Webinar Series Spotlight on Key Labour and Employment Issues. The Law on Safeguarding Employment (13 June 2013) Main provisions

Transcription

1 Webinar Series Spotlight on Key Labour and Employment Issues The Law on Safeguarding Employment (13 June 2013) Main provisions Jean-Marc Sainsard Pauline Pierce France March 26, Offices in 19 Countries

2 Today s presenters Lew Clark Partner and today s Moderator US lew.clark@squiresanders.co m Jean-Marc Sainsard Partner Paris jean-marc.sainsard@squiresanders.com Pauline Pierce Of Counsel Paris pauline.pierce@squiresanders.com 2

3 Main changes arising from the Law of 13 June 2013 Rewriting of the collective redundancy procedure of at least 10 employees over a 30 days period within a company with a workforce of 50 employees or more. Implementation of a social plan via a collective agreement Implementation of a social plan via a unilateral document Dismissal procedure without implementation of social plan Obligation to seek a prospective buyer in the event of outright closure of a site New rules concerning the consultation of the Works Council New Works Council consultation timeframe (Decree of 27 Dec 2013) The economic and social database Further consultation on the company s strategic positioning Creation of agreements to maintain/preserve employment Internal and External Mobility ( agreements of secured voluntary mobility ). Part-time reform 3

4 Benefit of the reform of collective redundancy procedure Before this new Law, there were no specific deadlines governing the procedure and litigation sometimes lasted for years. The Law has not changed the key requirements of collective redundancies (need for a real economic ground, obligation of redeployment, supporting measures ) but: - provides specific deadlines - enables employer to set up a social plan via an unilateral decision in the absence of a collective agreement, or if the Works Council does not give its opinion within the applicable deadlines - allows the administrative authority (and no longer the judiciary one) to control the legality of the procedure and the content of the social plan. This new control procedure will limit litigation since the administrative authorities are, usually, more neutral and less politicized. 4

5 Collective redundancy procedure before the reform Preliminary information : In case of collective redundancy, the Company has to implement two different information/ consultation procedures of the Works Council: Information/consultation on Book II : Presentation of the Company/Group and economic grounds of the contemplated restructuring operation. Information/consultation on Book I : On the Social plan, the implementation of dismissal (including order criteria, calendar), the number of job cuts and relevant professional groups, the implementation of training, adaptations and redeployment measures. 5

6 Collective redundancy procedure before the reform Collective redundancy procedure of at least 10 employees over a 30 days period within a company with a workforce of 50 employees or more Assumption that the Works Council would appoint an expert (3 meetings instead of 2) Implementation of restructuring project by employer (Book II) + Implementation of social plan by employer (Book I) First meeting of the Works Council on Book II + Book I Then notification to the Direcct (the administrative authority) 21 days Min. 45 to 75 days depending on the number of contemplated redundancies Second meeting of the Works Council on Book I Then notification to the Direccte Max. 14 to 28 days depending on the number of contemplated redundancies Third meeting of the Works Council on Book I Then notification to the Direccte 6 Notification of dismissals

7 Collective redundancies Procedure following overhaul *of the French labour code Book II* Book I prepared by the employeur unilaterally + OR Book II* + Book I by majority collective agreement entered into with trade unions ** The Health and Safety Committee *** The Regional Labour Authority First meeting of the works council and meeting on Book II + Book I + meeting of the CHSCT** Then notification to the Direccte*** Min. 15 days Second meeting of the works council on Book I Then notification to the Direccte Sending by employer 2 to 4 months depending on number of redundancies Experts report (max. 15 days before opinion) Works council and CHSCT give their opinion First meeting of the WC on Book II + meeting of CHSCT 2 to 4 months depending on number of redundancies WC and CHSCT give their opinion Works council gives its opinion on the draft collective agreement Signature of the collective agreement 2 to 4 months depending on number of redundancies Sending by employer Employer sends unilateral document to the Direccte for approval (time limit for response : 21 days) Sending collective agreement to the Direccte for approval (time limit for response: 15 days) Positive response or absence of response Negative response Max. 2 months Displaying on the premises Appeal before Administrative Court Consultation with works council and amendment Max. 3 months 7 Notification of redundancies Decision of Administrative Court Sending it again to the Direccte

