21.451.