Pitfalls to avoid when employing in France
“Flexibility and security” were the key words of the recent major reform of French Labor Law. The aim of the “Macron Laws” was to simply the life of employers, notably by :
- Making it easier for companies to hire,
- allowing them to negotiate wages and working conditions directly with employees rather than being bound by industry-wide collective agreements negotiated by trade unions,
- Limiting damages paid to workers for unfair dismissal,
- Introducing collective departures of more than 10 employees without having to justify the reason.
In practice, many foreigners think this reform did not go far enough and, indeed, French labor law may still prove to be tricky.
What are the main pitfalls an employer in France should avoid? Let’s take a look.
Pitfall 1: Not entering into a written work contract before the work relationship starts
A written work contract is, in general and in theory, not compulsory. However, it is strongly advised to draft a work contract, in order to provide for specifics of the working relationship (working time, non-compete, employee inventions, non-solicitation, trial period, applicable CBA, etc.). Furthermore, French law does require that certain elements be formalized in writing to the employee: for example a fixed-term work contract or an interim contract should be in written form, failure to do so will cause the contractual relationship to be considered as an indefinite term work contract.
Furthermore, drafting the document will allow the company to understand the rules and consider optional ones (for example the withdrawal from the non-compete or the trial period length).
Pitfall 2: Forgetting to check the applicable collective bargaining agreement
The French Labor Code is not the only source of law. Collective agreements negotiated with unions on the national, industry or company level may apply, as well as non-written rules defined by case law or a company’s customary practices.
There are numerous collective bargaining agreements (“CBA”) in France – the government aims to reduce their number to 200 in 2019 (against 700 in 2017). CBAs enable to tailor labor rules according to the company’s business activity. Hence, their contents and size vary widely. Some CBAs are more detailed than others.
Where the company’s activity falls within the scope of a CBA, it is essential to refer to the CBA for any specific rule, such as mandatory notice periods derogatory to the law, mandatory referral to a commission before dismissing an employee, legal indemnity computation, etc.
Pitfall 3: Overlooking the termination procedure
At-will employment does not exist in France. An employee may only be terminated for a real and serious cause. Two main categories of real and serious cause that exist in France are: termination for “personal” reasons and termination for “economic” reasons.
Despite the recent reform, the strict termination procedure remains unmodified, which entails convening the employee to a preliminary meeting (save large-scale dismissals) and the sending of the dismissal letter within a very-strict time-frame. As awkward as it might sound, while carrying out the procedure, the employer may not inform the employee he is terminated before the dismissal letter has been sent.
Furthermore, in a number of listed circumstances, the employer is compelled to inform and consult the workers representatives prior to a collective dismissal process. Failing to do so is a criminal offense and may jeopardize the entire procedure.
The Macron laws simplified the termination process for economic reasons, rendering the implementation more employer-friendly:
- the scope of “economic hardship” is now narrowed to France and no longer worldwide ;
- the reemployment obligation is made easier ;
- the employer no longer has to have an economic rationale to implement a voluntary collective departure of more than 10 employees, etc.
For protected employees, it remains mandatory to consult the workers representatives and request the labor inspector’s authorization during the dismissal process.
And do not think that when both parties agree to separate, there is no procedure to carry out. This is France, after all. Mutually agreed terminations may only be implemented through the signing of an official governmental form (a “Cerfa” form), which should be sent to the labor administration for homologation (i.e. approval and registration).
Last but not least, it is important to check the legal costs when terminating an employee, as it will vary according to the seniority and remaining paid vacation of the employee, as well as the size of the company.
Pitfall 4: Forgetting to control employees’ working time
The legal working time in France is 35 hours a week, unless otherwise specified in the work contract. Only executives with high functions (“cadre dirigeant”) will be exempt from working time.
Employers may provide for lump-sum in days or hours arrangements, but under strict conditions (notably it should be provided in the work contract as well as in a collective agreement).
Overtime is strictly limited and should be compensated by at least + 25% from the 36thto the 43rdhour of the week, then +50% for any additional hours. Night time and Sunday work also calls for additional compensation.
The employer is liable where the employee does not respect his rest time (in principle at least 10 hours of rest day and 35 consecutive hours once a week). Exceeding the maximum working time is a criminal offense. There also exists a new obligation for the employee to “disconnect” from any devices.
Pitfall 5: Assimilating paid vacation with personal days or sick days
Historically, following a general strike and pressure from trade unions, the French government signed the Matignon Accords in 1936, which mandated 12 days (2 weeks) of paid leave for workers each year.
French employees today enjoy at least five weeks of paid vacations a year, on top of which are added bank holidays and rest days (known as “RTTs” which are given to compensate overtime for example).
However, the employee cannot take his vacation time as he pleases, it is the employer who regulates when vacation time may be taken and who leaves when. The counterpart for the employer is that he should make sure an employee was able to take his vacation time.
Annual vacation days which are not taken are lost, unless provided otherwise in a collective agreement or by custom within the company.
Employers should distinguish paid vacations from sick days (which are indemnified by social security) and personal days (which can be taken without pay with the employer prior consent).
Becoming familiar with usual employment-related practices in France is crucial.
Having the foresight to ask the right questions and to decode local requirements will enable employers to ensure effective and smooth Human Resource relation, be attractive to best talents, as well as prevent any “shock wave” which bad press or litigation may create, hence protecting the entire employee workforce.
It is important to bear in mind that, beyond the difference in legal rules, there exists a difference in culture and habits: recognition of merits may be considered as wage discrimination in France; forgetting to consult the workers representatives will be qualified as obstruction which is a criminal offence; exceeding the maximum working time is also a criminal offense. Civil and criminal risks for the company are at stake, likewise for the company’s representative.
lHence, in order to fully experience what French law can offer, shift your mindset. Embrace French culture, assisted by a good lawyer who will adapt your wishes to the legal but also cultural context.