Constitutional Council rejects key point of 'social modernisation' law

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In December 2001, France's National Assembly passed the controversial 'social modernisation' law, which includes measures making redundancies more onerous for employers. In January 2002, the Constitutional Council approved most of the new law, opening the way for its implementation soon. However, it rejected one key point: the proposed restrictive definition of the permissible grounds for redundancy.

Throughout 2001, a government bill on 'social modernisation' proceeded through the legislative process in the French parliament. The bill contained a variety of social measures, but the core was made up of provisions relating to redundancies, precarious employment and vocational training (FR0101121F). The bill gave rise to heated debate, which focused particularly on the issue of redundancies (licenciements économiques) (FR0107172F).

Amendments and controversy

In its bill, the government sought to make redundancy an employer's last resort. It thus proposed that, before being able to table a redundancy plan (plan social), employers must have convened negotiations or reached an agreement on introducing the 35-hour working week. In addition, employers contemplating redundancies would have to have reduced 'structural overtime'. If the company failed to meet these requirements, the courts could be called upon provisionally to block the redundancy plan. The employer would also be required to propose redeployment to alternative jobs requiring equivalent skills within the company or group. The works council should be informed prior to any public announcement of redundancies.

The left wing of the ruling Socialist-led coalition advocated a more restrictive definition and stricter rules governing redundancies in order to tackle the perceived problem of 'abusive' redundancies. The text was considerably strengthened by amendments tabled by the French Communist Party (Parti communiste français) against the backdrop of the industrial unrest which broke out after several major redundancy plans were unveiled in spring 2001 (FR0107165N and FR0104147F). As a result, the amended bill provided for: a restrictive definition of redundancy, narrowing the acceptable grounds for such job losses to cover only particularly serious economic difficulties, technological advances and reorganisational requirements; new rights for works council to oppose redundancies; a new system of mediation in redundancy disputes; and a new obligation on companies planning redundancies to draw up a 'plan to safeguard employment' (plan de sauvegarde d'emploi).

Conservative members of parliament criticised what they perceived the 'anti-economic' nature of the legislation. Their criticisms were based on the objections raised by some employers' associations. Indeed, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), with the support of the French Association of Private Business (Association Française des Entreprises Privées, AFEP), waged war on the proposed legislation.

In October 2001, AFEP, - a lobby group made up of 80 heads of major French companies - published a manifesto signed by 56 of its members in the Les Echos daily newspaper. This document highlights the 'risks' inherent in the new redundancy measures 'for companies, their employees, and in more general terms, the employment situation in France'. The organisation contended that the proposed definition of redundancy was 'a hindrance for companies', which 'need to take prompt action to address changes in the marketplace'. The manifesto was especially critical of the doubling of the period before a redundancy plan can be put into effect (to a maximum of 80 days) and the strengthening of court powers. For AFEP, the latter flies in the face of 'the desire to develop genuine social dialogue'. Lastly, the document states that requiring companies to provide information on redundancy plans to employee representative bodies first is not consistent with stock exchange rules.

The social modernisation law was finally passed by the National Assembly in December 2001. Conservative members of parliament then - as a last resort - referred the legislation to the Constitutional Council (Conseil Constitutionnel) for review.

Legislation amended

In January 2002, the Constitutional Council approved the law's provisions on redundancies with one key exception: it rejected the definition of redundancy. The Council contended that the wording used in the legislation was overly restrictive, given that it provided only for three possible grounds for economic redundancy: 'major economic difficulties where all possible solutions have been exhausted'; 'technological changes endangering the very survival of the company'; and 'reorganisation required to ensure the survival of the company'. This definition, which precludes any other grounds for redundancy, such as cessation of business, was deemed to contravene two principles: first, the freedom to do business; and second, the safeguarding of employment. The Council maintained that these provisions would have prevented companies from pre-empting future difficulties by taking action designed to avoid larger-scale redundancies at a later date. Moreover the courts would not only have controlled the grounds for redundancies but also the choice of solution. As a result of the Constitutional Council ruling, the Labour Code's provisions on this issue - in their unamended form - supplemented by case law, continues to apply.

