Employment law in France: five fascinating features

What are the key things international employers need to know about employment law in France? Laura Merrylees looks at five features from contracts to covenants.  

There are many stereotypes about employment rights and culture in France, with workers’ strikes often making global headlines. The key legal obligations for global employers that operate in the country can be found in XpertHR’s guide to employment law in France, and below we highlight five interesting facts.

1. Termination by mutual consent

Open-ended employment contracts may be terminated by mutual consent, provided that a statutory process known as “approved termination by agreement” (rupture conventionnelle homologuée) is followed.

Such terminations constitute neither a dismissal nor a resignation and must be based on a written agreement, following at least one meeting between the employer and employee.

An obligatory cooling off period enables either party to retract the termination. After this period ends, either party may submit a request to the authorities to approve the agreement.

2. Non-competition clauses

Non-competition clauses are permitted provided that they are in writing and either incorporated into the employment contract or contained in a collective agreement.

Case law has laid down a number of further requirements that need to be met to ensure such clauses are valid. These include restrictions relating to the purpose and scope of the clause.

Financial compensation must be paid to the employee for the duration of the restriction. The amount of the compensation must not be “derisory”. Failure to do so may lead to a claim for compensation and the release of the employee from the restrictions in the clause.

In certain circumstances, an employer may cancel a non-competition clause unilaterally, provided that requirements set out in the employment contract or collective agreement are met.

3. Works councils

All companies with at least 50 employees must set up a works council (comité d’entreprise).

If the company has more than one establishment, it must set up establishment-level works councils in each, in addition to a central company works council. Groups of companies must also set up an overall group works council.

The works council is entitled to be informed and consulted by the employer on a wide range of specific matters, on both a regular and ad-hoc basis.

Employee representatives on works councils are elected for a four-year term.

Works councils must meet at least every two months in companies with fewer than 150 employees and at least every month in companies with 150 or more employees.

4. Dismissal on economic grounds

A dismissal on economic grounds (essentially redundancy) is one that is based on grounds unrelated to the employee.

It results from the abolition or transformation of the employee’s job, or a change to an essential element of the employment contract that the employee has refused to accept.

Employers must make serious efforts to redeploy employees threatened with redundancy.

Where the French employer forms part of a group with operations outside France, this includes asking employees if they wish to be offered any available jobs in these locations and, if so, under what conditions (for example, location and pay).

5. Recruitment

Before a new employee starts work, the employer must send a “declaration prior to recruitment” to the local social security office (Urssaf), providing specified information.

This declaration registers the employee for social security, unemployment insurance and workplace health services. Criminal sanctions may apply if an employer intentionally fails to do so.

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Employers must provide employees with a written employment contract, a letter of engagement or another written document setting out the main employment conditions.

Companies with more than 50 employees must send details of employment contracts signed (and terminated) each month to the local labour authorities.