Labour & Employment 2019

2019 Research

Business

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EMPLOYMENT EMPLOYMENT LABOUR & 2019 Global interview panel led by DLAGlobal interview Piper

Market Intelligence LABOUR & EMPLOYMENT 2019

Subscriptions Claire Bagnall [email protected] Labour & Senior business development managers Adam Sargent [email protected] Employment Business development manager Dan Brennan [email protected] 2019

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26 Labour & Employment 2019 © Law Business Research 2019 France

Philippe Danesi is location head of employment for DLA Piper in France. He is involved in all aspects of employment law. He has broad experience in assisting companies in dealing with the employment aspects of complex restructuring oper- ations and related litigations. He has specific experience negotiating and implementing social plans, outsourcing, transfer of personnel, cross-border transactions as well as in negotiating and implementing working time strategies and collective bargaining agreements. He handles collective issues and litigation involving unions and staff representatives before labour, civil, criminal and administrative courts in France.

Marie Durand-Gasselin advises and represents local and international clients on various labour law issues, from individual (recruitment to termination of employment agreements) to collective labour relations (management of staff representatives, information and consultation processes, negotiation of collective company agreements). Marie also has a solid experience in mass redundancies, plant closings, implementation and monitoring of social plans, as well as social consequences of corporate M&A, group reorganisations, transfer of businesses or outsourcing of activities. Within the employment law department, Marie has developed an acute knowledge and growing practice with regards criminal law, compliance law and data protection law issues arising from employee and HR management (codes of conduct, whistleblowing regulations, internal investigations, processing of employee personal data, undeclared work). Marie represents clients in the context of employ-

Photo by David East on Unsplash ment litigations, through both settlement negotiations and court proceedings.

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1 What are the most important new developments in your jurisdiction over the past year in employment law?

In the autumn of 2017, President Macron unveiled his labour law reforms aimed at increasing the economic attractiveness and competitiveness of France by bringing more security to employment relationships, simplifying and strengthening the social dialogue and promoting collective bargaining at company-level in order to better address the companies’ operational constraints. This reform has the ambitious objective of promoting a free, dynamic and responsible dialogue with social partners within the company, in order for companies to have more ability to adapt to the challenges of a global economy. Over the past year, this reform has triggered a profound shift in the role and responsibilities granted to French unions, since they now have the ability, provided they have proven to be fairly representative within the company, to negotiate at the level of the company collective agreements that can be less favourable than the rules of the applicable industry-wide collective bargaining agreement (industry-CBA) and, even, under specific circumstances, supersede individual employment contracts. Such power given to the unions is consistent with the fact that they have become more legitimate, as their representativeness is granted by the employees through democratic elections of employee representatives. By way of background, employment relations in France are essentially governed by our detailed and cumbersome Labour Code, as well as by the applicable industry-CBA and eventually company practices and collective bargaining agreements negotiated at company-level. A strict hierarchy traditionally applied, where employee rights and entitlements set forth by labour laws could not be reduced by CBAs and, likewise, entitlements provided by the industry-CBAs could not be reduced by collective company agreements. Adapting the rules was only possible if more favourable to employees. With the labour law reforms, and since 1 May 2018, only ‘majority collective agreements’ are valid. Majority collective agreements are collective company agreements signed by one or more unions that obtained at least 50 per cent of the votes cast at the first round of the last elections of employee representatives, or at least 30 per cent if then approved by referendum. Under these, there is the possibility to deviate and reduce employees’ entitlements negotiated at industry level in a wide range of topics (except for areas such as minimum wages, gender equality or job classification). Majority collective agreements also allow the negotiation of the implementation of instruments such as collective mutually agreed terminations (RCC agreements),

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Philippe Danesi Marie Durand-Gasselin

