Whatever the reason for making a French employee redundant, it must be both clear and rigorously defendable: for example, audited accounts that prove economic difficulties. In the event of a legal challenge, the judge will use this evidence to decide whether the redundancy is justified.
(For general information about managing redundancies in France, please read our previous article).
What preparations must French employers make before confirming redundancy?
In the first instance, all conceivable measures must be taken to avoid redundancy, including training and redeployment where necessary. Only after these measures have been taken can the employer consider making employees redundant.
Note that in France, redundancies are termed as “dismissals for economic reasons”. They may be individual or collective, with a slightly different process for each.
For collective redundancies, the employer must create job pools that incorporate everybody in the company, and define specific criteria to identify ‘at risk’ employees. In other words, the employer cannot freely choose whom they wish to dismiss.
“Dismissals for economic reasons” implies that such dismissals must not be related to the employees themselves, which is correct.
In most cases, a sustained drop in business turnover (or other similar economic difficulties) tends to be the official reason for redundancy in French companies.
The French Labour Code specifies that justifiable economic reasons must include a significant change in at least one economic indicator, such as operating loses or deteriorating cashflow. “Significant” is deemed at least equal to:
- One quarter (companies with fewer than 11 employees)
- Two consecutive quarters (companies with between 11 and 50 employees)
- Three consecutive quarters (companies with between 50 and 300 employees)
- Four consecutive quarters (companies with at least 300 employees)
It is important to note, however, that only a judge can decide whether the conditions are reasonably severe enough to justify redundancies by economic difficulties as there is no other specific criteria set in the law.
Once the economic difficulties are established, there are justifiable reasons for redundancies:
- Technological change, such as the introduction of new computer technology that will impact employment
- A need to safeguard the company’s competitiveness in the market
- Cessation of company activity (unless this is the direct fault of the employer)
Only under specific circumstances, such as the company having ceased trading, are employers exempt from applying their agreed ‘at risk of redundancy’ criteria.
If such criteria are not provided for by the company’s convention collective, the employer must set them after consulting the social and economic committee, or CSE (if one exists). The criteria must also take into account those already set by the Labour Code, as follows:
- Family responsibilities,
- length of service,
- social characteristics that may make it difficult for the employee to return to work, and
- professional qualities (such as performance).
While the employer can prioritise a certain criterion, or add more to their list, they cannot subtract any of these. Employers must also take care not to use the criteria to target a specific role or employee, as this – or any other outcome that does not respect the agreed criteria – may lead to harsh financial penalties.
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