Apart from certain provisions which may be tailored to the relevant situations negotiated by companies or sectors of business through collective agreements (subject to compliance with a number of basic rules and principles), French employment law does not include any specificities in relation to certain sectors of business.
In particular, financial institutions are subject to the same set of rules as any other French company.
However, this may change in the next few weeks or months.
As part of the process of ratification of President Macron’s ordinances reforming the French labour code, the French National Assembly adopted on 23 November 2017 an amendment to the draft law of ratification of the ordinances which were already published. This amendment is included in the latest version of the draft law, which will be discussed before the Senate in the next few days.
If definitively voted, this provision will authorise credit institutions, asset management companies and investment companies to reduce the amount of deferred bonuses, or even to claim restitution of such bonuses paid to a number of employees due to their behaviour or actions. This contradicts a long-standing prohibition against such clauses in the French Labour Code (known as the prohibition of pecuniary sanctions).
This text targets not only legal representatives of the financial institutions, but also certain categories of employees involved in risk taking (“material risk takers”, also known as MRTs), the employees having management duties and any employee whose business conducts have a significant incidence over the risk profile of the company or the group.
For such individuals, a valid clawback provision could therefore be validly enforced (which has not been legally possible so far).
In addition, the amendment adopted provides that the deferred bonuses paid to material risk takers will not be included in the basis for the calculation of not only their statutory dismissal indemnities, but also of any damages which may be awarded for unfair or void dismissal.
Regarding statutory dismissal indemnities, this amendment will not have any impact for banking companies, which are subject to a specific sector-wide collective bargaining agreement providing that only the fixed salary is to be taken into account for such calculation.
However, the impact of this amendment could be much more significant regarding damages awarded to material risk takers, as until now these damages have been calculated on the basis of the total compensation awarded to the employee during the year preceding the termination (or the last 3 months, if more favourable).
This double limit to traders’ remuneration (added to the scale of damages to be awarded in case of unfair dismissal which has been recently implemented and which is applicable to all dismissals notified on or after 23rd September 2017) is clearly in favour of financial institutions, demonstrating the French Government’s response to Brexit.