‘competitiveness agreements’ or agreements on the level of implementation or functioning of the Social and Economic Committee (CSE). Even if not many have yet been entered into to date, it is worth noting that competitiveness agreements allow – in the absence of economic difficulties and in order to adapt to the company’s operating constraints or to safeguard or sustain employment – deviation from provisions emanating from CBAs or even more remarkably from employment contracts on working time duration and organisation, remuneration and professional or geographical mobility. Also, the provisions of competitiveness agreements automatically cancel and supersede all conflicting and inconsistent clauses contained in employment contracts so that employees’ refusal to implement such competitiveness agreements constitutes, in and of itself, a valid cause for termination by the employer, which entitles the employee to benefit from unemployment insurance with increased training rights paid by the employer. Such terminations are not based on economic grounds and therefore do not trigger the (costly) obligation to implement a social plan. With these new regulations, elected and legitimate unions become critical contributors of flexibility, adaptability and ‘deregulation’ within companies. In other www.lexology.com/gtdt 29 © Law Business Research 2019 France

“By 1 January 2020, all companies employing at least 11 employees over a consecutive 12-month period shall have set up a Social and Economic Committee.”

words, the collective interest supersedes individual interests, depending on the signature of the unions, with related impact on their potential re-election. The negotiation of collective company agreements allowing such tailor-made company rules to prevail over the provisions of industry-CBAs has also been facilitated in small and medium-sized enterprises, where the need for flexibility and adaptability is even more critical but where unions are often not present. In these companies, it is now possible to negotiate with elected CSE members or, in micro-businesses that do not have elected a CSE, directly with the employees themselves through referendums. Another key evolution that has already had concrete repercussions in most French companies over the past year is the merger of the three previous information and consultation bodies into a single staff representation body called the aforementioned CSE, with a view to make social dialogue more efficient and operational. By 1 January 2020, all companies employing at least 11 employees over a consecutive 12-month period shall have set up a CSE that definitely replaces and merges the roles and prerogatives of former employee delegates (for companies

30 Labour & Employment 2019 © Law Business Research 2019 France with 11 to 49 employees), and also works councils, and health and safety committees (for companies with 50 employees or more).

2 What upcoming legislation or regulation do you anticipate will have a significant impact on employment law in your jurisdiction?

After the labour law reforms, the 2018 ‘Law for the Freedom to Choose One’s Professional Future’ marked the second phase of the reforms announced by President Macron to modernise and renovate the French social model. Pursuant to this law, and its 2019 decree of implementation, companies with 50 employees or more are now required to establish and publish (name and shame), every year on 1 March at the latest, a gender equality index report aimed at meas- uring the existing pay gap between male and female employees (but does not go as far as publishing actual figures in euros) and, if needed, corrective measures over the following three years. These obligations came into effect on 1 March 2019 for businesses with more than 1,000 employees, on 1 September 2019 for those with between 251 and 1,000 employees, and on 1 March 2020 for companies with between 50 and 250 employees. The decree gives a strict methodology to measure the gender pay gap, which is based on measurement against five defined indicators: • gap in average pay (base plus variable pay including benefits in kind and performance bonuses) between men and women with comparable jobs (or employment status) and age groups (40 points); • gap in distribution of personal pay increase (20 points); • percentage of women who received a pay increase on returning from maternity leave (15 points); • number of women in the top-10 highest paid employees (10 points); and • gap in distribution of promotions (in companies with more than 250 employees) (15 points).

The overall score is obtained by adding up the points obtained for each indicator, giving an overall score of up to 100. For all companies with 50 employees or more, this overall score shall be published annually on the company’s website and, in the absence thereof, employees must be informed of the company’s annual score by ‘any appropriate means’. The indicators, the methodology and the associated annual score must be filed with the labour inspector and made available to CSE members in the Economic and Social Data Base (BDES). For the first time, failure to achieve a score of at least 75 points triggers an obligation for the employer to take corrective measures. If this failure persists during www.lexology.com/gtdt 31 © Law Business Research 2019 France

three consecutive years, the labour authorities may – where the company’s failure is justified by circumstances such as economic difficulties, ongoing restructuring or ongoing insolvency proceedings – give the company an extra year to obtain at least 75 points, or impose a financial penalty of up to 1 per cent of the company’s total wage for the previous year. By the end of 2019, all companies with 50 employees or more will have to publish their score to the gender pay gap index and the first financial penalties are expected as of March 2022 for companies with 250 employees or more. The possibility of a significant fine shows that the law does not merely encourage companies to move towards more gender equality, but bring companies to proactively handle the situation by significantly decreasing the pay gap between male and female employees.

