Download France Employment Law

Employment Law in France:
Avoiding Common Pitfalls
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Agenda
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France overview
General considerations for French employment
Employment contract requirements
Working hour requirements
Statutory requirements and standard benefits
The impact of collective bargaining agreements
Termination issues
Case study
Q&A
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About HSP
Overview
• Leader in international business services
• 400+ customers, operating in more than 90 countries
• HSP OverseasDirect – all monthly activities companies must undertake in
country
• HSP OverseasConnect – cloud-based portal to manage it all
• Advisory – connecting all the dots
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Introduction
Dafydd Williams - Director of Advisory Services, High Street Partners
• Based in the U.K., Dafydd provides hands-on client advisory services across
the AMESA region, with extensive experience with French human resources
issues
• Before joining HSP, he spent 15 years with PwC and Arthur Andersen in
London, Paris and Sydney, working on international mobility solutions for
multinational companies and their employees
• Fluent in French, Dafydd has lived many of the experiences faced by HSP
clients in cross-border operations
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France Overview & Stats
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Population : 65 million
GDP: $2.15 trillion
GDP growth: 1.8%
Foreign direct investment: $33.6 billion (in 2010)
One of the top three economies in Europe
(Source: 2011 CIA World Factbook, 2011 World Bank Development Indicators)
Despite notoriously complex employment law,
France remains a key destination of European expansion
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A Little Bit of History…
• France subscribes to a form of civil law, the Napoleonic Code
– Differs from U.S. common law (aka case law)
• Originally created in 1804, the code is based on the French Revolution
principles of liberty, equality and fraternity
• These principles underpin much of French employment law
– Highly protective of employee rights
– “Guillotine the boss” where possible
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General Employment Considerations
Employment law encompasses all of the following
• National labor law
– The French Labor Code and associated regulations
• Collective bargaining agreements (CBA)
– Typically by industry, by occupation
• Union/Industrial agreements
• Contractual law
– Terms and entitlements agreed within the employment contract
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General Employment Considerations
• Legislation is constantly being updated and interpreted through case law
– Result is regular changes to legal positions
– Those hiring in France need to put on their lawyer hats
• Collective bargaining agreements also modify national law
– Equivalent of industry specific trade union agreements, but can apply based
on industry, or activity or other factors
– Not always obvious
French employment law is heavily biased
towards protecting employees
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Employment Contract Overview
• A contract must be in place prior to the commencement of employment
– U.S.-style offer letters pre contract are not common, nor recommended, due
to potential conflict of terms
• Things that must be in contract:
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Category of the position
Non compete clauses
Home worker allowances
Reimbursement of home office expenses
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What Needs to Be in French?
Employment
Contracts
Variable
Compensation Plans
Supporting
Documents
Non compete
Agreements
Company Policies &
Procedures
Stock Option
Plans
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French Employment Contracts
• Contracts MUST be in French, as well as all supporting documents
– English translation can be provided alongside (as required)
• Without a French version of documents, French courts will automatically
deem them unenforceable in disputes
– Important with non compete & proprietary information agreements
– Variable compensation plans: All goals & targets must be in French
• Q2 2011 court ruling found that otherwise, maximum bonus will be awarded
• Difficult to enforce some U.S. company policies
– Foreign Corrupt Practices Act
– Recommend that companies adapt policies specifically for France
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Working Hours
• Standard working week is 35 hours
• Réduction de Temps de Travail (RTT): Additional days per year (~10 days)
to compensate at a flat rate any excess time worked by employees
– RTT days must be tracked and are usually used first from any PTO
– Some CBAs have allowed for an opt out of this regime using a 218 annual work
day regime and a system of RTT days
• 2011: Court case challenging the validity of the 218/RTT opt out; ruled that
employees may be able to claim overtime retrospectively from commencement of
employment
• Overtime hours often need to be expressly approved by management
– Paid additionally to base salary, depending on job coefficient level
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Statutory & Expected Benefits
• State social security provides for:
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Health cover
Unemployment allowances
Retirement/pension fund
Disability and death
Minimum 25 days vacation/11 public holidays
Commuting costs
• Other expected, but not required benefits may include:
– Cars
– Private health
– Meal vouchers
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Collective Bargaining Agreements
• Collective bargaining agreements (CBA) take precedence over national law
– Constantly updated, long (400+pages) and rarely in English
• Each industry has an applicable CBA, determined by company activities
– Dictated by the company business activity code (Kbis) registration
• Employment contract terms are impacted by applicable CBA
– Essential that CBA is clarified from the start
– Impacts notice of termination, probation, vacation, benefits plans, etc.
One CBA applies to one company, and is not
dependent on employees’ roles/functions
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Collective Bargaining Agreements
• Common CBA for IT/software companies: Syntec
– Not all IT is covered
– Hardware manufacturers are often appropriately covered by
Metallurgy, an old metal-working CBA
• Other industry sectors with CBAs include: Pharma; Higher
Education; Not-For-Profit; Car Manufacturers, etc.
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CBAs & Job Coefficients
Experience
Education
Salary Level
Job Coefficient
Length of Service
Industry Qualifications
Managerial Status
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CBAs & Job Coefficients
• Job coefficient impacts entitlement to working time, overtime payments,
minimum/maximum salary awards
– Cadre (manager) status comes with a whole different set of rules
• Coefficients need to be considered when drafting employment contracts
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Resume
Job description
Salary level to be awarded
Previous job coefficient
Employees often view coefficients as a sign of status,
important to considering job/role changes
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Employee Termination
• Similar to other countries outside the U.S., “at-will” doesn’t exist
– Outside of an employment contract’s probation period, terminations are
EXTREMELY difficult for any reason (incl. redundancy)
• Strict due process to follow, with diversions leading to costly damages
– Written warnings, performance plans, formal letter invitations to meetings,
deliberation time
– Different labor courts for different claims – dependent on the location of the
employee’s residence
– Unfair dismissal – 6 months salary, 3 months notice
• Settlements with employees are standard
– Typical best case : 3+ months salary
– A worse case: 24 months salary
– Attractive option, as it offers lower social security & income tax costs
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Case Study
Background
• Employee working above her experience/qualifications
• Hired by local manager, benefits and entitlements inconsistent with role
What Went Wrong
• Employee was underperforming in role
• U.S. tried to fire her, local manager took care of performance management
The Result
• Significant legal fees to negotiate a change of role and removal of certain
benefits – compensation for loss of vehicle and all public transport costs
reimbursed
• Ongoing risk of being sued unfair treatment
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So Why France?
• Big market opportunity
– GDP: $2.15 trillion; GDP growth: 1.8%
– One of the top three economies in Europe
• Key location for EU markets
– IT
– Healthcare
– Energy
• Incentives for foreign investors
– Tax breaks for R&D via Crédit d’Impôt Recherche
– Eased immigration rules to allow companies to bring in professionals with key
skills and expertise
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Q&A
Questions?
www.hsp.com
Dafydd Williams
Director, Advisory Services
High Street Partners
+44.203.004.8341
[email protected]
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