The Employment Law Review: France

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 (CBAs), 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:

  • central agencies – the National Council of the Labour Inspectorate and the Directorate-General of Labour; and
  • decentralised bodies – the regional directorates for companies, competition, consumer affairs, labour and employment (known as DIRECCTE, or DREETS as of 1 April 2021 (see also Section XIII.ii)), which include inspection units.
  • The Labour Inspectorate is tasked with:

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

    The year 2021 was characterised by the adoption of a series of exceptional measures concerning the covid-19 pandemic to ensure continuity of economic activity.

    The economic measure that has most helped companies to face the health crisis is the recourse to part-time unemployment covered by the public authorities in certain circumstances. Part-time unemployment is a compensation scheme to which companies may resort under extraordinary circumstances, such as an epidemic,2 it being specified that part-time unemployment is a collective measure.

    The purpose of the part-time unemployment scheme is to either (1) collectively reduce the number of working hours normally performed at the establishment to below the statutory working time or (2) temporarily close an establishment (or part of an establishment). The implementation of a part-time unemployment scheme must be authorised by the French administration on a dedicated website.

    The employment contracts of the employees concerned are suspended (not terminated), that is to say for the hours or periods that are not performed, the employees may not be present at their place of work, on call, or required to comply with their employer's instructions. The employees are entitled to a special allowance paid by their employer for any unworked hours, and the latter is reimbursed by the state up to certain ceilings. Any hours worked (in the case of reduced activity) must be paid at the normal rate.

    As of 30 July 2020,3 a new specific long-term part-time unemployment scheme, called APLD, has been adopted until 30 June 2022 to maintain employment in companies facing a long-term decrease in their activity but that is not likely to compromise their sustainability. The implementation of the APLD is subject to the conclusion of a company-wide or industry-wide agreement, including commitments to maintain employment and provide training, which is validated beforehand by the administrative authority. Applicable for six renewable months, up to a limit of 24 months, the APLD is limited to a 40 per cent reduction in an employee's working hours for the total duration of the agreement.

    Moreover, a number of provisions have been adopted in 2020 to face up to the covid-19 pandemic. Among these measures, Ordinance No. 2020-3234 states that a company-wide or industry-wide agreement may determine the conditions under which the employer is authorised to impose days of paid leave or to change the dates of previously scheduled leave, within the limit of six working days and subject to prior notice of one clear day.

    Concerning compensatory rest days, Ordinance No. 2020-323 provides that the employer may unilaterally impose or reschedule compensatory rest days (up to a maximum of 10), without having to enter into a company-wide or industry-wide agreement and subject to prior notice of one clear day. Ordinance No. 2020-15975 specifies that these provisions are applicable until 30 June 2021.

    Measures allowing the continuity of the functioning of the staff representative institutions have also been adopted. Ordinance No. 2020-14416 and Decree No. 2020-15137 allow the procedure for informing and consulting an employer's social and economic committee (or CSE)8 to be suspended for the duration of the state of health emergency (at the time of writing, until 16 February 2021). Previously, this procedure was possible (1) by agreement with the CSE or, in the absence of an agreement, (2) at the discretion of the employer for up to three meetings per year. The government provides in particular that resorting to videoconferencing, conference calling and instant messaging is authorised for all meetings of staff representative bodies. However, the Ordinance provides for exceptions, allowing CSE members to oppose the remote meeting when sensitive issues, such as dismissal or the APLD, are on the agenda.

    Significant cases

    On 4 March 2020,9 the Court of Cassation ruled that an Uber driver was to be recognised as a salaried worker and that his status as self-employed was not real. This major ruling raises questions as to the durability of business models based on digital platforms.

    The Court of Cassation decided that the criteria for self-employment, namely, the worker's capacity to develop his or her own customer base, the freedom to set prices, and the freedom to define the terms of performance of the services rendered, were not satisfied in the case of an Uber driver. On the contrary, the Court found that the driver was part of an organised hierarchy that prevented him from freely determining his activity. It also found that the platform had disciplinary power over the driver since Uber had the power to 'temporarily disconnect the driver from its application as of the third fare refused' or, again, could withdraw the driver's access to his account in the event of an excessive cancellation rate or reports of problematic behaviour from customers.

    The Court therefore concluded that this Uber driver's self-employed status was fictional. His service agreement is actually a contract of employment. If a service agreement is considered to be an employment contract, this has major consequences for the company having recourse to the service provider recognised as an employee, such as having to bear the cost of the termination of the employment contract, as well as the payment of overtime and the employer's share of social security contributions.

