French President Emmanuel Macron implemented a significant reform of the French employment code in late 2017, with the intention of providing employers greater flexibility and predictability in managing labour relations.
One of the most controversial measures was the creation of a grid applicable to the amount of indemnities due to employees for unfair dismissal, setting minima and maxima as a function of the length of service of the employee and the headcount of the employing entity.
Prior to the adoption of the grid, courts were free to determine the amount of damages payable to unfairly dismissed employees based on the loss suffered by the employee (with a minimum of 6 months’ salary for employees with at least two years of service in a company employing at least 11 employees and no cap). Under the new system, French courts are required to determine the amount of damages based on the loss suffered, but taking into account both a floor and a ceiling (which is fixed at 20 months’ salary for employees with at least 30 years of service).
At the time of the reform, a number of voices were raised against this measure, and some employees’ lawyers continue to challenge the validity of t provision of the French employment code, arguing that the grid is incompatible with Convention no. 158 of the ILO (International Labour Organisation) and the European Social Charter.
Article 10 of Convention no. 158 of the ILO provides that if the courts “find that termination is unjustified and if they are not empowered or do not find it practicable, in accordance with national law and practice, to declare the termination invalid and/or order or propose reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate”.
Similarly, Article 24 of the European Social Charter provides that the parties thereto undertake to recognize “the right of workers whose employment is terminated without a valid reason to adequate compensation or other appropriate relief”.
Consequently, employees’ lawyers have claimed that the dismissal indemnity grid could fail to provide sufficient (or total) reparation of the loss suffered by the employee, in breach of such international law rules acknowledged by France.
The number of published decisions to date in which such argument has been made remains limited, due to (i) the fact that the grid applies only to dismissals notified to employees after the date of the reform (late 2017), (ii) the length of proceedings before French employment tribunals, and (iii) the fact that not all employees’ lawyers have made use of such argument.
To our knowledge, only one employment tribunal (Le Mans) has published a decision rejecting such an argument by employees’ lawyers and strictly applying the new rules set forth in the French employment code.
The Caen employment tribunal, in a decision dated December 2018 and published very recently, took a more nuanced view, holding that the employee did not provide evidence of actual damages exceeding the amount to which the employee would be entitled on the basis of the amounts determined using the grid.
However, four other employment tribunals (Troyes, Amiens, Lyon and Grenoble) have ruled that the dismissal indemnity grid is in contradiction with the international undertakings of France. In these cases (all published in December 2018), the courts ordered the employing entities to pay an indemnity which the court set independently from the grid.
Needless to say, the employers will appeal against these decisions, and against any similar rulings which are likely to be issued by other lower courts. Ultimately, it will be up to the French Supreme Court to give a final say. In the meantime, the predictability promised to French employers is still limited.