8 I- Reform of the collective redundancy procedure 1- Mandatory consultation of the Works Council on the Book II Consultation purpose: The Works Council must be consulted on: The reorganization/restructuring contemplated The project of collective redundancy and its impact on the workforce. Number of meetings: The Works Council must hold a minimum of two meetings, separated by at least 15 days (instead of 14 to 28 days previously, depending on the number of employees) (art. L , I, al. 5). Works council opinion: The Works Council has a limited period to give its opinion (2 to 4 months depending on the number of redundancies envisaged), starting from the 1 st meeting. A collective agreement could however provide for different deadlines (art. L , II ). In the absence of any opinion being rendered during the applicable time period, the Works Council will be deemed to have been already consulted. 8

9 I- Reform of the collective redundancy procedure Minimum time period Works Council First meeting 15 days minimum Works Council Last meeting Opinion Book II Opinion Book I Maximum time period (depending on the number of redundancies envisaged) Between 10 and 99 employees Between 100 and 249 employees More than 250 employess Works Council First meeting Works Council First meeting Works Council First meeting 2 months maximum 3 months maximum 4 months maximum 9 Works Council Last meeting Opinion Book II Opinion Book I Works Council Last meeting Opinion Book II Opinion Book I Works Council Last meeting Opinion Book II Opinion Book I

10 I- Reform of the collective redundancy procedure The use of a chartered accountant to assist the Works Council on the Book II Where a chartered accountant is appointed, the deadlines for the disclosure by the employer of documents requested by the chartered accountant are as follows (art. L , al.1): - The chartered accountant has 10 calendar days from the start of his appointment to request from the employer all information deemed necessary to complete a report. The employer must respond within 8 calendar days; - The chartered accountant then has a further 10 calendar days to make any additional requests which must be answered in the following 8 calendar days. The chartered accountant must submit his report to the Works council at least 15 calendar days before the deadline given to the Works Council to give their two opinions (art. L , al.2). The absence of a report cannot defer this deadline (article R ). 10

11 I- Reform of the collective redundancy procedure 2- Implementation of a social plan (Book I) Choice by employer between: - Starting a negotiation with representative trade unions within the company to conclude a collective agreement which defines the content of the social plan, the terms of the consultation of the Works Council and of the implementation of the dismissals (article L of the Labour Code). The employer can start to negotiate on the social plan with the unions: before the first meeting of the Works Council and therefore before its information/consultation on the Book II (article L of the Labour Code) ; or during the information/consultation procedure of the Works Council. The Direccte must be informed without delay of the opening of negotiations for the purpose of reaching a collective agreement (art. L ). - Or, implementing a social plan via an unilateral document. Procedure: The Law does not specify how the negotiation of the agreement with unions is part of the information/consultation procedure of the Works Council (but negotiation must be finalized before the last meeting of the Works Council). 11 The collective agreement and the unilateral document of the employer are not exclusive: A part of the procedure or of the content of the social plan can be determined by the agreement and the other part by the unilateral document of the employer.

12 I- Reform of the collective redundancy procedure 2.1- Implementation of a social plan via a collective agreement (Book I) In case of negotiations, the Law does not specify either any deadlines nor the number of meetings required. Assistance from a chartered accountant to assist on Book I The Works Council can instruct a chartered accountant paid for by the employer to assist trade unions with their negotiations of this collective agreement (art. L , and art. L ) Consultation of Health, Safety and Working Conditions Committee ( Comité d hygiène de sécurité et des conditions de travail CHSCT ) The Law provides for consulting the Health, Safety and Working Conditions Committee as soon as the restructuring project has an impact on health and working conditions. Although the Law does not specify it, we recommend consulting this committee. Deadline of 2 to 4 months depending on the number of dismissals envisaged. The deadline runs from the start of the first meeting with the Works Council. The nature of the majority agreement 12 To be valid, the collective agreement must be signed by one or more representative trade unions having obtained at least 50% of the number of votes in the first round of the last election of the employees representatives, regardless of the number of votes (art. L new).

