Layoff procedure

This document was compiled in collaboration with Mr Olivier Jessel, barrister before the Bar of Paris.

Contents

1- Different types of layoff

1.1- Dismissal for personal reasons

1.1.1- Dismissal for real and serious cause
1.1.2- Dismissal for serious fault
1.1.3- Dismissal for serious offence
1.1.4- Unfair dismissal

1.2- Redundancy

2- Layoff procedure

2.1- Invitation of the employee to a prior interview
2.2- Prior interview
2.3- Notification of layoff

3- Rights and obligations of the employee and the employer (documents & payments)

3.1- Dismissal for real and serious cause
3.2- Dismissal for serious fault
3.3- Dismissal for serious offence
3.4- Unfair dismissal
3.5- Redundancy
3.6- Negotiated payment
3.7- Resignation

4- Protected employees

4.1- Pregnant women
4.2- Victims of accident at work
4.3- Specific staff members

There are various reasons (globalisation, reorganisation of the production tools or outsourcing) for national and international companies to lay off part of their employees. In France, layoff is ruled by the labour legislation and requires that employers and employees strictly comply with their obligations.

Information in this document are for information only and it is recommended to refer to a qualified lawyer to support you through these procedures.

They are described below:

As from July 13th, 1973, the labour legislation strictly rules the procedure, reasons and any documents related with layoff. There are different reasons and seriousness levels. Seriousness is a major factor to determine the rights and obligations of the employers and employees with respect to the French government. Below are described the different types of layoff and their corresponding reasons.

1.1- Dismissal for personal reasons

Dismissal for personal reasons covers 4 different categories: dismissal for "real and serious cause", "serious fault", "serious offence", "unfair".

1.1.1- Dismissal for real and serious cause

The real and serious cause may be considered as the lightest but actual reason that an employer can oppose the employee. To be applicable, the facts must be exact, verified (that can be verified physically or proven legally), precise and objective (not resulting from intermittent bad temper of the employer). It may be a fault of which the employee is accused.

The real and serious cause is also applicable even when the employee made no fault. Examples: the employee refusing to observe the project planning communicated by the manager, professional inability resulting in business objectives not being met, repeated delays with respect to work schedules or the employee refusing light changes of the work schedules.

An employee considering that the facts are not relevant may appeal to the industrial tribunal. Thus it is highly recommended to refer to a lawyer in order to support you throughout the layoff procedure. Lastly, court orders are decided on a case-by-case basis and according to different criteria.

Layoff is deemed an abuse if it is unjustified in a company of less than 9 employees and if the length of service of the employee is less than two years. The corresponding payment depends on the effective loss or damage sustained by the employee.

1.1.2- Dismissal for serious fault

Unlike dismissal for real and serious cause, dismissal for serious fault is not defined in the legislation. However, it should be noted that an employer may apply this type of dismissal in the event that the employee is accused of facts or group of facts infringing the obligations resulting from the work contract. The fault is serious enough to consider that the employee cannot remain within the company for the duration of the advanced notice.

Serious fault deprives the employee of the right for advanced notice and layoff payment. The employee should only receive the vacation payment.

1.1.3- Dismissal for serious offence

As for the serious fault, there is no legal definition. Serious offence is a highly serious and deliberate fault. This offence was caused by the employee with the aim to harm the employer and is often outside the scpe of work(e.g. espionage, theft, assault and battery, etc...).

In case of a serious offence, the employee receives no payment and is deprived of the right for advanced notice. The employee receives no vacation payment.

1.1.4- Unfair dismissal

- Unfair dismissal: employees are not informed about the procedure against them or this procedure is initiated by the employer without complying with the labour legislation. In certain cases, the employee receives no warning even when there is a real and serious cause. In such a case, layoff is deemed unfair.
It is highly recommended to contact a lawyer for support throughout this specific procedure.

1.2- Redundancy

According to the labour legislation, redundancy must not be directly related with the employee. The reasons for layoff must not be caused by the employee but may result from the following:

- Job suppression or transformation,
- Substantial modification to the work contract.

Redundancy may also result from the economic difficulties of the company, its reorganisation or technological changes.

Contents

Individual layoff procedure is broken down into three main steps as described below. The employer must comply with the layoff procedure stipulated in the labour legislation, otherwise the procedure would be deemed unfair.

2.1- Invitation of the employee to a prior interview

The employer must invite the employee to a prior interview before possible dismissal either:

- by personal delivery with signature of receipt,
- by registered letter with acknowledgement of receipt.

The invitation must state:

- The date of the interview,
- The time and place,
- The purpose of the prior interview (possible dismissal or transfer),
- That it is possible for the employee to be assisted by a staff member or an external adviser (the town hall or the labour inspectorate can provide a list of local advisers).

The invitation may not indicate the reason for possible dismissal. It should be noted that, before any prior interview, the employee remains within the staff of the company and the term "dismissal" must not be used in internal or external memos.

During this interview, the employee can be assisted by:
- a staff representative,
- an adviser (appointed by the employee) registered on a list managed by the Government representative in the department.

=> The prior interview cannot take place less than 5 working days following receipt of the invitation. In any other case, employees must be informed in advance enough to prepare their defence,
=> The employee can ask for the prior interview to be postponed,
=> The employer can request a suspension pending prior interview in case of serious fault. Such suspension means that the employee must not work for the company during this period.

