ILO rejects two-year ‘consolidation period’ after recruitment

On 14 November 2007, the International Labour Organization (ILO) judged that the probationary period for employees hired under a new recruitment contract cannot be considered reasonable. This decision, resulting from a trade union referral, puts an end to this type of employment contract. The French government has announced that it will bring its legislation into line with the requirements of the relevant ILO convention.

In August 2005, the Villepin government created the ‘new recruitment contract’ (Contrat nouvelles embauches, CNE). It provides for a so-called two-year ‘consolidation period’, during which employers – without having to give any reasons – can in theory terminate this type of employment contract (FR0511102F). However, right from the beginning of the existence of this new contract, uncertainty reigned on this point (FR0705029I). In response to the complaint lodged by the General Confederation of Labour – Force ouvrière (Confédération générale du travail – Force ouvrière, CGT-FO) on 25 August 2005, the International Labour Organization (ILO) considered, in its decision on 14 November 2007, that the length of the CNE’s ‘consolidation period’ could not be deemed ‘reasonable’ and that it was necessary for employers to give a valid reason for dismissal.

ILO Termination of Employment Convention

ILO Convention No. 158 on the termination of employment at the initiative of the employer, which France has ratified, stipulates that ‘the employment of a worker shall not be terminated unless there is a valid reason for such termination’ (Article 4) and ‘before he is provided an opportunity to defend himself’ (Article 7).

In the French government’s view, the CNE comes under conditions for application, as outlined in Article 2, Paragraph 2 of the Convention, which authorises the exclusion of certain categories of employees from these measures, notably ‘workers serving a period of probation or a qualifying period of employment, determined in advance and of a reasonable duration’.

Two-year consolidation period not ‘reasonable’

The report outlining the decision, which was prepared by a tripartite committee comprising employer, employee and government representatives and adopted by the ILO governing body, accepts that:

the period of employment consolidation could be considered “a qualifying period of employment”, namely a specified period of employment that is required for the employees concerned to be able to have a permanent contract.

However, the ILO report rejects the French government’s arguments regarding the ‘reasonable’ nature of a two-year ‘consolidation period’. Furthermore, the committee’s report underlines that:

the period should be “of reasonable duration”. This is a question to be determined by each country for which the Convention is in force, having due regard to the object of the Convention, which is to protect all employees in all branches of economic activity against unjustified dismissal.

It observes that ‘the length that is normally considered reasonable in France for qualifying periods of employment does not exceed six months’. The social chamber of France’s highest court – the Cour de Cassation – has not yet pronounced any specific ruling on the CNE; an appeal against the CNE has been lodged with the court. However, its jurisprudence on other types of employment contracts indicates that a probationary period of between two weeks and a maximum of six months – depending on the position occupied by the employee – is considered to be ‘reasonable’.

Therefore, the ILO tripartite committee indicates that it ‘finds itself unable to conclude [...] that a period as long as two years is reasonable’. Thus, the consolidation period is not covered by the exemption conditions in Article 2, Paragraph 2 of Convention No.158; hence, dismissal of an employee with a CNE must take place on the basis of a ‘valid reason’.

Complex legal situation

The committee invites the French government, in consultation with the social partners,

to take such measures as may be necessary to ensure that the exclusions from the protection provided by the laws and regulations implementing the (...) Convention (...) are in full conformity with its provisions.

Additionally, the committee demands the French government

to give effect to Article 4 (...) by ensuring, in accordance with that Convention, that “contracts for new employment” can in no case be terminated in the absence of a valid reason.

Taking note of the ILO’s decision, the Minister of Labour, Labour Relations and Solidarity, Xavier Bertrand, announced on 18 November that France would bring its legislation into line. He further stated that, once official notification had been received, the government would send a letter to employers indicating that a CNE cannot be terminated during the two-year consolidation period without a real and serious cause and without giving a reason for the decision to the dismissed employee.

Changes to the legislation are said to be already in the process of being examined.

Social partners’ reactions

Trade unions, and in particular CGT-FO, welcomed the ILO decision.

On the employer side, the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) indicated that ‘it is up to the government to clarify the situation and indicate what should be done on terminating an employment contract’. The employer confederation wishes the government to adopt ‘a solution which makes it possible to preserve necessary flexibility and also gives employers the legal security that they have the right to demand’. The labour market reforms agreed in January 2008 may go some way towards achieving this balance (FR0802049I).

Yannick Fondeur, Institute for Economic and Social Research (IRES)