In France, as in many Western countries, the salaried employee, who is economically weak, is regarded as being legally favoured in any employment relationship. French labour law therefore clearly favours the employee rather than the employer. In the area we are interested in, examples abound of the legislator showing such favour. Thus, in the event of a dispute as to the actual and serious cause of a dismissal, if the burden of proof does not fall specifically on either the employee or the employer, the employee is given the benefit of the doubt. In other words, if the judge has not been able to decide in the light of the elements submitted by the parties and despite, if necessary, the institution of a measure of investigation, the judge must consider that the dismissal is devoid of actual and serious cause.
As regards working hours, where it is sometimes quite difficult for the employee to produce evidence, similar rules apply. The employee must provide the judge with information that shows it is likely that he or she has worked overtime. As soon as these elements sufficiently support the claim and allow the employer to respond, it is up to the employer to produce its own evidence; the judge will then make a decision on the basis of the documents submitted by each party, after ordering a measure of investigation whenever necessary.
Finally, when an employee alleges a prohibited discrimination, either in the breach or even in the implementation of the employment contract, the burden of proof is clearly reversed. The same applies to allegations of moral or sexual harassment. It is up to the employer to show that the decision he or she made was not influenced by a discriminatory ground. If the employer cannot prove this, the alleged discrimination will be upheld against him or her. This mechanism is particularly unfavourable towards companies since, as we shall see, damages paid for discrimination must be awarded in full, in all cases.
In France, however, it has always been considered that the drawing up of the standards that govern employment relationships should be left to the social partners. Labour law, and, more generally, social law, is therefore widely composed of rules that derive from collective agreements negotiated by employers' groups on the one hand and employee unions on the other. In this context, the role of the state should be limited, through government action, to give the social partners the impetus – and sometimes the injunction – to negotiate. Besides, this time through the action of the legislator, the state should limit its role to determining the general principles, which are binding in all cases and which the social partners cannot exclude, while ensuring the effectiveness of collective agreements – again through the appropriate legislation.
The principles discussed in Section I explain why the resolution of individual labour disputes between an employer and an employee falls, in the first instance, not to state courts but professional and specialised ones, namely the labour courts. These are presided over by an equal representation of non-professional judges who are appointed by trade union organisations of employers and the trade unions of employees. The labour courts are divided into professional sections: industry, trade and trading services, agriculture and miscellaneous activities. There is also an inter-professional section – the management section – before which all disputes between members of management and their employer, whatever the nature of the activity, are brought.
Wherever possible, conciliation is the preferred resolution. The procedure therefore begins, in the vast majority of cases, with an attempt at conciliation. This is entrusted to the conciliation board of the court, which is composed of two judges: an employer and an employee.
For a long time, the role of the conciliation board was limited to seeking an agreement between the parties to put an end to the dispute, in whole or in part, at a conciliation hearing. Since 2016, the conciliation board has been renamed the conciliation and orientation board. Its role has been extended beyond an attempt at conciliation to include preparation of the case and its orientation before the judgment board. The conciliation and orientation board thus plays the part of an examining magistrate, and is comparable, in many respects, to the role of a pretrial judge in procedures before the regional courts.
Thus the board may order, even ex officio, all appropriate means of inquiry. From this perspective, it can, at the outset of a conciliation hearing, order the disclosure of a particular piece of evidence, organise a consultation measure or even seek specialist knowledge, authorise an inquiry, order the personal appearance of the parties or visit the place of work, inter alia. Where the existence of the obligation is not seriously contestable, the board may order payment by the employer to the employee of a provision on the wages and damages relating to the termination of the employment contract. Similarly, the board may order delivery of the documents relating to the termination of the employment contract (such as the certificate of work or certification from an unemployment agency).
As part of its examination of a case, the conciliation and orientation board should ensure there is an exchange of arguments and evidence between the parties. In this regard, the procedure before the labour courts, which was purely oral until 2016, has since undergone a significant evolution that increases very significantly the quantum of writing. Henceforth, a labour court must be seised of a signed and dated written petition, which must state the legal and factual grounds supporting a claim. This petition must also set forth the documents on which the claim is grounded and must be filed in the Labour Court Registry in as many copies as there are parties to the proceedings plus one, with a copy of the said documents. For the remainder of the proceedings, if the parties have decided to be assisted or represented by lawyers, the said lawyers, if they decide to use written documents to develop their argument, must now do so in the form of legal submissions.
When it appears to the conciliation and orientation board that the case has reached a state that can be judged, the parties are referred to the judgment board, which will hear the pleadings. Composed of four judges specialising in labour law – two employers and two employees – it then deliberates before rendering its decision. Note that the parties are not present during the judgment board's deliberations.