13 I- Reform of the collective redundancy procedure Substance of the agreement The agreement must deal with the content of the social plan (Book I) (art. L new). It may also include in particular order criteria, calendar, number of job cuts and relevant professional groups (art. L ). Information procedure to the administrative authority («Direccte»). The Direccte must be informed without delay of the opening of negotiations for the purpose of reaching a collective agreement with unions on Book I (art. L ). The employer must: - Communicate to the Direccte all the information provided to the employees representatives (art L ) - Notify the Direccte of the redundancy project (at the earliest, the day after the date scheduled for the first meeting of the Works Council) - Inform the Direccte when using a chartered accountant (and submit his report). 13

14 I- Reform of the collective redundancy procedure The communication of the majority collective agreement to the Direccte at the end of the consultation procedure (art. L ) The administrative authority notifies the employer of the decision of validation within a 15- day deadline starting from the receipt of the agreement. Silence by the administrative authority during the deadline noted above is deemed acceptance of the validation decision. In this case, the employer sends a copy of the validation request, with the administration s acknowledgement of receipt, to the Works Council and the trade unions representative signatories (art. L new, al. 3). In case of non-validation, employer can file a new request after making the necessary modifications and consulting the Works Council. 14

15 I- Reform of the collective redundancy procedure Applicable procedure in case of negotiation and signature of a collective agreement on Book I WC First meeting Book II Book I Opening of negotiations The Works Council can instruct a chartered accountant to assist trade unions with their negotiations of this collective agreement Convening of trade unions Time of negotiations (not limited by Law). The WC can appoint an expert for its own information/consultation procedure on Book II Information of the Direccte of the opening of negotiations Consultation of the WC on the collective agreement project and on Book II Signature of the agreement with unions (50%) Information/Consultation of the WC (collective agreement deadlines) Sending to the Dirrecte 15

16 I- Reform of the collective redundancy procedure Implementation of a social plan via a unilateral document of the employer Drafting of the unilateral document In the absence of a collective agreement, a document is established by the employer setting the content of the social plan, the terms and conditions of the Works Council consultation and the implementation of dismissals. The employer document is not exclusive to the collective agreement. On the contrary, if the latter does not contain all the considered elements, the employer document must specify the missing points. 16

17 I- Reform of the collective redundancy procedure Communication of the unilateral document to the Direccte at the end of the consultation procedure (art. L ) The administrative authority notifies the employer of the approval decision within a 21 days time limit starting from receipt of the complete document developed by the employer. Silence by the administrative authority during the deadline noted above, is deemed acceptance of the approval decision. In this case, employer sends the Works Council a copy of the approval request, accompanied by the administration s acknowledgement of the receipt. In case of rejection, the employer can file a new request after making the necessary modifications and consulting the Works Council. 17

18 I- Reform of the collective redundancy procedure 3- Applicable provisions in case of both implementation of a social plan by employer s unilateral document and via collective agreement Health, safety and working conditions committee ( CHSCT ) consultation procedure The CHSCT should give its opinion when the contemplated restructuring project has an impact on health and working conditions during the same deadline given to the Works council to give its opinion (2 to 4 months from the start of the 1 st meeting of the Works council, depending on the number of redundancies) (art. L , al.2). New possibility for the CHSCT to appoint an expert paid for by the employer at its first meeting. The expert must give his report at least 15 days before the deadline given to the CHSCT to give its opinion (art. L , al.1). Employer can question the need for expertise, its cost, or its scope with the Direccte. The administrative authority has 5 days to decide on this point (art. L , al.1). Powers of the administrative authority The administrative authority can, at any moment during the procedure, make observations or proposals to employer concerning the progress of the procedure or the social measures of the social plan. The employer is required to provide a motivated response (art. L ). Communication of the Works council s opinion to the Direccte: we recommend this step even though it is not legally mandatory. 18 Employees information concerning the validation or approval decision via billposting on the workplace (article L ).

