French Labour Law.
In the event of collective dismissal of employees for economic reasons, in certain circumstances it is necessary for the employer to prepare and present a social plan (PSE in French) to its employees, trade unions and labour inspection in accordance with Articles L. 1233-61 to L. 1233-64 of the French Labour Code.
A social plan is always compulsory for companies with 50 employees or more if the dismissal involves at least 10 employees over a period of one month. This applies even if the company is subject to insolvency proceedings.
If a foreign employer initiates collective dismissal proceedings in its French establishment, only the workforce employed by the French establishment must be taken into account for the calculation of the above threshold (Cass. Soc. 23 -9-2008 No. 07-42.862: RJS 12/08 No. 1181).
Alternatively, it is of course possible to set out the departure of several employees within the framework of a collective termination agreement, but this must be accepted (Art. L 1237-19 s. of the French Labour Code).
Social plan in France
The social plan aims to avoid redundancies in the first place, or at least to limit their number. The social plan, negotiated either unilaterally by the employer or jointly with the work council, must be approved by the labour inspection (Art. L 1233-57-1 of the French Labour Code). It may also only set out measures that impact part of the workforce (ex. logistics or accounting).
Every social plan must contain a so-called “transfer plan”, which facilitates the transfer of employees within and outside the company in France and abroad. To this end, arrangements are made to transfer employees within the company, to create new activities, to offer retraining measures (reclassification leave under Articles L. 1233-71 to L1233-76 or CSP under Articles L. 1233-65 to L. 1233-70 of the Labour Code), to adjust working hours…
Selection criteria in France
The selection of employees to be dismissed is determined by social selection criteria, which may be set out in the applicable collective agreement (for instance duration of employment, marital status, competence…). The dismissed employee may request communication to the employer of the social selection criteria under which he/she has been released within a maximum of 10 days after leaving. The employer must then respond within the same timeframe.
Furthermore, the social plan may provide for financial incentives for employees to leave early or for personally financed retraining measures.
If an employer with at least 1 000 employees completely closes its French branch, he/she is legally obliged to first search for potential buyers for the French branch.
The social plan must be submitted to the work council within certain legally set out deadlines. If the work council’s approval is not obtained, this does not mean that the social plan cannot be implemented. In such case, the compulsory approval verification by the French labour inspection will be stricter, also taking into account the financial possibilities of the company.
If, on the other hand, the work council agrees with the social plan, the labour inspection only verifies whether the social plan contains the basic rules for avoiding dismissals, a transfer plan and social “cushioning measures” (Art. L 1233-57-2 Code de Travail).
The labour inspection has up to two or three weeks to review the approval. If no approval or refusal is submitted in writing within such timeframe, an implicit approval is implied according to Art. L 1233-57-4 Labour Code.
No termination notice may be given before an explicit or implicit approval has been given.
Invalidity of termination
If a dismissal is deemed by a French court to be based on an invalid social plan (for instance lack of approval by the French labour inspection or lack of consultation of the work council), all dismissals are null and void with the consequence that the dismissed employee either receives his/her former position (if possible) or can claim damages (articles L. 1235-10 to L.1235-17 Labour Code). Damages amount to at least 6 months’ gross salary (+ statutory severance pay).
This article has been prepared for informational purposes only. It is not a substitute for legal advice addressed to particular circumstances. You should not take or refrain from taking any legal action based upon the information contained herein without first seeking professional, individualized counsel based upon your own circumstances. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
Information by ALARIS AVOCATS, English speaking lawyers in France (Paris) specialized in French labor law, especially any kinds of Social Plans, dismissal procedures and labor contract clauses.