France: An Employment Overview

Looking Back at 2025

The year 2025 was characterised by fragile economic stability amid persistent social tensions. Inflation in France continued to ease, though more slowly than in 2024, providing only limited relief for businesses as cost pressures remained high. Post-Olympics economic momentum faded, with employment stabilising, while investment decisions remained cautious against a backdrop of global uncertainty.

On the political front, 2025 unfolded as a year of transition and volatility. The aftermath of the dissolution of the French National Assembly continued to weigh on the political landscape, marked by shifting parliamentary balances and successive government adjustments. Employers closely monitored these developments in search of clearer policy direction, as legislative activity remained limited and reinforced a sense of institutional inertia.

From an employment law perspective, 2025 continued late 2024’s trends. Amid economic pressure, companies faced significant restructurings. With no major legislative reforms, case law was central in clarifying areas like collective redundancies and working time. The year was defined by judicial refinement, making risk management critical for employers.

A year constrained by political instability and the absence of reform initiatives

In 2025, French employment law developed against a backdrop of sustained economic uncertainty and political instability, which significantly curtailed the government’s capacity to pursue far-reaching social reforms. While the phased implementation of the 2023 pension reform continued to affect employers and employees alike – most notably through the gradual increase in the statutory retirement age and the extension of contribution periods – the political instability following the dissolution of parliament materially undermined the government’s ability to articulate and deliver a coherent, long-term social reform agenda. The rapid succession of governments and the appointment of François Bayrou as prime minister in early 2025, followed by his resignation and the subsequent appointment of Sébastien Lecornu as prime minister in early September 2025, further fuelled speculation regarding possible adjustments to the pension reform. Discussions on such adjustments were indeed reopened in parliament, as part of the debate on the drafting of the Social Security Finances Act for 2026, which was voted on and enacted on 30 December 2025.

Although the 2025 budget (Finance Act) was ultimately adopted through a special finance law, this exceptional mechanism was primarily intended to ensure the continuity of public finances and left little scope for new social or labour-related measures, beyond those already provided by existing legislation, including inflation-linked pension revaluations. As a result, developments in employment law in 2025 have stemmed predominantly from case law and from the practical implementation of recent legislative changes, rather than from new statutory reforms.

At the moment, the 2026 budget (Finance Act for 2026) is still under discussion in parliament, and may ultimately have to be adopted through a special finance law again, with similar consequences.

A year marked by numerous significant developments in French case law

Case law in 2025 was shaped by several significant decisions that further redefined employers’ obligations while strengthening employee protections. In a landmark criminal ruling, the Criminal Chamber of the French Supreme Court recognised the concept of “institutional moral harassment”, holding that a deliberately implemented corporate policy that knowingly leads to a deterioration in working conditions, may constitute moral harassment and give rise to the criminal liability of corporate executives.

The Social Chamber continued to align French law with EU requirements on working time and paid leave. Citing EU case law, it ruled that paid leave counts towards overtime thresholds, partially setting aside the French Labour Code. It also confirmed that sick leave during paid leave entitles employees to postpone leave days if the employer is notified. This judicial evolution builds on the landmark shift initiated in 2023 by the French Supreme Court in response to European Union law and the jurisprudence of the Court of Justice of the European Union, a shift that was subsequently codified by the DDADUE Act of 22 April 2024. As a result, employers are now fully engaged in implementing the new rules governing the accrual of paid leave during periods of sickness. More broadly, courts have continued to refine legal standards in other key areas, including the allocation of the burden of proof in discrimination and harassment claims, working-time arrangements, and the strict formal requirements applicable to disciplinary measures and dismissals.

These rulings reflect a clear 2025 trend: courts playing a decisive role in correcting statutory gaps, strengthening employee rights, and increasing legal risks for employers, especially regarding working time, paid leave, and psychosocial risks. Employers must monitor case law to manage compliance and litigation risk.

European Impetus – Pay Transparency Directive Approaching (June 2026 Deadline)

The Pay Transparency Directive (EU 2023/970) introduces new transparency obligations for employers, including pay-gap reporting. Adopted in 2023, it must now be transposed into French national law by 7 June 2026.

The directive imposes a series of concrete obligations, such as the requirement to disclose salary ranges in job postings, a prohibition on requesting candidates’ salary history, and mandatory publication of pay-gap data, with obligations calibrated according to company size. This European timeline is creating a strong regulatory impetus, prompting both member states and employers to reassess their compensation structures and human resources practices to ensure greater transparency and advance the principle of equal pay.

Senior Employment and Workforce Demographics – End-of-Career Management

In 2025, the management of senior employees and end-of-career pathways became a key focus of French employment law. Companies and groups with 300 or more employees are now required to engage in periodic collective bargaining on employment, working conditions, and career management for senior employees, strengthening social dialogue on age-related workforce issues. Non-compliance with these mandatory negotiations on senior employment may result in financial penalties, as newly stipulated by the Social Security Financing Act for 2026 (Loi de Financement de la Sécurité Sociale or LFSS).

New or expanded mechanisms have also been introduced, including the experimental experience enhancement contract for job seekers aged 60 and over, as well as increased flexibility – through company agreements – to maintain all or part of employees’ compensation when transitioning to reduced or part-time work towards the end of their careers. Career path interviews have also been adjusted to better support long-term employability.

At the same time, unemployment insurance remains, more than ever, a central tool in managing end-of-career transitions. Under certain conditions, unemployment benefits (Aide au Retour à l'Emploi or ARE) may be paid until retirement benefits are granted. However, in a context of fiscal restraint, the government has announced further reforms aimed at reducing public spending, including stricter conditions for approved state-regulated contractual terminations (rupture conventionnelle). Taken together, these measures reflect a clear 2025 trend: encouraging longer working lives while limiting publicly funded exit mechanisms, with increased legal and strategic implications for employers.

Looking Ahead – Increased Constraints and Targeted Flexibility

In 2026, employment law is expected to combine tighter regulations with targeted flexibility, particularly in end-of-career management, workplace protection, and career transitions. The LFSS is set to impact employers’ strategies for managing senior employees, notably through a partial suspension of the 2023 pension reform, a slower increase in the statutory retirement age from September 2026, and higher termination-related costs due to increased employer contributions. Limited exemptions are provided – especially for employees hired under experience-enhancement contracts.

At the same time, access to phased retirement is expected to be facilitated from age 60, strengthening tools for gradual end-of-career adjustments. Beyond retirement, 2026 may also bring heightened workplace protection obligations, with proposed legislation reinforcing the prevention of sexual and gender-based violence, as well as greater career mobility through a new fixed-term retraining contract. Overall, employers will need to balance rising compliance and cost pressures with more structured legal tools to manage workforce transitions and workplace risks.