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The new “Labour Law” (Loi Travail/Loi El Khomri): The point of view of a French accountant

Labour law

Before the adoption of the new labor law, El Khomri, it was impossible for any company in France to deviate from collective agreement or labor law.

The main purpose of the “work” law is to provide more flexibility for negotiation in companies on working hours, rest and leave.
A company agreement or establishment can now waive a sectoral agreement provided it is not prohibited by the agreement.

I – Working time, overtime, leave, etc.

No major changes have been made in terms of working time, maximum periods of daily or weekly working hours, or rest time.

With respect to overtime, the law has not changed the definition of overtime (work in excess of 35 hours per week), but it now allows each company to determine a different rate of compensation for the extra working hours (even lower) from the official one established by the company’s sector.  

The company’s agreement also prevails for scheduling the weekly working timetable, deciding the amount of extra working hours, interrupting the activity for more than two hours per day and giving less than seven days’ notice.  Similarly, for night-shift work company agreements will prevail.

In terms of paid leave, an employee will be allowed to take it on hiring and so not wait until the 1st of May after being hired.

To achieve its goal, the “labour law”, through numerous texts, makes it easier for companies or establishments to negotiate. Even  companies without union representatives will be able to negotiate.  Furthermore, companies employing fewer than eleven employees can more easily organize the negotiation.

II – Dismissal on economic ground

The law updates the list of economic reasons for dismissal on economic ground. It adds to the reasons already in the labor code:

  • The company’s reorganization to maintain its competitiveness,

  • Termination of company’s activities.

Economic difficulties are also more clearly defined, they are characterized by the significant development of at least one following economic indicator:

  • Decrease in orders,

  • Decrease in turnover,

  • Operating losses,

  • Deterioration of cash.

Many other variations in texts were included in the Act but are outside the scope of this article, but one of them may be important for companies who set up a business in France, it is for the assignment of an employee of a foreign company in France. The declaration prior to the work Inspection is not sufficient in order for the the assignment to be considered as regular. Now, all subcontractors and all users of services rendered to France by a company established outside which proceeds through assignment, must verify that the legal requirements are met by the foreign company.

In conclusion, for companies who invest in France, the development or modification of any agreement remains a delicate operation.  If you would like to speak to an English speaking accountant in France before beginning, please contact us.

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