    On 8 July 2020,10 the Court of Cassation rendered an important decision concerning the protection of whistle-blowers.

    The French Labour Code protects against dismissal and any discriminatory measure any employee who relates or testifies in good faith to facts constituting a misdemeanour or crime of which he or she becomes aware in the exercise of his or her duties. Any dismissal or any discriminatory measure in breach of this text is null and void.11

    The Court of Cassation consistently holds that the circumstance that the facts denounced are not established is not sufficient to characterise bad faith.12 In practice, the employee's bad faith is only accepted in the event of false denunciations, assuming an intention to harm.13

    In the case at hand, an employee was dismissed for serious misconduct on the grounds that he had denigrated the company in letters addressed to the regional director in response to two warnings notified to him, and filed a complaint against the head of an agency of the company with the aim, according to the employer, of destabilising that structure.

    The Court of Cassation confirms its positions decided here that bad faith can only result from the employee's knowledge of the falsity of the facts denounced and not from the mere fact that the denounced facts are not established. An unfounded accusation is therefore not necessarily a sign of bad faith. This solution confirms that the whistle-blower's protection first protects the whistle-blower employee even if the denounced facts may have negative repercussions for the company.

    The Court of Cassation also stated that the employer is entitled to produce before court elements extracted from an employee's private Facebook account if that disclosure is indispensable for the exercise of the employee's right to evidence and the invasion of the employee's privacy is proportionate to the aim pursued.14

    In this case, an employee of a large clothing company was dismissed for serious misconduct. His employer reproached him for a failure of his obligation of confidentiality for having posted on his Facebook account a picture of the new clothing collection that had only been presented to the company's sales representatives and that was not supposed to be public at that time. The employer was informed of the existence of this picture by an employee of the company.

    The Court of Cassation recognised the employer's legitimate interest in the confidentiality of its business, which justified the invasion of the employee's privacy to obtain evidence, which was done in good faith. Until then, to be able to consider punishing any behaviour harmful to the company, the employer had no choice but to first prove the public nature of a Facebook account. The Court of Cassation recognises for the first time that an employer can dismiss an employee on the basis of information published on a personal Facebook account, as long as the employer did not use any stratagems to obtain the information, which was the case here.

    This judgment serves as a reminder that the strict separation between the private and professional spheres of employees cannot confer to them total impunity when, through their 'private' behaviour, they harm the interests of their employer.

    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-compete clause.

    Although 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).15 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 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).16

    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.17

    The probationary period may be renewed once by mutual agreement of the parties, provided this is allowed by a CBA and the employment contract. In any case, save otherwise provided for by a CBA, the maximum duration of the probationary period, including renewal, is four months for office and blue-collar workers, six months for supervisors and technicians and eight months for executive employees.18

    Unless otherwise provided for by a CBA, if the employee terminates the employment contract during the probationary period, he or she must respect a notice period of one day if his or her service with the company is less than eight days, or two days otherwise;19 if the employer terminates the employment contract during the probationary period, the length of the notice period ranges from one day if the employee has less than eight days' service in the company to one month if the employee has more than three months' service.20

    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 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 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.

    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:

  • be justified by the legitimate interests of the company;
  • be limited in time and place; and
  • provide for financial compensation.21
  • 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. The Court of Cassation requires that employers waive non-compete clauses within the period cited in the non-compete clause and no later than 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 a notice period, the employer must waive the non-compete clause before the last day of effective work.22 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.

    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).23

    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 the 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 his or her compensation represents a flat rate that does not vary in accordance with the number of hours worked per week.24

    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 employees' 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, an 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 private and professional life, and 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. 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;25
    2. maximum daily working hours: 10 hours;26 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 increase of not less than 10 per cent.

    Where no company collective agreement on overtime is in place, or if 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 the 43rd hour.

    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. Otherwise, the French Labour Code provides for a quota of 220 hours per year.27

    It is possible to replace the payment of overtime hours by the equivalent time in compensatory rest. Compensatory rest in lieu of pay may be implemented 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 the CSE is not opposed thereto.

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

    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 seconds their employees to France must submit a prior declaration of posting to the Labour Inspectorate before the posting begins, in accordance with the regulations under Directive (EU) 2018/957.28

    Employees 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. remuneration, payment of salary, including overtime increases;
    4. health and safety rules;
    5. discrimination and professional equality between women and men;
    6. maternity protections, maternity and paternity leave, adoption leave, family-related leave; and
    7. reimbursement of professional expenses in terms of transportation, meals and accommodation.