3 How has the #MeToo movement impacted the investigation or settlement of harassment or discrimination claims in your jurisdiction?

Regulations designed to prevent harassment and discrimination in the workplace and to protect employees’ health and safety were already quite solid in France even before the #MeToo movement. Harassment (moral or sexual) and discrimination, which unlike in the United States are distinct and independent notions under French law, are each quite largely defined and heavily sanctioned by both the criminal code and the employment code. In addition, employers bear the general obligation to take all necessary measures (including preventive measures) to effectively protect employees’ health and safety and prevent sexual harassment in the workplace. The 2018 Law for the Freedom to Choose One’s Professional Future strengthens regulations aimed at tackling sexist behaviour and sexual harassment in the workplace by creating new additional obligations for employers as of 1 January 2019. Companies with 250 employees or more shall now appoint a reference person responsible for guiding, informing and accompanying employees in the fight against sexual harassment and sexist behaviour. This reference person shall have appropriate skills, knowledge and training to effectively perform his or her role. In practice, he or she will most usually be a member of the HR team. This reference person will typically be expected to raise employees’ awareness regarding the prevention of sexual harassment and sexist behaviour, assist and advise employees who would report such facts, participate in internal investigations following such reporting and help managers when dealing with sexual harassment or sexist behaviour. While the law does not provide any specific sanction for failure to appoint

this reference person, such failure could be grounds for the award of damages Photo by Nosiuol on Unsplash

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for non-compliance with the aforementioned general obligation for employers to protect employees’ health and safety. In addition, for companies with a CSE, the latter must also designate one of its members as reference person for sexual harassment and sexist behaviour. Employers now also have the obligation to take appropriate measures to inform employees – as well as trainees, apprentices and job candidates – of the legal definition of sexual harassment, as defined by the Criminal Code, and of the various civil and criminal legal actions and labour authorities and persons (ie, notably the labour inspector, the occupational doctor and the company’s and the CSE’s reference persons) available to victims. Victims of sexual harassment benefit from extended statutes of limitation to initiate legal actions against the perpetrator of sexual harassment or the company (five years for civil actions before labour courts and six years for criminal actions). If dismissed after having suffered or reported facts of discrimination or harassment, employees may seek reintegration in the company or, more likely, the granting of uncapped damages of a minimum of six-month salary. Photo by Nosiuol on Unsplash

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4 What are the key factors for companies to consider regarding the enforcement of restrictive covenants against departing employees?

Proportionality of the restrictive covenant is definitely the main factor to consider. Under French labour law, employees are by the sole effect of their employment contract subject to a general obligation of confidentiality and loyalty towards their employer, which prevents departing employees from disclosing confidential information regarding their former employer or acting in a way that may characterise unfair competition. This general obligation applies throughout the duration of the employment contract and following its termination without time limitation, and does not need to formalise this obligation in writing in the employment contract. In addition to this general obligation, employers may want to enter into restrictive covenants with employees to prevent them from competing with the activities of the company following the termination of their employment contract. Since restrictive covenants limit employees’ fundamental freedom to work, the Court of Cassation constantly imposes conditions of validity aimed at ensuring that the clause does not excessively infringe the employees’ right to work. To be enforceable, restrictive covenants shall be: • formalised in writing, in French, and incorporated in the employee’s employment contract; • justified by the genuine and legitimate interest of the company; • limited in time and geographical scope; and • so long as it is complied with by the employee, compensated for by the payment of a monthly indemnity.

This proportionality requirement is assessed on a case-by-case basis, depending on factors such as the employer’s business activity, its global footprint, the employee’s specific skills or strategic role, the employee’s access to key commercial or operational information, or the speed at which the market is changing. Some industry-CBAs also impose requirements regarding the compensation (generally 30 per cent to 50 per cent of the employee’s average compensation), maximum duration (generally up to two years) or restrict the employer’s ability to release the employee from the non-compete obligation by requiring his or her prior consent. The above conditions shall be attentively assessed by the employer before entering into a restrictive covenant. Indeed, if the above conditions are not satisfied, the clause will be held unenforceable, releasing the employee from its non-compete obligation while still entitling him to damages.

