FRANCE: An Introduction to Employment

Post-Pandemic Developments in French Labour Legislation

The findings emerging from the first half of 2023 demonstrate a continuation of 2022’s trends. Indeed, prices remain high – even though inflation is declining – and the recruitment and retention of skilled employees remains difficult. However, social climate – punctuated by strikes and disagreements during the past few months – is more strained than ever.

On a more positive note, 2023 is also the year that the World Health Organization declared the “end” of COVID-19 as a public health emergency of international concern. In France, this meant the end of derogatory sick leave – ie, no waiting period between the beginning of the leave and the compensation, compensated absence even if the conditions for entitlement to benefits are not met, etc – as of 1 February 2023.

The end of the COVID-19 crisis also signalled a return to normalcy on the legislative front. Reforms that had been postponed owing to the pandemic have commenced and will continue to be discussed in the following months – for instance, the pension reform, which was first mentioned during Emmanuel Macron’s first term as French President in 2017.

Adoption of a controversial pension reform

The start of 2023 was shaped by the ongoing debate surrounding the adoption of the pension reform. With Emmanuel Macron’s re-election, the question of pension reform returned to the forefront. The original idea was to raise the retirement age from 62 to 65, which was later reduced to 64. This reform met with strong opposition from both the national trade unions as well as from the opposing political parties in the Congress.

After its presentation to the Congress on 10 January 2023, three months of nationwide protests, and no fewer than 14 days of mobilisations in response to calls from the trade unions, the Pension Bill was passed at the end of March 2023. The raising of the retirement age – combined with a repeated use of Article 49.3 of the French Constitution, which allows bills to be passed without a vote – made this reform very unpopular and affected the social climate throughout the country. Furthermore, multiple political parties challenged the compliance of the text with the Constitution. On 14 April 2023, the Constitutional Court validated most of the reform, which is now enacted into law.

The main measures of the reform are the gradual increase of the minimum retirement age (from 62 to 64 years), as well as the increase in the length of contribution required to reach the full pension (from 167 quarters of work to 172 quarters). Other key provisions include the end of special retirement regimes (mainly affecting railway and public transportation companies) and a reorganisation of the early retirement system for long careers – as well as new rules for granting additional quarters of work for specific categories of employee (eg, disabled employees).

The bill will come into effect on 1 September 2023 and will affect contributors born after 1 September 1961. The age of retirement, in particular, will increase steadily at a rate of three months per year for all contributors and will reach 64 by 2030.

Introduction of the Presumption of Resignation

The latest unemployment reform, which has been implemented progressively since 2019 (and delayed because of COVID019), has been adopted by the law of 21 December 2022 on the labour market. This law allows the government to introduce a new mechanism for modulating the duration of unemployment insurance benefits according to the state of the labour market. The idea is to ensure that periods of employment are more profitable than being unemployed by establishing new compensation rules that encourage people to return to work.

To achieve this target, a new ground for exclusion from unemployment benefits has been introduced: the presumption of resignation. This ground was introduced in response to a request from companies, highlighting the organisational difficulties caused by these sudden departures. Leaving without any notice is particularly common in certain fields, such as personal services, cleaning, hotels and restaurants, as well as construction.

Previously, in this situation, companies usually decided to terminate these employees for gross misconduct – meaning the employees could freely decide to take another job or to benefit from the unemployment benefits. The reform implements a mechanism that functions as follows.

• The presumption of resignation is characterised by an employee’s unauthorised absence from work, which may be prolonged or repeated without justification.

• In order to use this mechanism, the employer must give formal notice to the employee to return to work within a period of 15 calendar days.

• If the employee fails to regularise their situation (ie, resume their position) within the deadline, they will be presumed to have resigned on the expiry of the period.

• The absent employee, who has voluntarily abandoned their workstation, will no longer be entitled to unemployment benefits.

Promotion of the use of profit-sharing schemes

Following the trends set by the Law No 2022-1158 of 16 August 2022, which provided for emergency measures to protect purchasing power (mainly though the exceptional purchasing power bonus known as the “Prime Macron”), the question of the extension of profit-sharing schemes was continually discussed throughout 2023.

Against a backdrop of ongoing inflation and high prices, the primary aim of value-sharing mechanisms is to increase the purchasing power of households at lower cost to employers – given that these schemes are generally exempt from tax and social security contributions.

In February 2023, the social partners drafted a national interprofessional agreement, which aimed to promote the use of profit-sharing schemes in SMEs as well as develop saving schemes for employees. By way of an example, the agreement creates the obligation for companies with between 11 and 49 employees to provide for a profit-sharing scheme by 2025 (wherever their economic situation allows it).

The agreement also aims to develop employee profit sharing – in the form of “participation”) – in companies with fewer than 50 employees, which are not required to set up a scheme. It allows them to negotiate – through a branch or company agreement – formulas that differ from the legal one, which may lead to a less favourable result. However, this measure will allow employees in companies that have so far been poorly covered by this profit sharing to benefit from this scheme.

The key points of the national interprofessional agreement will also be incorporated completely into a bill, which should be adopted by the end of the summer of 2023.