French President Emmanuel Macron has signed five ordinances making important changes to several aspects of the French employment code. The ordinances, which were immediately published in the French Official Journal on September 23rd, 2017, are aimed in particular at providing employers more flexibility and predictability in labour-management relations.

Several provisions of this ambitious reform (the “Reform”) – numbering 159 pages and providing for 36 measures – are already in force.

Due to the significant amount of amendments to French employment regulation provided by the Reform, we have chosen to focus in our third article on the amendments relating to economic dismissals.

The main aspects of the Reform regarding redundancies are as follows.

1. Limitation of the scope of analysis of the economic grounds

French case law used to closely monitor what constituted a fair reason for dismissal, particularly in cases of dismissal for economic reasons.

The Reform redefines the perimeter in which economic grounds for dismissal are to be assessed:

  • if a company does not belong to a group: economic grounds will be analyzed at company level (unchanged);
  • if a company does belong to a group: economic grounds will be analyzed at the level of the group companies located in France and operating in the same sector of business as the company targeted by the redundancies.

This constitutes a major change, as in the past, the economic difficulties / threats to competitiveness were assessed at the total group level, with the courts focusing on the results of all companies of the group, worldwide, operating in the same sector of business as the company targeted by the dismissals.

2. Limitation of the redeployment obligation

The Reform limits the obligation to seek redeployment positions as follows:

  • if a company does not belong to a group: to the whole company (unchanged);
  • if a company belongs to a national group: redeployment positions are to be sought in all companies of the group – as defined by French commercial code, provided that their organization, activities or location allow the employees to be redeployed in such companies (unchanged);
  • if a company belongs to an international group: redeployment positions shall be sought in companies located in France only (while in the past, the employing entity was obligated to seek reclassification positions in the whole group, even outside France, if requested by the employee).

In addition, the Reform no longer requires the redeployment offers to be personalized. Redeployment offers must still be in writing and specific. However, they can be either addressed to employees individually or posted by all means such as a list of positions on the intranet.

Aside from the provisions related to the posting of job offers (which must be supplemented by decree), all of the above provisions are applicable to all economic dismissal procedures initiated since 24th September 2017.