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“The status of platform workers has been at the centre of many debates within the European and French labour law community.”

It is also critical that the restrictive covenant provides for the employer’s ability to waive the clause unilaterally in order to avoid having to pay a financial consider- ation to an employee whose competition is finally not to be feared.

5 In which industry sectors has employment law been a hot topic recently? Why?

The status of platform workers has been at the centre of many debates within the European and French labour law community. The specificity of the status of platform workers was enshrined in the ‘El Khomri Law’, which created an obligation for digital platforms to take ‘social responsibility’ for their workers expressly qualified as ‘independent workers’ (when they are not employees), by guaranteeing their right to unionise, to go on strike and by contrib- uting to their training costs and to the payment of their medical insurance for the risk of work-related accidents. While recognising that platform workers, because of their economic depend- ency towards digital platforms, have a right to be covered against specific critical www.lexology.com/gtdt 35 © Law Business Research 2019 France

risks, the law did not go that far as to establish a presumption of independent contractor status (as opposed to employee status), leaving the door open to legal actions initiated by platform workers to seek for the recognition of an employment relationship between them and the digital platform. A recent decision from the Court of Cassation illustrates the equal reluctance to create a new social status for these platform workers, aside from the traditional dichotomy between employees and independent contractors. In the ruling regarding drivers of the Take Eat Easy food delivery platform, the Court of Cassation used its traditional test to assess whether the platform workers should be held as being under an employee relationship with the platform. The judges stressed that Take Eat Easy not only was using a geotracking system that enabled it to monitor the position of the couriers in real time and to record the total number of kilometres for each courier, but also had the power to sanction the courier through a bonus-malus system (see question 6). Based on these specific circumstances, the Court of Cassation ruled that the role of the platform was not limited to connecting the restaurateur, the customer and the courier, but extended to giving instructions and monitoring the way the couriers were performing their activity; hence characterising a subordinate and employee relationship. The Court of Cassation seems not to have taken into consid- eration the specifics of this new type of worker who, unlike regular employees, adheres to standards and pricing unilaterally set by the platform and determines for themselves if and when they wish to work, with no exclusivity or non-competition obligation towards a platform. A new legislative attempt to create a new social status for platform workers is awaited with the ‘Law on Mobilities Orientation’, which should regulate the activities of platform private drivers or couriers. The Law on Mobilities Orientation was initially expected for July 2019 but should be adopted in the coming year. It is notably awaited by e-scooter and e-bikes companies, which employ juicers and repairers under various statuses. These companies may have a strong commercial interest in hiring part of their people under an employee status as many cities may, during their tender processes, want to favour companies with workforces that are significantly comprised on workers under an employee status.

6 What are the key political debates about employment currently playing out in your jurisdiction? What effects are they having?

The social reforms initiated by the Macron administration (Macron Social Reform) are essentially driven by the concept of ‘flexisecurity’, which intends to promote a

modernised social model where employers are given more freedom and flexibility Photo by Joao on Tzanno Unsplash

to run their business ‘while at the same time’ (according to President Macron’s famous mantra) providing enhanced security, training rights and protection to employees. On the security front, some of the most legible and immediate measures were the general increase of legal severance indemnities, the reduction of the statutes of limitation to challenge the validity of a dismissal (one year for both economic and personal reasons, except for discrimination or harassment situations) and company-CBAs (two months), and the implementation of a scale of damages (minimum or maximum) based on the employee’s length of presence for dismissals without real and serious cause. By giving more clarity and certainty to both employees and employers about the outcome of a dismissal, the Macron Social Reform seeks to ease tensions associated with terminations of employment contracts, encourage settlements and hence in the long term reduce barriers to recruitment and encouraging hiring. After this first phase of the Macron Social Reform, the Macron administration unveiled its reform of vocational training (2018) and more recently, in the summer

Photo by Joao on Tzanno Unsplash 2019, its reform of the unemployment insurance system.

