The labor markets of today’s modern global economy are going through significant structural changes, driven mostly by globalization and technology. As the future activity of companies is more and more difficult to predict, their capacity to adjust their head count has become critical.
On the political sphere, the failure of European countries to reach an unemployment rate as low as in countries such as the US has led to the rise of neoliberal theories, according to which, the blame for such high unemployment falls on rigid, employee-friendly labor legislation. Therefore, according to these theories, the only effective remedy to unemployment lies in the elimination of institutional obstacles, such as employee protective laws, especially with respect to termination of employment.
As analyzed by the researchers Werner Eichhorst, Paul Marx and Caroline Wehner,
a new wave of labor-market reforms, following the neoliberal trend, started after the 2008 crisis in order to tackle:
1) Employment protection — i.e., dismissal protection and restrictions on fixed-term
2) Unemployment-benefit generosity and coverage
In France, President François Hollande started his transformation of the labor market in 2016 with a labor law reform, known as the “El Khomri law” (named after the labor minister under President Hollande at the time), which allowed more flexibility to companies through companylevel collective bargaining, thus giving greater prominence to companywide collective bargaining agreements.
This movement of liberalization continues today. In September 2017, President Emmanuel Macron pushed through in record speed his “ordinances,” whose aim is to significantly reform French labor law. They extend collective bargaining rules first set in motion by the El Khomri law, notably by giving companies more power to negotiate working conditions directly with employees. (Major changes have also been made in other areas, such as employee representation, by gathering a staff’s various representative bodies into one entity.)
Indeed the ordinance, dated 22 September 2017, “regarding the predictability and securing of employment relationships” is a real game changer: it provides a new set of rules for individual terminations as well as for collective redundancies.
This paper will review the key rules of employment termination since Macron’s labor law reforms and analyze their consequences for employers in France. We will discuss how both individual terminations and collective head-count reductions in France have become easier and less risky.
Read the full paper here.
EY legal contacts:
Roselyn Sands – Global Labor and Employment Law Markets Leader
Paula Hogéus – Global Labor and Employment Law Leader