    It is the employer's responsibility to inform employees of any national CBA applicable to them during their posting in France.

    In addition, seconded 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.

    Global policies

    Companies with 50 or more employees must establish internal regulations. This requirement remains optional in companies with fewer than 50 employees.29

    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:30

  • measures for the application of health and safety regulations at the company, in particular instructions regarding the conditions for 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 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.31 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).

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

    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.32 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.33 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)34 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.35

    The right to health insurance benefits is subject to prior registration with the social security administration and performance of a minimum period of work.36 In addition, the employee enjoys protection from dismissal throughout the entire term of her pregnancy, and during her maternity leave, as well as for 10 weeks following the end of maternity leave.37

    The child's father or, more generally, the mother's partner, is entitled to 11 consecutive days of paternity leave.38 From 1 July 2021, paternity and childcare leave will be extended up to 25 days.39 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 benefits are calculated under conditions identical to those used in determining maternity leave benefits.40

    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.41 Parental leave comprises an initial phase of one year, which may be extended twice.42

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

    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 into 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, documents are not enforceable in court. However, this requirement is not applicable to:

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

    Employee representation

    Following the introduction of Ordinance No. 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 mandatory for any company that has hired 11 or more people during the previous 12 months.43 The members of the CSE are elected for a term of four years (unless a collective agreement provides for a term of office of two or three years).44

    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, all works councils, staff delegates and workplace health and safety committees were required to be replaced by a single CSE, taking over most of their duties. Any employer that has not set up a CSE may be sanctioned for the offence of obstructing the setting up of staff representative bodies with imprisonment for a maximum of one year and a fine of €7,500 for the legal representative and €37,500 for the entity.45 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 CSE is composed of one delegate and one substitute. In companies with 25 to 49 employees, it is composed of two delegates and two substitutes.46 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.47

    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. This office may be held in conjunction with others.

    Finally, Ordinance No. 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.48 This optional tool is currently used very rarely in France, with only a handful of company councils having 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 purposes of the CSE. Certain consultations are recurring, whereby the employer is required to consult the CSE regularly concerning the company's:49

    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 agreement50 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.51

    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 (CNIL)52 or a government body is required for companies located in France that process HR data as an employer.

    Article 30 of the GDPR53 requires that organisations, including companies located in France acting as an employer for the processing of HR data, must maintain records of their 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, GDPR).54

    Companies located in France acting as employers are likely to need to consider consent when no other lawful basis55 clearly applies, such as an employment agreement.

    According to Article 32 of the GDPR,56 organisations, including companies located in France acting as employers, 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, GDPR)57 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 located within 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.

    As regards the United States, as of 16 July 2020, the Court of Justice of the European Union (CJEU) invalidated the EU–US Privacy Shield adequacy decision, adopted by the European Commission following the invalidation of the Safe Harbour principles, which allowed the transfer of personal data between the EU and US companies adhering to its data protection principles. In the meantime, the CJEU validated the standard contractual clauses (SCCs) allowing the transfer of personal data from the European Union to importers established outside the European Union. On 23 July 2020, the European Data Protection Board (EDPB), which is the independent European body that contributes to the consistent application of data protection rules throughout the European Union and promotes cooperation between the EU's data protection authorities, adopted guidance58 to a set of frequently asked questions on the CJEU's decision of 16 July 2020. In this guidance, the EDPB noted, among other things, that there is no grace period during which an organisation can keep on transferring data to the United States without assessing its legal basis for the transfer. Whether or not an organisation may transfer personal data, including HR data about employees, on the basis of SCCs will depend on the result of a prior and documented self-assessment, taking into account the circumstances of the transfers, and supplementary measures the organisation should put in place. The supplementary measures and SCCs, following a case-by-case analysis of the circumstances surrounding the transfer, would have to ensure that US law does not impinge on the adequate level of protection they guarantee. On the US side, organisations are encouraged to continue to demonstrate their commitment to protect personal information in accordance with a set of privacy principles that offer meaningful privacy protections and recourse for EU individuals. As noted in a joint statement dated 10 August 2020,59 the US Department of Commerce and the European Commission are still discussing the potential for a new, enhanced EU–US framework to comply with the CJEU's decision of 16 July 2020.

    iii Sensitive data

    From the perspective of the GDPR and French legal HR data protection, under Article 9 of the GDPR,60 '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. However, 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.

