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Here's why both sides despise France's labour reforms
Protesters demonstrate in front of the French parliament on Tuesday. All photos: AFP

Here's why both sides despise France's labour reforms

The Local · 3 May 2016, 16:33

Published: 03 May 2016 16:33 GMT+02:00

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French MPs on Tuesday began discussing (although arguing over is more appropriate) the highly controversial reforms labour laws in the country.

The bill, seen as President Francois Hollande’s last battle before new year’s elections, has already prompted hundreds of thousands of protesters to take to the streets. And it has also riled company bosses, whom it was originally aimed at pleasing.

Protesters claim it favours bosses at the expense of workers, while employers complain it doesn’t go far enough to help them start recruiting and bringing down unemployment. In fact many complain it will have the opposite effect.

While reformist unions believe the bill contains some important elements that will boost workers' rights, the more hardline unions like the CGT, believe workers will be much worse off.

Here are the most controversial elements of the bill that have angered either one side or the other. You can decide for yourself whether France will be a better or worse place to work if the law is passed.

Economic redundancies 

The main aim of the bill is to give firms more power to lay off workers when times are hard. Companies have long complained that the strict rules for “economic redundancies” (licenciements economiqies) in France have proved to be a brake on recruitment because bosses have been too scared to take people on in case they can’t shift them when things go awry.

The socialist government wants to release that brake.

The current bill lays out rules by which companies can lay people off for financial reasons which will basically depend on how big the firm is and how their figures are looking over a period of time.

So companies with 11 employees or fewer can lay people off if they record losses or a drop in orders over one trimester. For companies with 11 to 50 employees the same applies but over two trimesters. For companies with up to 300 employees losses must be posted over three trimesters and for bigger firms it is four trimesters.

Left wing unions say companies could effectively lay off workers just because their takings or orders are worse than the previous year, which may have been a bumper year. 

In short they claim it's bad news for workers and will undermine job security.

Judges will at least be given power to check whether companies are cooking the books to make it look like they are going through hard times just to be able to lay off workers.

Worker referendums over union decisions

Another controversial element of the reform that has angered France's famously grouchy trade unions directly targets their influence in companies.

If bosses and union representatives fail to come to an agreement over a change to working practice then the company can hold a referendum among workers.

Worker referendums do already take place in companies, as seen by the last year’s referendum in car firm Smart where workers voted to work longer for the same pay to avoid job losses.

But on that occasion unions refused to validate it. In future the labour bill will make it easier for firms to hold referendums and they won’t need union backing to become valid.

Critics say that by reducing the influence of unions bosses will be able to put pressure on workers and effectively blackmail them into agreeing what they want.

Increase payroll taxes on temporary contracts (CDDs)

This is a measure that was not included in the first writing of the bill but the French PM Manuel Valls has since added it in a move to suppress opposition from the left and student groups.

Employer’s unions however are fuming over the move to impose a surcharge on CDDs, which in theory is designed to encourage them to hand out more permanent contracts.

They claim it will have the opposite of the desired impact and just dissuade firms from taking on staff at all.

It is believed the government intends the rate of the extra payroll tax will be set via agreements between unions and bosses.

Nevertheless bosses groups have threatened all-out revolt if it goes through.

Change hours and pay conditions in bid to boost business

Laws passed in 2013 allowed French companies to force workers to accept pay freezes and changes to working hours if the company was going through difficulty. The theory was that it could help save jobs.

In future, it won’t just be companies in clear financial strife that will be allowed to introduce these changes, but even companies in good health.

Labour laws will mean they can ring the changes if they are hoping to conquer new markets or win new contracts and hope to create new jobs. Initially those who don’t agree to the changes would have faced the sack, but a change to original bill mean they will be subject to economic redundancy and therefore receive greater protection and unemployment benefits.

Critics say companies could abuse the rule simply change working hours for example making employees work on Sundays, when there is no clear strategy to expand.

Story continues below…

Lay offs in France even if multinationals doing well?

This issue is one of the main sources of opposition among critics of the reform and it’s still not sure what will happen.

Initially the government wanted to allow the French subsidiaries of international companies to be able to lay off workers in France if they were struggling to make profits. So even if the umbrella company as a whole was making millions, if the French subsidiary wasn’t, then jobs could go.

However the man who wrote the bill, MP Christophe Sirugue appears to have gone back on his initial opinion and has tabled an amendment to return to the current system whereby the group’s overall figures are taken into account if the French branch wants to lay workers off.

We will have to wait to see whether his amendment is given the green light.

No compensation limits for those unfairly sacked

Here’s another reason why company bosses, who were initially in support of the bill, have been left fuming. Initially the bill was supposed to place set limits on how much a worker could receive in compensation if an employment tribunal found they were unfairly dismissed.

The limits were dependent on the salary and how long someone had worked at a company.

If the employee has less than two years of service the compensation was to be capped at three months' salary, whereas those who had worked between two and four years it was meant to be six months' salary, nine months' salary for between five and nine years of service and 13 months for 10 to 19 years on the job. Over 20 years and the pay out was to be capped at 15 months' salary.

Except the government caved in under pressure from unions and agreed to introduce the limits only as a guide for judges who would decide the amount.

Companies, who claim the fear of being made to pay large amounts of compensation to workers was a block on hiring, were left mightily cheesed off.

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