Judgments rendered by a labour court may be appealed before a court of appeal. Again, for a long time, these proceedings were oral, even at the appeal stage, but there has been a move towards a written, more formal procedure. As of 2016, all stages of the procedure are in writing, including hearings at courts of appeal. The parties must be represented either by a lawyer or by a union representative. All the rules applicable to civil case procedures before a court of appeal – which are sometimes very constraining – now apply to labour law procedures. In turn, decisions rendered by courts of appeal can be appealed before the French Supreme Court (or Court of Cassation).
In the highest degree of courts (Court of Appeal, Supreme Court), the specificities of labour law dispute disappear: these courts are presided over by professional judges who adjudicate on labour law disputes according to the same procedures and in the same way that they rule on all other types of litigation (family law, civil liability law, commercial law, etc.).
Other types of conflict fall under the jurisdiction of common law courts. These include collective disputes between either groups of employees and an employer or group of employers, or the employee representative institutions and the employer. Finally, disputes relating to professional elections, the appointment of union representatives and social security litigation are subject to specific procedures brought before common law first instance courts (i.e., district courts or regional courts).
III TYPES OF EMPLOYMENT DISPUTES
The vast majority of cases that come before the labour courts arise from the termination of an employment contract or, more specifically, a dismissal. The proportion of cases relating to dismissal on personal grounds fluctuated between 66 per cent and 76 per cent between 2004 and 2013. During the same period, dismissals grounded on economic reasons represented only 3 per cent of cases.
Since 1973, a dismissal must be justified by an 'actual and serious' cause (Article L.1232-1 of the Labour Code). Therefore, when an employee is dismissed for a reason that is neither actual nor serious, he or she is entitled to damages. Article L.1232-1 of the Labour Code has been in effect for more than 45 years now and – in its current codification – has given rise to very abundant case law which, given the French legislator's bias towards elaborate rules that are increasingly favourable to employees, has resulted in the courts increasingly allowing the appeals of interested parties. Thus, according to the official statistics of the Ministry of Justice for 2017 (the last full year for which statistics are available), the labour courts have been seised of 126,693 new cases (including emergency procedures).
The remainder of cases relate to other forms of dismissal (including collective or individual redundancy or dismissal invalidity) or termination of employment contracts (such as abusive resignation and formal record of termination). We should also mention disputes arising from implementation of the employment contract (amount of salary, application of the relevant clause of a collective agreement, disputes relating to paid leave or other types of leave, or to fixed-term and temporary employment contracts).
Let us point out here that, when they relate to the implementation of employment contracts, disputes raised by employees, in particular those who are still employed by the same company, may assume significant proportions. It is quite common for all the employees of a company (or an establishment or department), with the backing of a trade union, to seise simultaneously the same labour court of the same request. Strictly speaking, this is not a collective dispute but a collection of individual disputes. The resolution may therefore have consequences for the whole company and will apply to all the employment contracts in force.
IV YEAR IN REVIEW
During the past 18 months, labour law disputes have been strongly affected by the continued efforts of the legislator to reduce the number of disputes coming before the labour courts.
First, the Macron Scale has introduced a ceiling for the amount of damages awarded by judges in the event of dismissals devoid of actual and serious cause. Article 2 of Ordinance No. 2017-1387 dated 22 September 2017 has significantly amended the wording of Article L.1235-3 of the Labour Code. This text provides that the judge, when a dismissal has no actual and serious cause, may propose (but not impose) reinstatement of the employee concerned. However, the new wording of the Article adds: 'If either of the parties refuses this reinstatement, the judge grants the employee damages paid by the employer the amount of which ranges between the minimum and maximum amounts set in the tables here below.'
The first of these two tables applies to employees dismissed by a company that normally has 11 or more employees. It provides for minimum and maximum damages payments that vary according to the employee's length of service. The maximum amount ranges from two months' salary for an employee with one year of service to 20 months' salary for an employee who has been with the same company for more than 30 years. The minimum amount ranges from one month's salary to three months' salary. The second table applies to all other companies. The maximum amount is capped at 2.5 months' salary after 10 years of service.
In comparison with the law that applied previously, this double limitation constitutes a major change. Formerly, an employee with more than two years of service at a company with 11 or more employees automatically received a minimum indemnity equivalent to the salary paid during the previous six months; there was no maximum amount. In all other cases, the employee received compensation for proven damage and there was no maximum amount.
