Sunday, April 09, 2006

The CPE in Legal and Economic Context, Part 1

I've blogged previously about the particulars of the CPE law and the need for labor law reform, as have countless other people around the world, but thus far I've found explanations of the French labor system in general to be lacking. Major news outlets carry cookie-cutter explanations of the CPE and a handful of statistics documenting the high unemployment rates and lackluster economic growth plaguing France, all the while remaining silent on the specifics of the original laws the CPE modifies. A clear explanation of the current labor system is necessary for a complete understanding of the ongoing row in France. So, here is a short, simple and hopefully accurate summary of the labor laws the CPE would affect.

Before I go any further, a few notes on my sources:
1) Since I only speak English and German, reading through French texts is a bit of a losing proposition. As such, my research relied upon English translations and documents, so please don't take my comments as the Gospel truth.
2) If you do speak French and would like to see the primary sources for yourself, I would suggest consulting the Code du Travail section at Legifrance. I would appreciate any factual input from knowledgeable people, French or otherwise.
3) I may not be an lawyer, but I did sleep at a Holiday Inn Express last night. Read the links and the data for yourself!

Summary of Basic Labor Laws Affected by the CPE (as taken from www.investinfrance.org and www.triplet.com)

Contracts and Collective Bargaining

-All employees must be covered under a contract, either one agreed to by both the employee and employer or one of the industry-specific collective bargaining agreements written at a national level. All contracts must not be counter to the collective bargaining agreements or national labour codes.

-Companies may hire employees under temporary contracts, with a term limit of eighteen months, and then only under specific circumstances. Companies are restricted from using temporary contract employees to fill long-term positions.

Staff Representation

-Trade Unions are entitled to organize in any company.

-Depending on the size of the company, staff may either elect representatives to ensure compliance with applicable labor laws or form a works committee to represent worker interests in the company.

Layoffs

-Before laying off any workers, company directors must meet with the resident works committee to discuss termination plans.

-All employees must be given an interview to explain circumstances behind the intended layoffs.

-Layoffs of one to nine employees can only become final a minimum of seven days after the layoff interview. Layoffs above ten employees ratchet up the minimum notice period.

-For Layoffs above ten employees, companies must also submit a formal statement to labor authorities, explaining the reasons for the layoffs and the company's intented benefits for terminated workers

-Calculating severance pay may be quite complicated, though it generally equals 1/5 of monthly salary for each year of work (up to ten years of service), with 1/3 monthly salary for each year after ten. Other factors, such as the age of the employees, may affect the bottom line.

-Triplet & Associates adds:

Redundancies, or lay-offs on economic grounds, are subject to separate and complex procedural and substantive constraints particularly in the case of multiple dismissals.

There are a number of French State Agencies which have a statutory right to be advised of, and in some cases to authorise, proposed dismissals by private sector employers.

Termination of Employees for Misconduct/Personal Problems

-For conduct detrimental to the interests of a company but not actually illegal or
intentionally destructive, employees must be officially warned and given the chance to explain their conduct before any termination becomes final.

-Labor laws and applicable collective bargaining agreements may require that employees be given a notice period before the termination becomes effective; up to two months may be required for employees with two years of experience.

-Laws might require severance pay, and the employee has the option of referring their termination to a labor court.

-On the subject of labor courts:

It is extremely easy and at virtually no cost for an employee to start litigation against his (ex) employer before separate Labour Courts.

Labour Relations Courts (Conseils de Prud'hommes) are generally made up of lay judges who are elected from the ranks of employer/employee organisations.

It is rare that the plaintiff be other than an employee and just as rare that claims be dismissed with no award whatsoever being made against the employer.

Limits on Hourly Work

-The regular workweek is capped at thirty-five hours. For specific information regarding overtime limits, please consult here and pages 5 and 6 of the .pdf file here.


For Further Reading:
-Primary source material available online at Legifrance.com (again, the Labour Code has yet to be translated from French)
-An introduction to French Law sources is available at the Cornell Law School's website, found here.

Previous Posts on the CPE:
Paris on the Brink?
France and the CPE, Continued
French First Employment Contract and Econ 101

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