In general, the Council approved the remaining points, including: the doubling of the minimum redundancy compensation; the extension of deadlines; the requirement to convene negotiations on the 35-hour week prior to any redundancy plan (the so-called 'Michelin amendment'); increased powers for works councils; nine-month redeployment leave for redundant workers; and a contributions to the regeneration of closed sites by companies with a workforce of over 1,000.

The aspects of the social modernisation law concerning the accreditation of vocational skills and experience, precarious employment and combating 'moral harassment' (bullying) were approved. However, the Council stressed that for cases of moral harassment heard before civil and industrial courts, plaintiffs will be required to present 'detailed and concurring presumptive evidence'.

Controversy continues

If the various protests at the decision by the Constitutional Council do not lead to a review of the legislation by the National Assembly, the social modernisation law should come into force as soon as it has been promulgated or the enabling decrees have been published.

With the presidential election only some three months away, the controversy surrounding this legislation is framed by heightened political debate. The conservative opposition has labelled the Constitutional Council decision a repudiation of government policy. The Left on the other hand, criticised the 'political' position taken by the Council's 'learned members', the vast majority of whom are claimed to be right-leaning. The Ecologist Party (Les Verts) and the Communists were the most scathing in their criticisms. In the opinion of Robert Hue, the Communist Party leader, 'this decision sets a very serious precedent' and 'incites industrial violence and disregard for workers'.

MEDEF expressed its 'satisfaction' at the Constitutional Council decision. It pointed out that it was not surprised by the Council's decision, since the 'government and the ruling coalition had indulged in developing provisions which were radically contrary to the interests of the country'. The employers' organisation let it be known that it would be 'unstinting in its attempts to have all the other anti-employment provisions contained in the legislation (...) repealed'.

The trade unions, which had, on the whole, supported - although at times in a qualified fashion, deeming it too conservative - the new legislation, deplored the fact that they had not been consulted:

• the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC) contends that the Constitutional Council decision 'brings the government back to the reality of industrial relations' and that 'instead of talking to the various stakeholders, the government submerged itself in internal debate with its own ruling coalition';

• the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) stated that the coalition had 'failed to consult the social partners', with the result that the problem 'remained unsolved'. The union confederation is calling for a 'balance between the legitimacy of economic power and the necessary counterweight provided by the trade unions';

• the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) considers that the 'lack of consultation with the social partners is tantamount to a failure of the government's approach'. It claimed that the Constitutional Council decision 'fails to resolve in any way the issue of alternatives to redundancies, especially in the case of small and medium-sized companies'; and

• the General Confederation of Labour (Confédération générale du travail, CGT) regrets that 'it was sidelined during the development of the legislation'. It contends that 'the Council has shown bias and, once again, freedom to do business has prevailed over other rights and freedoms, starting with the right to employment.'

The frustration felt by the social partners was demonstrated by the fact that some refused to take part in the preparatory meeting on the enabling decrees for the new legislation convened by the Minister of Employment and Solidarity. CGT and MEDEF are advocating bilateral meetings or, at the very least, a meeting of the Higher Committee on Employment (Comité Supérieur de l'Emploi), a body composed of trade unions, employers' associations and Ministry of Employment officials. This committee has an advisory role, in particular in the area of collective agreements.

Commentary

In the current pre-election period, the focus on the Constitutional Council decision appears to be making the debate on the social modernisation law a party political issue. The animosity between the Right and the Left tends to dominate the scene, and may be deflecting attention away from the more complex social partner positions, which should be studied in greater detail. It is especially noteworthy that all the trade unions deplore the fact that they were not consulted on the development of the new law. In addition, the employers' associations do not appear to be united in their criticism. This is demonstrated by the relatively large number of heads of major companies - including Saint-Gobain and Vivendi Universal- who did not sign on to the French Association of Private Business manifesto. (Marie Raveyre, IRES)