Redundancy legislation to be toughened

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In June 2001, France's national assembly gave a second reading to the government's "social modernisation" bill, whose wide-ranging provisions include measures on redundancies. In a context of increasing disquiet about a wave of large-scale job losses, the latest version of the bill contains much more restrictive measures on redundancies than the original proposals. Employers' organisations have rejected the proposals out of hand, while trade unions want the law to go further.

Over recent months, a government bill on "social modernisation" has been proceeding through the legislative process. The bill contains a variety of social measures, but the core is made up of provisions relating to redundancies, precarious employment and vocational training (FR0101121F). The bill was given a second reading by the National Assembly on 13 June 2001, incorporating a series of amendments, which were hammered out inch by inch in the debate. In particular, the latest text of the bill, which is to be finalised in autumn 2001, significantly differs from the initial version in terms of the strength of its measures on the control of redundancies.

Social and political events over the past few months were a major driving force behind this change in focus. The redundancies announced at Danone and Marks & Spencer in March 2001 (FR0104147F), were followed by a string of redundancies in other companies, the most recent of these being at Bata. Nationwide demonstrations, including those held in Paris on 9 June and Calais on 23 April, were organised in protest at these job cuts (FR0107165N). All these events affected the parliamentary debate, which was marked by a tougher stance from the Communist Party (Parti Communiste Français, PCF).

More restrictive measures

The social modernisation bill now introduces a series of more restrictive measures for companies planning redundancies, as follows.

• A more restrictive definition of redundancy. The only acceptable grounds for redundancy (licenciement économique) will now be: "serious economic difficulties which the company has been unable to resolve by any other means"; technological advances "threatening the company's survival"; or "reorganisational requirements which are vital to keep the company in business". Redundancy on any other grounds will be deemed as having no genuine and warranted basis. The Labour Code currently states that acceptable grounds for redundancy "include" these reasons, allowing other grounds, and this will now be deleted.

• Works council right to oppose redundancies. When a company announces redundancies, works councils will be able to present "alternative proposals". They will also have the "right to oppose" restructuring and staff-reduction plans as well as the terms and conditions for their implementation. However, the right to oppose will apply only to management proposals and not to the redundancies themselves. The latter may be dealt with by a mediator (see next point). Lastly, works councils may ask a judge in chambers (juge des référés) to rule on whether appropriate procedures have been followed for the tabling of counter-proposals.

• The intervention of a mediator. The law will create the position of mediator. Mediators may be brought in by either party where a company or autonomous economic unit (workshop, shop etc) plans to make redundant at least 100 workers as part of a partial or total closure programme. Appointed by district courts, mediators will have a maximum of one month - during which time the redundancy process is put on hold - to bridge the gap between the two parties and table a "recommendation". If this recommendation is rejected, it is up to the judge in chambers to make a final ruling. As a result of this and their new role in deciding on works council procedures (see previous point), judges in chambers will play a more important role in the process. They will be responsible for deciding whether a genuine debate on works council and mediator proposals has taken place.

• Plan to safeguard employment. Companies with more than 100 employees planning redundancies will be required to present a new "plan to safeguard employment" (plan de sauvegarde d'emploi), which must provide for redeployment and assess the social and local impact of redundancies, though no figures have yet been specified. Companies with a workforce of over 50 will be required to make either a financial or in-kind contribution in proportion to the number of workers made redundant and their financial situation.

Mixed social partner reactions

The MEDEF employers' confederation said that it "condemned out of hand" the proposed legislation, which it saw as "flying in the face of the interests of companies and workers" since it "will hamper company development (...) cause firms to relocate abroad and prevent companies locating in France". According to MEDEF: "This is yet another example of French specificity in the Europe we are striving to create, (…) and it [the legislation] will make the already extremely complex French redundancy process even more complicated, time-consuming and cumbersome. Companies will be caught between labour inspectors, judges, mediators, trade unions and the works council and will no longer be able to undertake the necessary restructuring measures."

The General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) echoes this position, stating that this "inflexible and complex legislation is, to all intents and purposes, unenforceable in small and medium-sized companies and will harm jobs". The more moderate Young Business Leaders' Caucus (Centre des jeunes dirigeants, CJD) believes that "the legislation, which is geared to addressing the bottom-line-based logic of too many large companies", fails to consider the specific situation of small and medium-sized enterprises (SME s) and ends up penalising them. It does, however, believe that the proposed measures "have the merit of strengthening company-level bargaining". Nevertheless, CJD joins the other employers' organisations in severely criticising the fact that the draft legislation has been developed without consultation.

Even though the trade unions have stressed the fact that the proposed new legislation is a step forward, they have remained rather critical and non-committal.

• The CFDT confederation "fears perverse effects" on workers and jobs. It is concerned that specific provisions might end up "having the exact opposite effect to the intended goal (...) especially in terms of the behaviour of companies", which may attempt to develop "evade-and-delay tactics", as a way of weakening the protection for redundant workers provided by redundancy programme s. In addition, the proposed measures are seen as failing to address "the issue of the situation of millions of workers in SMEs".

• While CGT is satisfied that its proposals have been heeded, it considers that the proposed new legislation is only a first tentative step: "there is nothing in this legislation, which, by any stretch of the imagination, gives workers new and more effective rights in opposing redundancies." The union confederation underlines the fact that the new legislation "does nothing to protect workers from individual dismissals and redundancies not covered by a redundancy programme" and that measures providing workers with "genuine job security" are yet to be developed.

• CGT-FO considers that there is "nothing revolutionary" in the new proposals and that it is "crucial to come up with new ways to once again give the public authorities an economic and industrial role that would prevent opportunism-led social intervention". It underscores the "need to provide for genuine monitoring of redundancy programmes, guaranteeing genuine redeployment".

• The National Federation of Independent Unions (Union nationale des syndicats autonomes, UNSA) asserted its satisfaction at the prospect of "finally seeing the social modernisation bill on the books", but considers that "the last-minute political settlements have not significantly altered the initial bill". It deplores the fact that workers in SMEs, the group most affected by redundancies, have "once again been left out in the cold".

• CFE-CGC considers that the bill should go further, so as to offer more effective protection for workers. It calls for companies to be "required to demonstrate tangible results" in redeployment. It joins the other trade unions in claiming that the proposed new legislation is a hastily cobbled-together reaction to events and political debate without real consultation.

The government will have to address the issue of lack of consultation raised by all the social partners before the debate on the wording of the bill is reopened in the autumn.

Commentary

One of the most innovative initiatives in the bill is the introduction of the plan to safeguard employment, including provisions for redeployment and compensation for the local area. These provisions go beyond the basic, if necessary, issue of providing workers with redundancy protection based on defensive measures, to open the way for active initiatives, such as guarantees of stable career paths and the continued vitality of local economies. The actual substance of these provisions - in particular, the implementation policy and monitoring system - is as yet uncertain. (Marie Raveyre, IRES)