    In response to the coronavirus pandemic, the CNIL has issued guidance61 in line with the application of the GDPR, outlining the best practices to adopt with regard to the collection of personal data, in particular health data. Companies must therefore remain particularly vigilant in collecting health data and cannot, on the ground of the risks associated with covid-19, deviate from the recommendations of the CNIL and the health authorities.

    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.62

    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.63

    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, 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.

    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.64 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.65

    Following dismissal, the employer must pay the dismissed employee:

    1. 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.66 As an exception, French law provides that no severance pay is due for employees dismissed for serious or gross misconduct;
    2. wages corresponding to the notice period, if the employer decides to release the employee from working during this period (as an exception, French law provides that no notice period is due for employees dismissed for serious or gross misconduct); and
    3. 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.

    As of 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):67

    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.68 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 compensation (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 (i.e., after notification of the termination);
    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.69 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.70

    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, in themselves, require 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 of 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 a company 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.71

    Once an employer has decided on the redundancy of between two and nine employees, it must inform the DIRECCTE72 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 (out of a headcount of more than 50 employees) during a period of 30 days, a specific, burdensome procedure must be implemented, involving the implementation of a job protection plan (or PSE).73 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.74

    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.75

    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.76

    Finally, as of 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.77 The DIRECCTE is informed without delay of the opening of negotiations and, once they are complete, 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.

    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 Directive 2001/23/EC (known as the Acquired Rights Directive), by Article L. 1224-1 of the Labour Code, and by both national and European case law.

    Article L. 1224-1 of the 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 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'.78 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 in place (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).

    Outlook

    A new pension reform was supposed to be adopted during 2020, aiming to create a universal pension system to simplify and ensure equal treatment by developing rules based on clear, comprehensible and transparent principles. This reform has been postponed because of the covid-19 crisis but should be the focus of new consultations in 2021.

    Footnotes

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

    2 French Labour Code, Article R. 5122-1.

    3 Law No. 2020-734 of 17 June 2020, Article 53.

    4 Ordinance No. 2020-323 of 25 March 2020.

    5 Ordinance No. 2020-1597 of 16 December 2020.

    6 Ordinance No. 2020-1441 of 25 November 2020.

    7 Decree No. 2020-1513 of 3 December 2020.

    8 Comité social et économique.

    9 Court of Cassation, Social Chamber, 4 March 2020, No. 19-13.316.

    10 Court of Cassation, Social Chamber, 8 July 2020, No. 18-13.593.

    11 French Labour Code, Article L. 1132-4.

    12 Court of Cassation, Social Chamber, 10 March 2009, No. 07-44.092.

    13 Court of Cassation, Social Chamber, 6 June 2020, No. 10-28.199.

    14 Court of Cassation, Social Chamber, 30 September 2020, No. 19-12.058.

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

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

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

    18 French Labour Code, Article L. 1221-21.

    19 French Labour Code, Article L. 1221-26.

    20 French Labour Code, Article L. 1221-25.

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

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

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

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

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

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

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

    28 Directive (EU) 2018/957 of the European Parliament and of the Council, amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services.

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

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

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

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

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

    34 Caisse Primaire d'Assurance Maladie.

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

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

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

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

    39 Law No. 2020-1576 of 14 December 2020, Article 73, version of Article L. 1225-35 as from 1 July 2021.

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

    41 id., at Articles L. 1225-47 et seq.

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

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

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

    45 French Labour Code, Article L. 2317-1.

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

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

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

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

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

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

    52 Commission Nationale de l'Informatique et des Libertés.

    53 1978 French law on information technology, data files and civil liberties, in its latest version in force, Article 30.

    54 id., at Article 48.

    55 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.

    56 1978 French law on information technology, data files and civil liberties, in its latest version in force, Article 4.6.

    57 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.

    60 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.

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

    63 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.

    64 French Labour Code, Article L. 1232-1 et seq.

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

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

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

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

    69 id., at Article L. 1237-11 et seq.

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

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

    72 As of 1 April 2021, DIRECCTE are being combined with other decentralised services and known as DREETS (regional directorates for the economy, employment, labour and accord).

    73 Plan de sauvegarde de l'emploi.

    74 Labour Code, Article L. 1233-24-1.

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

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

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

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

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