Over the years, the old system has increasingly been subject to criticism. In particular, the old legislation was criticised for fostering unpredictability in labour and employment disputes. Since there was no maximum level of compensation, each labour court and, more importantly, each court of appeal could freely determine the amount of damages granted to an employee dismissed without any actual or serious cause, and in a completely different way from the labour court or another court of appeal. In addition, there were objections to the payment of six-month minimum damages as a lump sum, as could happen in certain cases. In fact, some critics said these damages payments could be disproportionate to the amount of harm suffered, especially if the employee found work immediately after being dismissed without any actual or serious basis and, as a result, suffered no economic loss.
The former legislation (unchanged since 1973) was also said to be at fault for having generated a veritable explosion of labour court disputes. Ministry of Justice statistics show 200,000 new cases coming before the labour courts each year. Worse still, the appeal rate (around 60 per cent) had destabilised the functioning of the courts, some of which were no longer able to judge cases within a reasonable amount of time, in line with France's international commitments. In this context, the current government, appointed by President Emmanuel Macron after his election, modified Article L.1235-3 of the Labour Code, which is why the progressive limitation of the damages granted by judges to employees is commonly referred to as the Macron Scale.
The capping of damages applies to all disputes relating to dismissals notified after the Ordinance that created it entered into force, which is 23 September 2017 in Paris and the day after that in all other French regions. As a result, the vast majority of labour court cases that arose during 2018 further to a dismissal are affected by the limitations of the Macron Scale. However, these limitations only affect dismissals found to be without actual or serious cause. There is no ceiling for damages granted when the dismissal is void because of the violation of a fundamental freedom, an act of moral or sexual harassment, when the dismissal is deemed discriminatory or when it follows to legal action. In the same way, no limitation can affect compensation for the harm suffered as the result of an infringement of professional equality between men and women, the denunciation of a crime or offence, the exercise of a mandate by a protected employee or protection allowed to certain employees. In these latter cases, compensation for the harm suffered must be full.
The Macron Scale has also been heavily criticised. Even before the enactment of Ordinance No. 2017-1387, the employee and employer members of the labour courts expressed their concern at what they considered a genuine interference by the legislator in the traditionally consensual operation of the labour courts, whose impartiality and objectivity, they say, are necessarily guaranteed by the composition of the court being based on an equal representation of judges. They pointed out that this equality created balance and had resulted, since 1973 and contrary to what could have been said, in the homogenisation of the awarded damages from one labour court to another and even from one court of appeal to another.
As per President Macron's commitment, once the Ordinances were ratified by Parliament, the law of ratification was referred to the Constitutional Court. (Note that this Court – the highest constitutional authority in France – can be seised by the President, members of Parliament or senators after the passing of a law but before its enactment.) Parts of the text found to be inconsistent with the Constitution were deleted and only those that were declared compliant or were not challenged were published in the Official Journal and acquired the force of law.
In their referral, members of Parliament raised three questions. First, they said the capping of damages would be contrary to the constitutional principles of the 'guarantee of rights' according to which, in their view, the low ceilings of compensation provided would be insufficiently dissuasive and would thus allow the scope for an employer to wrongly dismiss an employee. Second, the limitation would also be contrary to the principle of full compensation for the damage suffered. Finally, according to members of Parliament, by limiting the indemnity solely on the basis of length of service, the legislator would disregard the principle of equality before the law.
In its Ruling No. 2018-761 of 21 March 2018 (published in the Official Journal dated 31 March 2018), the Constitutional Court dismissed these grievances. First, the Court considered that, for reasons of general interest, the legislator may adjust the conditions under which liability may be incurred and thereby, for such a reason, make exclusions or limitations to the right to damages, provided that it does not result in disproportionate harm to the victim of a wrongful act.
By setting a mandatory reference for the damages awarded by the judge in the event of dismissal without actual and serious cause, the legislator, according to the Constitutional Court, intended to reinforce the foreseeability of the consequences attached to the termination of an employment contract and thus pursued an objective of general interest.
Moreover, the derogation from the liability under common law resulting from the maximum amounts provided for does not constitute a disproportionate restriction of the general interest objective pursued. Indeed, on the one hand, these amounts were determined in line with the preparatory work, depending on the average compensation granted by the courts and, on the other hand, certain types of dismissals are not subject to any limitation (void dismissal, violation of a fundamental freedom, harassment, etc.).
As regards equality, this has not been breached. In fact, the legislator may, without disregarding the principle of equality, adjust the maximum compensation due to an employee when he or she retains, for this adjustment, the criteria relating to the harm suffered. This is precisely the case for the criterion of length of service with the company. In addition, the legislator was not required to set a scale taking into account all the criteria that determine the harm suffered by a dismissed employee, as the principle of equality does not require the legislator to treat persons in different situations any differently.
Compliance with the Constitution was therefore unambiguously upheld by the Constitutional Court. On this point, the debate is definitively closed. It is therefore no longer possible to argue before a labour court, a court of appeal, or even the Supreme Court, that capping resulting from the Macron Scale is unconstitutional.