19 I- Reform of the collective redundancy procedure Litigation The judicial court has been removed from the litigation concerning the social plan. Administrative courts are now competent. Legal actions must be submitted within a 2-month period, as follows: - Legal action by employer: starting from the notification of the validation or approval decision; - Legal action by trade unions or employees: starting from the date when trade unions or employees were informed of the decision, in accordance with article L of the Labour Code (L new, al. 3). The administrative Court shall rule within a 3-month period (art. L , 4). Sanctions Dismissal occurring in the absence of any validation or approval decision OR in the case of a negative decision is deemed null and void. In case of the rejection of a validation or approval decision due to either an absence of or a deficiency in the social plan, the dismissal procedure is rendered void. 19 Consequences of the nullity: - Reinstatement of the employee(s) following both employee s and employer s agreement. - If reinstatement is impossible or if it has been refused: indemnity (compensation) at least equal to the wages of the last twelve months (in addition to dismissal indemnity) (art. L and following).

20 I- Reform of the collective redundancy procedure Implementation Provisions on the rewriting of collective redundancy procedure apply to procedures initiated since 1 st July A decree from 27 June 2013 provided additional details, including the methods of control by the administrative authority and modifies the regulatory section of the Labour Code to adapt the new legislation. Conclusion files of approval (unilateral document by employer) or of validation (collective agreement) of social plans have been filed with the Direccte between 1 st July and 31 December The rate of refusals of unilateral documents was as high as 10% - 3/4 of the companies conducted negotiations with unions and two cases out of three led to collective agreements. - The litigation outcomes following social plans is decreasing: out of 416 requests of approval, only 5% were brought in court (whereas, 30% of social plans previously ended up in litigation). 20

21 II- Redundancy Procedure without social plan Redundancy procedure for companies with less than 50 employees The Direecte can now verify that employer has fulfilled met its obligations on the information/consultation procedure with staff representatives and implementation of social measures. (art. L ). The administrative authority must make its decision within 21 days from the notification of the proposed dismissal. Redundancy procedure for companies with 50 employees or more when the proposed dismissals concern less than 10 employees over the same 30 days period The procedure remains unchanged. 21

22 III- Obligation to find a prospective buyer (new provisions under the Florange Law dated 24 February 2014). Companies involved: Companies considering collective redundancy resulting in the closure of a site and subject to the obligation to propose redeployment leave to redundant employees, i.e : Companies with more than 1,000 employees in France Companies belonging to a group established in the European countries (including Switzerland, Norway and Iceland), with more than 1,000 employees, AND having at least 150 employees in two of these states. Information of: - The Works council: employer must inform the Works Council of its search for a prospective buyer as from the very opening of the collective redundancy procedure (first consultation of the Works Council). employer must provide all relevant information on the contemplated project, in particular all measures planned to find a buyer. - The administrative authority (Dirrecte): employer must also notify without delay ( sans délai ) its project to the administrative authority and provide all relevant information on both the contemplated project sent to the employees representatives and details relating to the information meeting with the Works Council (agenda, minutes, etc ) The City Mayor.

23 III- Obligation to find a prospective buyer (new provisions under the Florange Law dated 24 February 2014). Employer has to look for a prospective buyer as soon as the Works Council has been informed. - The Works Council is informed of formalized takeover bids at the latest 8 days after their receipt (this information is naturally confidential). - The Works Council may issue an opinion and make proposals. - The Works Council may also participate in the search of a buyer. In this case: it will have access to all documents made available to the prospective buyers. it can be assisted by a chartered accountant (paid by employer). The Works Council should be consulted when the employer accepts a takeover bid. Its opinion (whether negative or positive) will close the proceeding. The Works Council should be informed of the absence of takeover bid or if employer has not responded to any offer. Employer has submit a report to the former ( report on the research process"), indicating all actions taken to research takeover bids and the grounds for their refusal. 23

24 III- Obligation to find a prospective buyer (new provisions under the Florange Law dated 24 February 2014). Litigation: In case of non-compliance with the obligation to look for a prospective buyer or of turning down a serious repurchase proposal without legitimate reasons, the Works Council can refer the case to the Commercial court within 7 days following the meeting during which the report on the search of a prospective buyer was released. If the court deems that employer has not played the game fairly, it could sentence the latter to pay a fine as high as 20 times the monthly value of the minimum wage (SMIC) for each job cut, capped at 2% of the turnover/revenue. The court has a 14-day period to rule on the case. situation and of the efforts used to look for a buyer. It will take account of the company s Implementation: New provisions will apply to procedures initiated from 1 st April 2014 (a collective redundancy procedure is deemed to be started from the notification of the convening to the first meeting of the Works Council) 24

