French labour law

28 May 2020

When taking on an employee for a job in France, you should take into account the fact that French labour law will be quite different from the national law that may be applicable in other countries.

Parties are entitled, in case of entering into an international labour agreement (therefore entered into for example between a British or US company and a French employee) to choose the applicable law to this labour agreement. However, the mandatory rules contained in the local labour law of the place where the job will be fulfilled (here France) will overrule the law chosen by the parties.

French labour law contains many mandatory rules.

Points of attention:

 

Collective Bargaining Agreements

In France, nearly all Collective Bargaining Agreements are extended by government decree which means that they apply to all employees working in a certain sector, as mentioned in that Collective Bargaining Agreement, even if neither the employer nor the employee is a member of an employers’ organization or trade union. This is even the case if the company does not have a permanent establishment in France. If the right Collective Bargaining Agreement is not applied, the employee may claim the advantages she / he missed out for up to 3 years prior.

Non-competition clause

It is recommended to verify that the candidate is not bound by any non-compete clause towards a former or present employer. In order to be valid under French law, the non-compete clause should be limited in time (most often maximum 1 or 2 years), in activities (only those of the employer and not of the whole group) and in a geographic area. There should also be specific financial compensation. This financial compensation and sometimes also the other terms of the non-compete clause are often provided for by the Collective Bargaining Agreement.

Working time

All employees included higher management (cadres), researchers and engineers are supposed to work 35-hours per week (or a 39-hours in which case the first 4 hours “overtime” per week are already included in the basic salary). However, under some Collective Bargaining Agreements and under certain conditions, parties may also provide for a forfait jours which means that the employee will not work a certain number of hours per week but a certain number of days per year. Depending on the Collective Bargaining Agreement this number varies between 214 and 218 days. This means the employee gets approximately 10 extra days off in addition to the 5 weeks of paid holidays.

Labour agreements

Under French law, a CDD (contrat à durée déterminée – agreement for a fixed period of time) is only valid if certain conditions listed by French law are met and if the ground for such CDD is expressly mentioned in the labour agreement.

  • The trial period is 1 month maximum for contracts with an initial duration of at least 6 months and it should be shorter for contracts with an initial duration of less than 6 months.
  • After the end of the trial period, the contract can only be terminated in the event of gross misconduct (faute grave).
  • At the end of the CDD, a so-called prime de précarité is due. It amounts to 10% of the entire income the employee received during the CDD period in addition to all outstanding paid holidays.
  • If these conditions are not met, there is a risk that employees will argue that they were in fact working under a CDI (contrat à durée indéterminée – agreement for an unfixed term) and not under a CDD. If they bring the case before a court, their claims will likely be awarded and they will receive additional compensation and the income of the notice period.

Permanent establishment

This is more a tax and accountancy issue but is related to the description of the functions and the way the employee will be working. If the employee is entitled to negotiate, sign contracts and bind the company towards French clients, such company will have a permanent establishment in France and thus will have to pay VAT and company tax in France.
If the employer does not have a permanent establishment, the social charges for the French employees will be paid at a special office near Strasbourg where the company will get an employer’s number without becoming a French company or permanent establishment.

Dismissal (licenciement)

he applicable rules and procedures are formal and will be different depending on the circumstances: how many employees are working in the French operation, is there a works council (Comité Social et Economique), which Collective Bargaining Agreement is applicable, what are the grounds for the dismissal (personal grounds or economic grounds), individual or collective redundancies and in the last case, how many positions may be terminated in the reorganisation, etc.

Other ways to terminate a labour agreement, such as the rupture conventionnelle, are also ruled by strict and formal conditions and proceedings.

First instance litigation between employer and employees will be brought before the Conseil des Prud’hommes, a lay court in which employees and employers are rendering their decisions.

Mirjam BERG
Member of the Paris Bar
Partner at Amstel & Seine