This explains why opponents of the Macron Scale have raised their grievance on another ground, that of compliance of the revised Article L.1235-3 of the Labour Code with the international conventions that bind France. The Constitutional Court has no jurisdiction on the control of this compliance. The judicial and, more rarely, the administrative courts will be competent to exercise the control of compliance.
On this subject, the Labour Court of Troyes rendered a first decision on 13 December 2018, which has caused a sensation. The Constitutional Court considered that it was necessary not to apply the Macron Scale, which would be contrary to Article 10 of Convention No. 158 of the International Labour Organization (ILO) and Article 24 of the European Social Charter, all these texts having been signed and ratified by France. A second decision, rendered on 19 December 2018 by the Labour Court of Amiens under Article 10 of ILO Convention 158, is along the same lines.
It should be recalled that the aforementioned Article 10 provides that where a judge is led to the conclusion that a dismissal is wrongful, he or she must be entitled, in the absence of reinstatement or nullification of the dismissal, to award an employee adequate damages or any other form of compensation considered appropriate. By the mere fact that it is capped by the Macron Scale, the compensation would no longer be adequate or appropriate. Consequently, the labour courts of Troyes and Amiens have granted employees a greater amount of compensation than that afforded by the Scale, to provide the employee, from the courts' point of view, with appropriate damages for the harm suffered in the cases at bar.
Article 24 of the European Social Charter states, more simply, that 'all workers are entitled to protection in case of dismissal'. For the Labour Court of Troyes, which explicitly referred to this text in its decision, the Macron Scale would again deprive the dismissed employee of protection.
Another legislative amendment may have consequences for labour disputes, since it should decrease the number of new cases. The period of limitation for challenging the termination of an employment contract has been reduced to one year from the date when the notification of termination is issued.
Reducing the limitation period, which is specific to the termination of employment contracts, has been a long process. The first reform of civil limitation periods took place on 17 June 2008. Previously, the limitation period applicable to challenging the termination of an employment contract was 30 years (under the rules of common law), reduced to only 10 years against a merchant employer. The Act of 17 June 2008, which applied not only to employment contracts but more generally to all private law limitation periods, lowered this period to five years.
Subsequently, a new Act of 14 June 2013, specific to labour law, reduced the limitation period for bringing a legal action concerning the implementation or termination of employment contracts from five years to just two years. Finally, and only for employment contract termination cases, the Ordinance of 22 September 2017 (the same as that which instituted the Macron Scale) reduced the limitation period from two years to only one year.
The starting point of the limitation period was set as the day on which the employment contract termination is notified. It is no longer necessary to mention the existence of this one-year period in the document that notifies a termination of employment contract (except in the case of a termination relating to a 'professional employment safeguard contract' in the context of a redundancy, when reference must be made to the one-year limitation period in the proposal sent to the employee).
V OUTLOOK AND CONCLUSIONS
The question that should be raised at the beginning of 2019 is that of the effectiveness of the measures taken by the legislator with regard to labour law disputes.
First, the fall in the number of incoming cases occurred well before the Macron Scale was implemented and even before the reforms to the labour law procedure that took effect on 1 September 2016. The peak was reached in 2009 when the number of new cases rose to the unparalleled level of 228,578 cases. The number has fallen steadily since: to 184,343 cases in 2015, 149,806 in 2016 and, as already stated, 126,693 in 2017. It is clear that the reform only accompanied an underlying trend that was already pessimistic and certainly did not trigger the decline or even accelerate it.
On the other hand, it is certain that the nature of the cases of which the French labour courts will be seised in the future will evolve. Litigation that is currently overwhelmingly made up of disputes on individual dismissals, will gradually occupy the territory of discrimination in all its forms. Indeed, one should note that when it is discriminatory, a dismissal is void and when deemed void, a dismissal entitles the claimant to compensation without limit.
However, this type of case is much more burdensome than cases based solely on challenging the actual and serious cause. In itself, despite the benefits to the employee in terms of burden of proof when the discrimination falls within the scope of a legal prohibition, the discrimination must be carefully alleged, and the elements that make it likely and presume its existence, must be collected carefully. Conversely, an employer must be very specific when challenging allegations made by an employee without being able to take shelter behind its power of control.
In this respect, litigants could make judicious use of the new powers of investigation and guidance now granted to the conciliation and orientation boards. Likewise, they will have to ensure, in a precise written and legally founded argument, the development of all the legal means necessary to convince the judge. In a nutshell, the work done by their lawyers will become more and more important.
1 Julien Boucaud-Maître and Jean Gérard are partners at Chassany Watrelot & Associés.