25 IV- New rules on the consultation of the Works Council 1- New timeframes of consultation of the Works Council The Law on safeguarding employment and the enabling Decree of 27 December 2013 have set specific timeframes for consultations with Work Council. These rules target the great majority of the consultations with the Works Council (i.e. on the organisation and general running of the company, the working conditions, vocational training, single annual report of the company s financial situation, social report, etc ) The stated timeframes allotted to the Works Council to render its opinion may be reduced by way of an agreement between the employer and the Works Council (but must be at least equal to 15 days). In absence of any agreement, the Works Council has one month to give its opinion. The timeframe starts from : The communication by employer of information provided by the Labour code for the consultation/information of the Works Council ; or The communication of such information on the economic and social database. Longer time periods apply under certain circumstances, including: - Intervention of an expert (2 months) or; - Consultation of a CHSCT (3 months) or; - Consultation of a coordination body of the CHSCTs (4 months). 25 In the absence of any opinion being rendered during the above-mentioned applicable time period, the Works Council will be deemed to have rendered a negative opinion.

26 IV- New rules on the consultation of the Works council 2- Economic and Social Database (article L ) The Law on safeguarding employment and the enabling Decree of 27 December 2013 sets an obligation for companies to create a single economic and social database Companies concerned: Companies of 50 employees or more (this obligation is associated to the articles regarding the Works Council). Recipients: The data will be accessible to employees representatives (members of the Works Council (or failing that, employees delegates), members of the central works council, of the CHSCT, or union representatives). Duty of discretion for the information presented by the employer as confidential. The content of this database is very broad and covers in particular: - the presentation of the situation of the Company (turnover, added value, operating and net income); - investments; - equity and debt; - all elements of compensation of employees and managers; - social and cultural activities; - payments made to investors; - financial flows to the Company, including state aid and tax credit; 26

27 IV- New rules on the consultation of the Works council - outsourcing, where appropriate commercial and financial transfers between group entities; - The information on the two preceding years, on the current year and on the three following years; The database will need to be regularly updated. Consequences: - The database corresponds to communication of information transmitted on a regular basis (quarterly and annual information, accounting and financial documents ). - Information documents supporting occasional meetings are not included in the database. Implementation: - Effective from the 1 st June 2014 for companies with more than 300 employees. - Effective from the 1st June 2015 for companies with less than 300 employees. 27

28 IV- New rules on the consultation of the Works council 3- A new consultation on the strategic guidance of the Company - Defined by the body charged with the administration or surveillance (i.e the Company s Board of Directors and/or Supervisory Board). - The consultation will include the strategic guidance impact on business, employment, development of profession and skills, organization of work, the use of sub-contracting, of temporary contracts or internships. - The Works Council issues its opinion and can propose alternative guidance. The body charged with administration or surveillance need make a reasoned response. - The economic database is the support for the preparation of this consultation. 28

29 V- Agreements to maintain employment Accord de maintien de l emploi» Companies concerned: New form of company agreements to be concluded at employer s initiative for companies facing «serious economic difficulties» (art. L , I ). - Scope of application is limited to the company: it cannot form part of a group of companies. - It can concern all or some of the employees. Purpose of these agreements: Avoid economic redundancies through collective efforts within the company. Negotiating parties: These agreements will be negotiated and concluded with representative trade unions in the company (art. L , I ), or in their absence, with elected employee representatives appointed for this purpose by the representative trade unions in the industry or at a national and inter-professional level (art. L , II ). Content: - Adaptation of the working time, organization and distribution of working time and remuneration of employees. - In return, the employer agrees to maintain the jobs of the employees concrned. 29

