Observation (CEACR) - adopted 2022, published 111st ILC session (2023)

Termination of Employment Convention, 1982 (No. 158) - France (Ratification: 1989)

The Committee notes the observations of the French Democratic Confederation of Labour (CFDT), received on 6 September 2021, and the Government’s response, received on 7 October 2021. It also notes the observations of the French Confederation of Management – General Confederation of Professional and Managerial Employees (CFE-CGC) provided with the Government’s report. The Committee notes that the observations concern in particular the application of Article 10 of the Convention.

Follow-up on the recommendations of the tripartite committee (representation made under article 24 of the ILO Constitution)

Article 4 of the Convention. Valid reason for termination based on the operational requirements of the undertaking, establishment or service. The Committee notes the Government’s indications that Act No. 2016-1088 of 8 August 2016 on work, the modernization of social dialogue and the safeguarding of career progression clarifies the definition of economic grounds for termination of employment, in order to make the applicable rules clearer, in particular in small and medium-sized enterprises. The Government indicates that the definition of termination of employment on economic grounds includes the grounds contained in the case law of the Court of Cassation, namely the cessation of the enterprise’s activity and the restructuring of the enterprise in order to safeguard its competitiveness. In addition, the difficulties that can justify termination of employment on economic grounds are defined taking into account elements from case law, including a drop in orders or sales, operating losses, a significant deterioration in cash flow or any evidence of such difficulties. In its report, approved by the Governing Body in March 2022, the tripartite committee set up to examine the representation alleging non-observance by France of the Convention observed that the Convention and Recommendation do not define the concept of operational requirements of the enterprise and that the supervisory bodies have illustrated the concept on the basis of specific elements (paragraph 54 of the report). The tripartite committee considered that determining whether the concept of operational requirements has been respected within the meaning of Article 4 of the Convention is a matter for the national courts. The Committee requests the Government to provide examples of judicial decisions on the effective application of Article 4 of the Convention, particularly decisions concerning dismissals on the grounds of the operational needs of the enterprise. In particular, it requests the Government to communicate the criteria used by the judges in these decisions.

Articles 8 and 9. Reasonable period of time. Judicial review of the grounds for dismissal. The Committee notes that, according to section L. 2254-2 of the Labour Code, a “dismissal is based on specific grounds that constitute real and serious justification”. It notes that the initial reference to the obligation to state, in the letter of dismissal, the specific grounds on which the dismissal is based has been removed (but not the obligation itself, as section L. 2254-2 (V) refers to section L. 1232-6). In paragraph 58 of its report, the tripartite committee considered that, beyond the explicit reference in section L. 2254-2 of the Labour Code to the real and serious nature of the termination of employment on the grounds of an employee’s refusal to have his or her employment contract amended as a result of the conclusion of a collective performance agreement, the judge must be able to continue to conduct a genuine judicial review. The tripartite committee indeed considers that the provisions of section L. 2254-2 merely recall the requirement that any termination of employment must be based on real and serious justification. It is for the judge to determine as part of the judicial proceedings on termination based on section L. 2254-2 whether a valid reason exists within the meaning of Article 4 of the Convention, that is, whether the reason for the termination is based on “the operational requirements of the undertaking, establishment or service”, it having been established that, during the judicial examination, the burden of proof must not rest on the employee alone. Referring to Order No. 017-1387 of 22 September 2017 concerning the predictability and security of employment relationships, the Government indicates that the time limits for appeals against the termination of an employment contract have been harmonized at one year. The Committee recalls that all parties concerned should seek to avert or minimize as far as possible termination of employment for reasons of an economic, technological, structural or similar nature, without prejudice to the efficient operation of the undertaking, establishment or service, and to mitigate the adverse effects of any termination of employment for these reasons on the worker or workers concerned (Paragraph 19(1) of the Termination of Employment Recommendation, 1982 (No. 166). The Committee requests the Government to provide information on the results of judicial reviews of dismissals based on section L. 2254-2, and on the impact of the change in the time limits for appeals.

