What Happens to Employees During Restructuring?

We speak to Morgane Mondolfo about the areas of employment law companies need to consider when restructuring their business.

What areas of employment law must employers refer to when restructuring their company?

Restructuring a company in France has a double impact: on the collective employment relationships with the staff representatives, and on the employment relationships with the individuals. Restructuring a company is a complex process in France with various steps to be complied with, especially with the staff representative bodies who must be involved before implementing any redundancy or voluntary departure plans, and who will negotiate the measures to be set up in order to help the employees find a job within the group (redeployment obligation, which is key in France) or even outside the group (with outplacement specialists), and obtain additional severance payments to the one applicable pursuant to the law or the collective bargaining agreement.

The employees are not entitled by the law to days-off or any specific changes/flexibility in their working time or working organisation during a restructuring.

The redundancy plan can be signed with the unions or unilaterally implemented by the employer, if the unions refuse to sign. In this case, the measures of the plan will be examined by the Labour Ministry who will decide if the redeployment actions are sufficient and whether or not the measures are proportionate to the company – or even its group’s – financial possibilities. If not, the Labour Ministry can ask the employer to improve the measures.

What rights do employees have during these tough times?

The employees are not entitled by the law to days-off or any specific changes/flexibility in their working time or working organisation during a restructuring.

Therefore, for significant redundancy/voluntary departure plans, it is highly recommended for the employer to appoint a specialist in the prevention of psychosocial risks, who will listen to the employees and help them to adjust to the changes in the organisation or to their dismissal process and prepare the next steps in their career. This is also a manner to minimize the risk of sick leave, absenteeism, and more generally bad social climate, all along the process.

The employees can go on strike (but this is not specific to the restructuring context), as long as they have professional requests (wage, working conditions etc…).

Having the workforce go on strike is a constant fear for employers (especially for foreign groups) when dealing with significant redundancy plans.

The criteria and process of voluntary departs are key.

How should dismissal be handled during restructuring?

During restructuring, dismissals will be handled for an economic ground, which is strictly defined by the French labour code and by case law. The process varies depending on the number of dismissals involved and the headcount of the company.

In order to avoid any litigation risk, a settlement agreement is the best option when the employer is not fully comfortable with the economic ground of the dismissals.

 Another route was also created at the end of 2017: the collective termination by mutual consent

What should be considered if employees plan to voluntary depart?

The criteria and process of voluntary departs are key. The employer will determine the expected number of departs by specifying the departments and positions concerned.

The voluntary departure is then proposed to the employees. The latter are free to apply to the plan or not.

In the event of the employee’s application to the voluntary depart, the termination of the employment contract takes the form of an amicable termination. There is, therefore, no dismissal in this scenario. The departure is freely negotiated with the employee.

It is also highly recommended to set up clear criteria for choosing the employee who will depart, when several employees – all eligible to the plan – apply to departure in order to avoid any discrimination claims, for instance.

It is also possible to set up hybrid plans, such as: voluntary depart and redundancy plans, which means, if the number of voluntary departs is not reached, the employer will have the option to dismiss employees for economic grounds. Another route was also created at the end of 2017: the collective termination by mutual consent, which is another way of dealing with collective departures through negotiation, and the correlative removal of positions, without referring to an economic ground.

Morgane Mondolfo

Partner – Employment law

24 rue de Prony – 75017 Paris

m.mondolfo@squadra-avocats.com

+ 33 6 16 23 69 96

Morgane Mondolfo is the Head of the Employment and Labour Law Department. She assists numerous French and Foreign groups in their HR restructuring and business transfer initiatives and plans. Morgane also intervenes for clients, in French and EU law, in the strategic and daily issues arising from the management and relations with French, European, US and Asian workforces at an advisory and/or pre-litigation or litigation level. Morgane Mondolfo is also an accredited mediator, registered at the Paris’ Court of Appeal, and a certified collaborative law practitioner.

SQUADRA is a French law firm with 16 creative and highly-specialised professionals. The multidisciplinary team works in the principal fields of business law, for advisory work and litigation: corporate and M&A, labour law, income and corporate tax, banking/financing, IP/IT, real estate. SQUADRA offers cross-border expertise and works with a network of carefully chosen professionals, in France and overseas, with a strong focus on the US, UK, Italy and India. SQUADRA assists a clientele which mainly consists in French and international groups in various business sectors, such as: banks, investment funds, luxury, design & fashion, IT, aerospace, food, pharma.

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