France: Rules on redeploying redundant employees are amended

Legislation adopted in France in May 2010 has amended the rules that oblige employers to seek to redeploy employees threatened by redundancy. The changes relate to offers of redeployment to foreign countries in cases where the French employer forms part of a multinational company, an issue that has been highly controversial. 

On this page:
Obligation to attempt redeployment
Controversy over foreign job offers
Revised redeployment rules
Uncertainties with new legislation.

Obligation to attempt redeployment

The Labour Code provides that an employer may not make an employee redundant if there is a possibility of redeploying that employee to another job within the organisation suited to his or her capacities. The employer must make serious efforts to redeploy any employee threatened with redundancy. Failure to do so will make any subsequent redundancy invalid. The employer must offer the employee:

• any available job in the same category as their current job;
• any available equivalent job; or
• failing these, any available job in a lower grade, if the employee expressly agrees to this.

Employers were originally required to seek alternative jobs for employees threatened with redundancy only within the company concerned. However, based on case law in the Cour de Casssation (France's highest court), the Labour Code was amended in 2002 to state that, where a company forms part of a wider group, the redeployment obligation applies to possible alternative jobs within the whole group of companies. The Cour de Cassation also ruled that, in the case of multinational groups, if no available jobs can be found in France, jobs should be sought in the group's operations in other countries and offered to employees faced with redundancy.

Controversy over foreign job offers

The extension of the obligation to attempt redeployment to include potential jobs throughout groups of companies, anywhere in the world, has resulted in a number of controversial cases, which have attracted considerable media attention. For example:

• in March 2008, employees threatened with redundancy at Staf, the French subsidiary of Sinterama, a textiles multinational based in Italy, were offered redeployment to jobs in Turkey paid at €230 per month, or in Brazil at €315 per month;
• in June 2009, Carreman, a textiles group, offered redundant staff at its plant at Castres in France jobs in India with a monthly wage of €69; and
• in March 2010, Continental, the Germany-based tyre manufacturer, offered staff due to be made redundant at its site at Clairoix in France alternative employment in Tunisia, paid at €137 per month.

The employers involved in some of these cases have been accused by the media and politicians of making spurious and insulting alternative job offers in developing countries merely to meet their legal obligations and avoid making real efforts to redeploy redundant staff.

However, employers' groups point out that the law requires companies to offer all jobs meeting the redundant employees' capacities, however low paid or far from France. Further, the penalties for not doing so are potentially severe. As well as giving employees grounds for having their redundancies overturned in court, failure to offer all jobs may result in heavy fines. For example, in May 2009, Olympia, a sock manufacturer, was fined €2.5 million by the Rheims appeal court for failing to offer redundant French staff jobs in Romania on a monthly wage of €110. Despite the penalties, commentators claim that many companies do not offer redeployment to all possible jobs for fear of adverse media reporting.

A further problem with the legislation is that the complexity and size of some multinational companies make it difficult for them to comply. An example cited in Parliament was that of Siemens, the Germany-based electronics group. If Siemens' French subsidiary is contemplating redundancies, its HR department must in theory gather at short notice details of potential appropriate job openings in the group's 1,224 subsidiaries around the world.

Revised redeployment rules

To address the problems caused by the existing rules on redeployment within multinationals, the legislation has now been amended by law no.2010-499 of 18 May 2010 on "guaranteeing fair remuneration conditions for employees affected by a redeployment procedure" to a foreign country.

Under the new statutory rules, where an employer contemplating redundancies is part of a group with operations outside France, it must ask the employees concerned, through a questionnaire, if they wish to be offered jobs outside France and, if so, under what conditions and limitations, notably in terms of location and pay. The employees have a week to respond and are entitled to refuse and be offered only jobs within France. Failure to respond within a week is taken as a refusal.

Offers of redeployment to other countries must be clear and in writing, and conform to any restrictions stipulated by the employee. They must relate to jobs in the same category as the employee's current job, or to equivalent jobs, and be "accompanied by an equivalent remuneration". Only in the absence of any such jobs, and with the employee's express agreement, may jobs in a lower category be offered.

The employees are entitled to refuse any offers made. If no appropriate jobs can be found, the employee must be informed of the fact.

The minister of labour, Éric Woerth, said that the amendments represent a "clear and effective response" to the problems with the previous rules, whereby employers were obliged to offer employees all available posts, wherever they might be located and whatever the pay level, in order to avoid having subsequent redundancies ruled null and void.

According to Woerth, the changes "bring new guarantees for employees and companies and will avoid employees being made job offers considered as shocking, while preserving all their rights". The minister accepted that the Cour de Cassation rulings had sought to protect employees and ensure that redundancies were a last resort, but had led to a "shameful and unacceptable" situation, with companies forced to make "absurd and degrading" offers.

Uncertainties with new legislation

The Social Affairs Committee of the Senate (the upper house of Parliament) has highlighted what it sees as a number of "areas of uncertainty" in the new legislation. The Committee argues that the law may not put an end to "indecent" job offers, as it does not lay down a minimum pay level for the positions that may be offered to employees threatened by redundancy. If, in filling in the questionnaire required by the new procedure, employees accept in principle being offered jobs at lower pay than their current level, this would oblige the employer to offer all available jobs, even those paid at a small fraction of French levels.

The Committee points out that the legislation does not stipulate what restrictions employees may place on the foreign job offers they wish to receive. Vaguely expressed restrictions might be difficult for employers, and the courts, to interpret, leading to legal uncertainty. The Committee also believes that the absence of specific legislative provisions on the contents of questionnaires might lead to abuses by unscrupulous employers. Questionnaires might be framed in such a way as to limit greatly the types of job that the employer is obliged to offer. For example, a negative response by the employee to a question such as "would you accept a job that would not enable you to retain all your current rights and benefits?" could allow the employer to offer no jobs outside France.

The Ministry of Labour has announced that it will draw up a circular on the application of the new legislation, and that this will deal with the content of questionnaires. It will do so by providing model questionnaires which, while not being obligatory, will act as a point of reference. According to Éric Woerth, companies will be free to draw up their own questionnaires but if they ignore the content of the forthcoming model questionnaires, this will be "at their own risk".

The circular is also likely to deal with pay levels. Woerth is not in favour of a requirement that jobs offered abroad must be paid at least at the level of the French national minimum wage, as demanded by some during the parliamentary debate, pointing out that other countries have their own minimum wage rules and that individual employees may have differing views on whether or not they would accept a lower wage in a particular country. He has suggested that the questionnaire could ask whether or not employees would be prepared to work for less than the French minimum wage in each of the various countries where redeployment is possible.

This article is based on material provided by Christophe Boulay, correspondent for France.

European employment policy, practice and law, June 2010