Reforming the labor code: the government's main ideas

After Nicolas Sarkozy's pension reform in 2010 and the El Kohmri law, the reform of the Labor Code led by Emmanuel Macron and the Philippe government is the third major reform carried out on the labor market in recent years. The government carried out this reform by ordinance following the agreement of Parliament voted in September 2017.

It is divided into 5 ordinances which were adopted the same month by the Council of Ministers and have been in force since January 1, 2018.

Since the presidential election campaign, the French President had been announcing his intention to overhaul the Labor Code . Considered too rigid, he wanted to give it greater flexibility to adapt to the new realities of the job market and promote economic recovery.

While many fundamental principles remain unchanged, the government has altered several balances.

A look back at the main new measures contained in this emblematic reform from the beginning of the Macron quinquennium.

What are the key measures?

The new supremacy of company agreements

This is certainly the nodal point of the reform: priority is now given to company-level negotiations, leaving more room for negotiation. In the past, these were applied on an industry-by-industry basis. If no specific agreement is created, the branch agreement will take on its full importance.

From now on, company agreements will be able to contain provisions contrary to branch agreements, and will prevail in matters of working conditions, organization or vocational training.

Concerns are focused on the 95% of small and medium-sized businesses that have no trade union, which would leave almost total power to the head of the company to draw up his or her own agreements.

Unions will be able to appoint their own representatives, even if they are not officially recognized.

The employee delegate can also assume this role with the company's management bodies.

Regulations governing industrial tribunal and redundancy payments

There is now a ceiling on compensation paid to employees who have been unfairly dismissed. In all cases, no industrial tribunal can award compensation in excess of 20 months' salary.

This ceiling applies only to employees with the longest service, and is reduced where appropriate.

To compensate for this measure, the government has increased statutory redundancy payments, which become compulsory after 8 months' employment, compared with 1 year previously.

The text also provides for payment to employees who resign, subject to conditions.

As a result, all redundancies must now be contested within a maximum of one year.

Broadening the scope of redundancies for economic reasons

Whereas all the entities (parent company and subsidiaries) of a company used to be taken into account when assessing the validity of a redundancy for economic reasons, only national sites will now be taken into account.

Encouraging Sunday work

The Macron ordinances make it easier to repeal prefectoral decrees limiting Sunday working, and increase the deadline for concluding agreements for businesses located in tourist zones.

The reform of the "compte pénibilité

Created by François Hollande, the Compte pénibilité was notoriously difficult to implement. It has now been simplified, with the removal of several criteria from the calculation mechanism. This does not extend the retirement period for the employees concerned.

The extension of the "CDI de chantier" to a "CDI de projet

The "CDI de chantier" (indefinite-term employment contract) allows the duration of the contract to be adapted to the duration of a construction site, by giving greater flexibility to its start and end dates. This principle has now been extended to all companies whose work rhythm depends on defined projects. If one of these projects ends earlier than planned, the company can terminate the employment contracts early and without penalty.

The creation of the right to error

When an employer is audited for the first time by the tax authorities, he will no longer be penalized if an unintentional breach is found.

Extending teleworking

Whereas it used to be compulsory to draw up an amendment to the employment contract, it is now possible to authorize an employee to work from home, unless the head of the company can justify particular difficulties hindering the smooth running of the business.

When will they come into force?

To date, all 117 measures contained in the reform of the Labor Code are in application. The legislative work ended on December 31, 2017 with the ratification of all the ordinances by the Conseil d'Etat and the National Assembly.

Other measures require a specific, phased implementation schedule

For example, the merger of employee representative bodies can be implemented up to December 31, 2019.

Despite opposition to the reform from several political parties and trade unions, the government has had no difficulty in obtaining parliamentary approval on several occasions for its reform.

This is the first emblematic economic law of the beginning of the Macron quinquennium. A reform of professional training is also in the pipeline for 2018.