Regardless of the number of employees that are made redundant, companies must comply with a certain number of legal requirements. The following explanations do not cover the specific process for implementing a job-protection plan which will be discussed in a separate article.
i.Do you need a specific ground to make an employee redundant?
Each employer company must determine and explain to the staff representatives, if any, and to the employees at risk of redundancy, the reasons for which it has no other choice but to make employees redundant.
To justify the contemplated redundancy, the company must establish that (i) it is has suffered financial losses, or (ii) it needs to safeguard its competitiveness or even that (iii) the activity should be discontinued. Financial losses are defined, essentially, as a significant drop in orders, turnover, cash flow or gross operating profits, or as an operating loss going on for a certain period of time, which varies depending on the size of the company.
The underlying economic rationale must be assessed at the level of the business sector of the group to which the company belongs, taking only the group companies established in France into account. This information will mainly be presented in (i) the documentation put forward to the company’s employee representatives, if any, and (ii) in the termination letter to be sent to the employees to be made redundant.
ii. How to select employees for redundancy?
French Labor law limits the employer’s discretion in selecting which employees to dismiss in the context of a redundancy plan. The legal criteria to be used to decide upon the order and priority of the employees’ terminations are provided by the French Labor Code (or the applicable collective bargaining agreement) which are (i) family situation, (ii) age and physical or psychological disabilities, (iii) professional skills and (iv) length of service in the company.
These criteria are applied in selection pools (aka ‘professional categories’). French courts consider that employees performing the same kind of professional activities supported by the same professional training belong to the same selection pool.
iii. What are the particular characteristics of redundancies in France?
An employee can be made redundant only after every effort of training and adaptation has been made and where it is not possible to provide alternative employment within the company or with the companies of the group established in France. The search for alternative employment solutions should be carried out throughout the employee representatives’ process and the individual termination process, up until the notification of termination letters. Failure to comply with this legal requirement automatically leads to unfair dismissal, as does an insufficient rationale, leading to damages (even if the company has a good ground for termination).
Other key features of redundancies in France include:
- The employee’s entitlement to a priority for rehiring (i.e., a right of first refusal) for a period of one year from their dismissal.
- In companies with fewer than 1,000 employees, the employer must offer the opportunity to take out a professional security contract with unemployment insurance agencies which provide them with the benefit of a set of measures to facilitate their reinstatement in the employment market and the partial payment of their previous remuneration.
- In companies or establishments with at least 1,000 employees, the employer must offer the employee redeployment leave of between four and 12 months, funded by the company and that, in addition to maintaining remuneration, provides the employee with training and the assistance of a specialized team in his or her search for work.
This article was first published by our French member firm MGG Legal on 6 January 2022. Visit our member’s website and discover how our French experts can assist you and your business with employment questions or contact directly our representative Marijke Granier-Guillemarre.