In a nutshell the 2018 Law for the Freedom to Choose One’s Professional Future gives employees broader and more accessible range of individual training rights that they can more easily use independently from their employer to build their own career path. As for the 2019 reform of the unemployment insurance system, its main goals are to turn the unemployment insurance system into a more efficient and universal system while increasing the responsibility of companies and individuals to reduce precariousness and overcome mass unemployment. Independent workers and resigning employees will, as from 1 January 2020, be eligible under strictly limited circumstances and specific conditions to the unemployment insurance system. From the employer’s standpoint, the main change brought by the new regulations is the implementation – as of January 2020 – of a bonus-malus system for the calculation of employers’ contributions to the unemployment insurance, with a view of encouraging companies to offer more permanent contracts and to extend the duration of fixed-term contracts rather than using temporary assignments or very short fixed-term contracts. This bonus-malus system is similar to that applied for the calculation of employers’ contributions to the work-related accidents insurance scheme. At first, it will only apply in seven determined business sectors with the highest rates of temporary workers or fixed-term contracts but may be extended to all sectors in the coming years. Finally, the Macron administration recently announced its reform of the French retirement scheme, which should be implemented by the summer 2020 with the overall aim to simplify and uniform the various existing retirement schemes and to extend the duration of working life in accordance with the increase in life expectancy and now types of work.

Philippe Danesi DLA Piper [email protected] Paris www.dlapiper.com Marie Durand-Gasselin [email protected]

The Inside Track

What are the particular skills that clients are looking for in an effective labour and employment lawyer?

Clients need a lawyer that has experience and a good knowledge of the business, its challenges, its terminology and common practices and can act as integrated business partner with a legal and sectoral added value. DLA Piper has engaged in a sectoral approach with cross-practice teams dedicated to bringing a real understanding of the challenges our clients face, and their need for competitive advantage.

What are the key considerations for clients and their lawyers when handling employment disputes?

Employment disputes are lengthy processes in France. When engaging in legal action, clients need to have visibility on the anticipated costs, successive steps and duration of the whole process to decide on the opportunity to settle or litigate the case. It is also key to be involved in the client’s internal and external communication strategy.

What are the most interesting and challenging cases you have dealt with in the past year?

We assisted a major player in the transportation sector with the merger and inte- gration of five legal entities in France with more than 6,000 employees in total. In addition to advising the client with the multiple collective negotiations associated with this restructuring, we handled not less than 15 litigations against unions and works councils and health and safety committees of the impacted entities, aiming at blocking or delaying the merger. We also assisted an international client in implementing a major restructuring in three of its French entities in three different locations in France, coordinating our advice and client’s actions with the several employee representative bodies and local labour authorities involved. This involved strikes and collectives actions. Finally, we represented a client in a legal action against unions, works councils and health and safety committees mainly on work-related psychological risks where significant damages were claimed and which caught the attention of the media. Positively, the court recognised the company’s commitment to negotiating collective agreements on the topics at stake. www.lexology.com/gtdt 39 © Law Business Research 2019 Market Intelligence LABOUR & EMPLOYMENT 2019 ISBN 978-1-83862-204-6 2019 Research Business Law © Sector focus Restrictive covenants Restrictive #MeToo movement #MeToo Regulatory trends Regulatory Market Intelligence offers readers a highly accessible take on the take accessible a highly readers offers Intelligence Market Led by DLA Piper, this Labour & Employment volume features features volume & Employment this Labour DLA by Piper, Led crucial issues of the day and an opportunity to discover more about the more discover to and an opportunity of the day crucial issues cases and deals. people behind the most significant discussion and analysis of emerging trends and hot topics within key within key and hot topics trends of emerging and analysis discussion jurisdictions worldwide. Lexology GTDT Market Intelligence provides a unique perspective on a unique perspective provides Intelligence Market GTDT Lexology landscapes. legal and regulatory evolving