Article 10. Payment of adequate compensation or such other relief as may be deemed appropriate. The Committee notes that, in its observations, the CFDT refers to the scale setting limits for the compensation of employees who have been dismissed without real and serious justification and refers to the incompatibility of the limits set with the principle of adequate compensation, as set out in Article 10 of the Convention. Indeed, the CFDT indicates that the compensation of the damage as provided for by this scale does not always make it possible to adequately compensate the employee for the unjustified termination of his or her employment, in particular when the damage is very significant and the employee’s length of service in the enterprise is short. In its observations, the CFE-CGC states that it considers this scale to be in breach of Articles 8 and 10 of the Convention. The Government points out that the scale mechanism provided for in Ordinance No. 2017-1387 and ratified by Act No. 2018-217 was submitted to the Constitutional Council, which declared section L. 1235-3 of the Labour Code establishing the compensation scale to be in conformity with the Constitution. The Government specifies that the scale system is a compulsory framework of compensation that the judge must use when declaring an employee’s dismissal to be without real and serious justification. In no case does the scale system allow the employer to terminate employment without justification, as the amount set by the scale and proposed by the judge is the compensation for the damages suffered by the employee. Currently, when the employee’s dismissal has no real and serious justification, the judge may order the reinstatement of the employee if neither party opposes it. If the employer or the employee refuse the reinstatement, the judge awards compensation. The judge may take into account elements related to the employee’s particular situation (age, health, family situation, etc.) when setting the amount of compensation in compliance with the minimum and maximum limits of the scale. In its report, the tripartite committee considered – aside from cases of termination concerning a fundamental right, to which the principle of full compensation applies, and irrespective of the compensation for separate damage – that the compatibility of a scale, and the related upper limit, with Article 10 of the Convention depends on whether sufficient protection is ensured for persons whose employment has been unfairly terminated and, in all cases, whether adequate compensation is paid (paragraph 80 of the report). Under these circumstances, the tripartite committee invited the Government to examine at regular intervals, in consultation with the social partners, the compensation procedures provided for in section L. 1235-3, to ensure that in all cases the parameters for compensation provided for in the scale ensure adequate compensation for damage suffered as a result of the unfair termination of employment (paragraph 81 of the report). The Committee notes the Court of Cassation rulings of 11 May 2022 (Appeal No. 21-15.247 (Ruling No. 1), and Appeal No. 21-14.490 (Ruling No. 2)). The Court holds that the provisions of section L. 1235-3 of the Labour Code are compatible with the provisions of Article 10 of the Convention. It notes that the scale takes into account the gravity of the employer’s misconduct by excluding from its scope of application terminations of employment that are set aside for one of the reasons listed in section L. 1235-3-1 of the Labour Code. The Court noted that the term “adequate” in Article 10 of the Convention means that compensation for unjustified termination of employment must be sufficiently dissuasive to avoid unjustified termination of employment and must reasonably allow compensation for the unjustified loss of employment. It affirmed that the provisions of section L. 1235-3 of the Labour Code, which provide for compensation ranging between minimum and maximum amounts, varying according to the amount of the employee’s monthly salary and length of service, reasonably allow for compensation for unjustified loss of employment. The Committee also notes that, according to the European Committee of Social Rights (ECSR) (Complaints Nos 160/2018 and 171/2018, decision published on 26 September 2022) the upper limits set by section L.1235-3 of the Labour Code are not sufficiently high to provide adequate reparation for the damage suffered by the victim and be dissuasive for the employer. The ECSR also notes that the upper limit of the compensation scale does not allow for higher compensation to be awarded on the basis of the personal and individual situation of the worker, as the courts can only order compensation for unjustified dismissal within the lower and upper limits of the scale, unless the application of section L. 1235-3 of the Labour Code is excluded. The ECSR is of the opinion that the courts have a narrow margin of manoeuvre in deciding the case on its merits by considering individual circumstances of unjustified dismissals. For this reason, the real damage suffered by the worker in question linked to the individual characteristics of the case may be neglected and therefore, the worker may not be fully compensated. The Committee notes the December 2021 report of the Committee for the Evaluation of the Orders of 22 September 2017, mentioning that in the sample of appellate court decisions studied by the Committee, the amount of compensation paid is between the upper and lower limits of the scale in 90 per cent of the cases for dismissals after the application of the scale, whereas this was the case for 44 per cent before the reform. The Committee requests the Government to provide information on the review, in consultation with the social partners, of the compensation procedures provided for in section L. 1235-3, so as to ensure that the parameters of compensation provided for in the scale allow, in all cases, adequate compensation for the damages suffered as a result of unfair dismissal.

Application of the Convention in practice. The Committee notes the observations of the CFDT on the legislative developments in the area of legislative developments in relation to the laws on termination of employment on economic grounds, in particular with regard to the need to have statistical data on the application of the Convention in practice. The Committee requests the Government to continue to provide any general information on how the Convention is applied in practice, including, for example, available statistics on the activities of the appeal bodies (such as the number of appeals against dismissal measures, the outcome of such appeals, the nature of the reparations granted, the average length of time taken for the appeal to be decided), and the number of dismissals on economic or similar grounds.