30 V- Agreements to maintain employment Accord de maintien de l emploi» Term of the agreement: maximum duration of 2 years Conditions of application: - Each employee concerned must agree. - In the absence of agreement, employee can be dismissed (according to the procedures of individual redundancy for economic reasons). Conclusion: Two agreements have only been signed since the 1st July

31 VI- Internal and External Mobility 1- Internal professional or geographic mobility agreement In companies or groups with more than 300 employees, and companies or groups with a European dimension of more than 150 employees in France: The negotiation on internal mobility will take place every 3 years, at the same time as the negotiation on the Human Resources Management (HRM) Gestion Prévisionnelle des Emplois et des Competences (art. L , al. 2). In other companies: The employer may decide to engage in negotiation on internal mobility whenever it wishes. Please note: in this case, the negotiation should equally focus on the Human Resources Management (HRM) (art. L , al.3). The negotiation on the internal mobility and the one on the Human Resources Management (HRM) are therefore inseparable! Reminder on the Human Resources Management (HRM): It is a negotiation aimed at anticipating the economic changes and thus avoid brutal restructuring (the HRM plan may notably contain training initiative to ensure the adaptation of workers to changes in their jobs, or actions promoting professional gender equality). 31

32 VI- Internal and External Mobility Purpose: Promoting internal mobility of employees, while providing guarantees Content: The negotiation on internal mobility should address (art. L ) : - The geographic scope of mobility - Measures aiming to accommodate work-life balance. - Measures accompanying the mobility (e.g. training, transportation expenses) Each employee concerned must be informed of the agreement. Application conditions after the conclusion of the agreement: - The employer must obtain the agreement of the employee concerned if it wishes to implement internal mobility (according to the procedure for modification of the employment contract). - Failing agreement, the employee may be made redundant (according to the terms applicable to individual redundancies). 32

33 VI- Internal and External Mobility 2- Voluntary mobility to another company (article L and following). Mechanism: Ability to temporarily perform an activity in another company. Employees concerned: - Employees working in a company or group with more than 300 employees ; and - Having more than 2 years service, whether consecutive or not. How to proceed: - requested at employee s initiative - employer agreement is necessary (no specific reasons in case of refusal are necessary) - necessity of an addendum to the employment contract - suspension of employment contract during the mobility period. End of the mobility period: The employee returns without further formality to his former job/employment or a similar one (with at least equivalent qualification and remuneration). 33

34 VII- Part-time Reform (article L ) Minimum duration of work for a part-time employee: 24 hours work per week (which may be waived in certain cases). The increase rate of salary for extra hours from the first hour of overtime: previously, only extra hours beyond 110% of the working time provided by the contract were paid at an increased rate. Implementation: - this text should have been enforceable on 1st January Postponed to 1 st July 2014 (in order to provide additional time to negotiate a new industry collective agreement concerning part-time arrangement). 34

35 Contact details JEAN-MARC SAINSARD Partner Squire Sanders, Paris PAULINE PIERCE Of Counsel Squire Sanders, Paris 35

36 Worldwide Locations North America Latin America Europe & Middle East Asia Pacific Cincinnati Northern Virginia Bogotá+ Beirut+ Leeds Beijing Cleveland Palo Alto Buenos Aires+ Berlin London Hong Kong Columbus Phoenix Caracas+ Birmingham Madrid Jakarta+ Houston San Francisco La Paz+ Bratislava Manchester Perth Los Angeles Tampa Lima+ Brussels Moscow Seoul Miami Washington DC Panamá+ Bucharest+ Paris Shanghai New York West Palm Beach Santiago+ Budapest Prague Singapore Santo Domingo Frankfurt Riyadh Sydney Kyiv Warsaw Tokyo 36 + Independent Network Firm

37 Disclaimer The information contained in this presentation is for general information purposes only and should not be construed as giving the ground for any action or omission in connection with the above material. This presentation should not be construed as professional advice on legal or any other matters. The examples given in this presentation are described with a level of detail that does not provide for their implementation without additional comprehensive review with due regard to specific relevant facts and circumstances. The application of laws and statutes may vary depending on particular circumstances. Squire Sanders does not assume liability for any damage that may be caused to anyone as a result of any action (or omission) on the basis of the information contained herein. 37