French labor law aims to strike a balance between flexibility and security. While there are perceptions that French labor laws make the market less adaptable and hiring more difficult, the realities are that the rules are well-suited, efficient, and stable. The social dialogue process between unions and employers helps define rules. Examples that demonstrate flexibility include probationary periods, individual redundancies, terminations by mutual consent, and collective redundancies. Reforms over the past decade have further increased flexibility while maintaining protections and security for workers.

1. 1
French Labor Law :
Striking the right balance between
flexibility and security
Emmanuelle Wargon, General Director for
Employment and Vocational Training (DGEFP)

2. 2
French Labor law : Realities vs Perceptions
Less adaptable markets
Longer hiring process
Higher recruitments costs
Unstable rules
Divisive rules
Well-suited rules
Efficient rules
Stable rules
Lively but constructive social dialogue:
rules defined by social partners
Concrete examples of the balance
between flexibility and security
The probationary period to assess
employees’ skills
The termination of an open-ended
contract by mutual consent
The rules governing individual
redundancies
The rules governing collective
redundancies
PERCEPTIONS REALITIES
A growing awareness of the need for
more flexibility since the mid 2000’s
Over the past 5 years:
2008 : Renewal of the social
dialogue rules
2008 : Termination by mutual
consent
2013 : Reform of the collective
redundancies procedure

3. 3
Existing rules contributing to a flexible labour market :
The example of probationary periods
Permanent
contracts An opportunity to assess an employee’s skills
For all kind of contracts although not compulsory
Must be clearly stated, either in the appointment letter or the employment contract in
coherence with collective agreements
If the contract is broken, no need to provide grounds or severance pay
Fixed-term
contracts
Duration depends on the employment status of the employee
(including renewal) :
Up to 4 months for workers and employees
Up to 6 months for supervisors and technicians
Up to 8 months for highly skilled employees and managers
Duration can be exdended without any justification
Up to six months contracts : 1 day per week for up to 2 weeks
For longer contracts: The maximum probationary period is 1 month

4. 4
Existing rules contributing to a flexible labour market :
The example of individual redundancies
Motive:
Cutbacks or job changes or rejection of a
contract modification in the wake of:
financial problems; technological change;
restructuring for competitiveness or a
business closure
Procedure:
Individual or collective (up to 9 employees)
Information of the works council if in place
Preliminary interview with the employee
(notice for convening : 5 working days)
Notification letter of dismissal sent 7 days
after the interview date, or 15 days in the
case of supervisory personnel
Notice period of at least :
1 month for employees with less than two
years of service
2 months for employees with more than two
years of service
Severance pay
At least 1/5 of the monthly pay for each year
of service after 1 year
Collective agreements may provide for
higher severance pay
ECONOMIC REASONS
Motive:
For misconduct on the part of the employee
or for actions that fall short of misconduct
but harm the company’s interests
Procedure:
A warning can be issued before initiating the
dismissal procedure (at least 1 working day
after the event and not more than 2 months)
Preliminary interview with the employee
(notice for convening : 5 working days)
Notification letter of dismissal sent 2 working
days after the interview
Notice period of at least :
1 month for employees with less than two
years of service
2 months for employees with more than two
years of service
Severance pay :
Employees entitled to severance pay equal
to that paid for layoffs for business reasons
Employees not entitled in cases of serious
misconduct
PERSONAL REASONS

5. 5
Existing rules contributing to a flexible labour market :
The example of terminations by mutual consent
320 000 amicable termination in 2012
95% of applications approved in 2012 (refusal if abuse of due process)
Limited termination fee in 2011 : 6 660 €
Mutually agree to negotiate a termination to an open-ended
employment contract by mutual consent
Agreement defining the termination date and conditions including the
payment due to the employee
At least one interview is required
The employee may be assisted by a person of their choice from
among the company personnel.
The employer and employee sign a written agreement
The employer and employee then have 15 days during which they can
withdraw their position
Approval by the employment authorities within 15 working days
Administration checks the procedure and the consent
MUTUAL
CONSENT
PROCEDURE
PUBLIC
INTERVENTION
A win-win scheme : flexibility for the employer vs guarantees for the employee
Consensus to avoid any appeal

6. 6
Redundancies of more that 10 employees in a 30-day period in a firm of 50 employees and more
2 options for the employer
UNILATERAL DOCUMENT
Established by the Management
Information & consultation of Works Council
Approved by the administration within 21
days
COLLECTIVE AGREEMENT
Negotiated within the firm
Majority agreement (1 or several representative
Unions gathering at least 50% of the votes cast)
Validated by the administration within 15 days
(limited control)
Content
Content of the Redundancy Plan is the single
mandatory content
Implementation of the dismissals (Number of
dismissals and the concerned job categories,
moderation and application perimeter of the dismissal
criteria, ….)
Content
Content of the Redundancy Plan
Implementation of the dismissals (Number of
dismissals and the concerned job categories,
moderation and application perimeter of the
dismissal criteria,….)
A trend of reforms to foster a flexible labour market :
The example of collective redundancies for economic reasons (1/3)

7. 7
Restriction of the duration of the procedure
The Works Council shall present its position concerning the economic rational of the project and
the social measures in a time frame that cannot be superior, counting from the first meeting
during which it has been consulted :
2 months if the number of dismissal is inferior to 100
3 months if the number of dismissals is equivalent to 100 and inferior to 250
4 months of the number of dismissals is at least 250
In the absence of the Works Council’s position, it is considered to had been consulted.
Maximum duration includes the possibility to call upon an expertise
As previously, le Central Works Council can consider to appeal to a certified public accountant
during the first meeting
The CPA shall present his/her report at least 15 days before the expiration of the time period of
the Works Council to present its two notices
A trend of reforms to foster a flexible labour market :
The example of collective redundancies for economic reasons (2/3)

8. 8
A trend of reforms to foster a flexible labour market :
The example of collective redundancies for economic reasons (3/3)
Limited refusals: only 33 out of 450 reasoned decisions
Priority given to negotiation: 40% of agreements
Limited appeal rate : 7% vs 30%

9. 9
A strong and diversified public support to growth and
innovation
Well-suited to the size of the firm, its
location, the type of project
At every stage: to hire, to train, to confront
with difficulties, to innovate, etc
Diversified tools : subsidized or interest-
free loans, grants for physical investment
projects and R&D, tax credit, etc
A win-win partnership based on
negotiations between trade unions and
employers organizations
Aiming at reducing administrative, fiscal
and social burden to unlock competitiveness
Among the first measures:
Tax credit for competitiveness and
employment : Major tax saving of 6%
of the wage bill (excluding wages
superior to 2.5 times the minimum
wage)
Decrease of the labour cost for
employees paid at the minimum wage
starting from 2015
Decrease of the fiscal pressure, in
particular corporate taxes
EFFICIENT EXISTING SCHEMES
FURTHER STEPS TO BOLSTER
COMPETITIVENESS: PACT OF
ACCOUNTABILITY

10. 10
QUESTIONS