2.2- Prior interview

The prior interview allows the employee to be informed of the reasons for dismissal and both parties to discuss.

The following must be observed:

- The interview must be in a language that both parties understand, otherwise the employer must invite an interpreter,
- The employer must not declare dismissal to the employee during this interview,
- What the employee may say cannot be a reason for dismissal,
- In case of redundancy, the employee whose length of service is less than 2 years must be informed in writing about adhesion to a retraining agreement.

2.3- Notification of layoff

The layoff letter must be sent at least one or two clear days following the prior interview. This letter must carefully and precisely state the reasons for layoff. Otherwise, it would be deemed an abuse.

In certain cases of redundancy, the employer must inform the labour inspectorate director in the department about this layoff.

Contents

In case of layoff, the employee and the employer have rights and obligations as detailed below:

3.1- Dismissal for real and serious cause

In case of unfair dismissal, the employer can benefit from:

- the advanced notice,
- a layoff payment equivalent to 6 months of wages minimum or depending on the effective loss or damage sustained,
- a conventional layoff payment, in most cases based on the length of service,
- vacation payments,
- compensation for non-observation of the layoff procedure, in most cases equivalent to one month of wages,
- mandatory end-of-contract documents (attestation of employment & certificate from ASSEDIC).

For employees whose length of service is less than 2 years and for employees of companies of more than ten employees, the court can decide on reinstatement in the company. Refusal by one of the parties makes reinstatement not possible.

3.2- Dismissal for serious fault

The employee will only benefit from:
- vacation payments,
- mandatory end-of-contract documents (attestation of employment & certificate from ASSEDIC).

3.3- Dismissal for serious offence

The employee will only receive:
- the mandatory end-of-contract documents (attestation of employment & certificate from ASSEDIC).

3.4- Unfair dismissal

In case of unfair dismissal, the employee will also benefit from the compensation indicated in sections 3.1 to 3.3 above:

- compensation for non-observation of the layoff procedure, in most cases equivalent to one month of wages.

3.5- Redundancy

The employee will benefit from:
- the advanced notice,
- layoff payments,
- vacation payments,
- mandatory end-of-contract documents (attestation of employment & certificate from ASSEDIC).
In case of dispute about the economic nature of this layoff, the industrial tribunal can decide that the layoff is unfair.

3.6- Negotiated payment

Employers may decide at their own discretion to negotiate layoff with employees. Confidential negotiations can be held. The parties shall agree on the layoff conditions and reasons.

In case of dispute, the parties can agree on a transaction to avoid an action being brought to the industrial tribunal.

Concerning the tax conditions applicable to these negotiated payments, it is recommended to contact the tax office to get information on the tax rate applicable to these payments. In general, income tax and social security contributions are not applicable to layoff payments.

3.7- Resignation

It is recommended that the employee willing to resigne, inform the employer in writing by registered letter with acknowledgement of receipt.
The asserted date and signature on this letter prevent any dispute.

The employee can resigne without any reason.
The employee has rights and obligations:
- Obligation to advanced notice,
- vacation payments,
- mandatory end-of-contract documents (attestation of employment & certificate from ASSEDIC).

Theoretically, in case of resignation, the employee shall not benefit from unemployment allowances, however ASSEDIC may consider resignation as rightful. The employee who has resigned can benefit from unemployment allowances if the reason is validated as one of the 11 valid situations recognised by ASSEDIC.

For information on these situations, we recommend you to directly contact ASSEDIC or to refer to their Internet website. However this remains exceptional.

Contents

The labour legislation protects the following employees against layoff:

4.1- Pregnant women

An employer cannot lay off a medically-stated pregnant employee and thus for all her work contract suspension periods. This applies even if the employee does not want to benefit from this right and for the 4 weeks following the end of the maternity period.

However an employer can terminate a work contract in the following cases:
- in case of a serious fault not due to pregnancy
- if the employer cannot preserve the work contract for a reason independent from pregnancy or birth.

In case of illegal layoff, the employee must communicate within 15 days to the employer a medical certificate stating her pregnancy by registered letter with acknowledgement of receipt as from she is informed of her layoff.

In this case, it is highly recommended to refer to the labour legislation and to contact a lawyer.

4.2- Victims of accident at work

An employer cannot lay off an employee victim of an accident at work or occupational disease for all work contract suspension periods. The work contract of this employee is suspended in the following cases:

- for the duration of the leave,
- for the waiting period and the rehabilitation, re-education or vocational training period.

4.3- Specific staff members

The following employees are protected against layoff:
- The candidates at staff representation (for 6 months) or works council (for 3 months),
- Employees that requested internal elections (whether appointed by unions or not),
- Union representatives,
- Active members of the works council and staff representatives (for the duration of their mandate + 6 months following its expiry),
- Union representatives at the works council,
- Staff representatives or candidates at the health and security committees.

An employer willing to lay off an employee of this category has two options:
1- obtain voted agreement (secret ballot) of the works council following an interview with the employee,
2- obtain authorisation from the labour inspectorate within 15 days following deliberation by the works council.

If layoff is refused, the employee is reinstated in the company.

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Note: This article only sums up the French social legislation and its main characteristics. It shall not be considered as a comprehensive draft document.

"Sources: Mr Olivier Jessel, barrister before the Bar of Paris - SoCompetent - 25/04/2007 "