For economic reasons, the employer may be forced to make a substantial change to their employees' employment contracts. If this decision does not yield favorable results, then the employer may choose to resort to dismissal. However, the redundancy procedure is complex and must follow certain steps.
Redundancy in a nutshell
Carrying out a redundancy procedure requires following a specific procedure. It can vary from one company to another, particularly depending on the number of employees. The reason given, however, is consistent and defined by the French Labor Code (Art. L1233-3). Economic layoffs involve financial difficulties, an unfavorable economic context, or a need to maintain the company's competitiveness.
Unlike dismissals for personal reasons, economic layoffs do not affect the employee themselves, as they only affect the position held. They are justified by classic economic difficulties (loss of turnover, for example). The employer is responsible for demonstrating that the economic context makes job elimination imperative and that redeploying the affected employees to another position is impossible. Only in these cases can economic layoffs be invoked.
What are the reasons for the economic layoff procedure?
There are many reasons that lead an employer to make such a decision. They must correspond to a tangible reality:
- The company is facing economic difficulties: according to the details provided by Article L. 1233-3 of the French Labor Code, the difficulties in question are "characterized either by the significant change in at least one economic indicator (such as a drop in orders or turnover, operating losses or a deterioration in cash flow or gross operating surplus), or by any other element likely to justify these difficulties" (1).
- The company is facing technological changes, which have a significant impact on employment. This may involve, for example, the introduction of new computer technology. In all cases, this situation must result in a profound change in employment, or a modification to the employment contract that reveals the employee's inability to adapt to new developments in their job.
- The company must take measures to preserve its competitiveness: still according to Article L. 1233-3 of the Labor Code, redundancy may prove essential to allow the employer to "reorganize the activity" and thus safeguard competitiveness. The Court of Cassation thus specifies that there must be "a real threat to the competitiveness of the company, which is not due to a fault on the part of the employer or to its culpable negligence."
- The company permanently terminates the employee's activity, unless this is due to a fault on the part of the employer. This reason appears in Article L. 1233-3 of the French Labor Code, since the intervention of Law No. 2016-1088 of August 8, 2016 (2).
What is the timetable for the redundancy procedure?
An employer who must proceed with the redundancy of one or more employees must follow a specific procedure. This depends above all on the number of employees affected by the decision. In all cases, it is essential that the social and economic committee (CSE) be consulted, at least for companies with at least 11 employees. Once this is done, the employer summons the staff representatives and gives them a written document specifying certain elements: the reasons for the dismissal, the number of planned dismissals, the professional categories concerned, etc. (3)
The economic dismissal of a single employee
The economic dismissal of a single employee must follow a specific procedure. Firstly, consultation with the CSE is mandatory if the individual dismissal relates to a reorganization of the company, or specifically concerns a staff representative (4). Subsequently, the employer must ensure that successive steps are followed: they must invite the employee to a preliminary interview, then send them a letter of dismissal with notification to the administration:
- Regarding the preliminary interview: this cannot take place less than 5 working days after the employee is given the letter of invitation. During the interview, the employer must inform the employee of the reasons for their decision. They must also allow the employee to become aware of the CSP (Professional Security Contract) system, which aims to promote their retraining.
- Regarding the letter of dismissal: this document must be given to the employee at least 7 working days after the interview. For its part, the employer has 8 days after sending the dismissal letter to the employee to inform the DREETS (Regional Directorates for the Economy, Employment, Labor, and Solidarity) of the redundancy.
Redundancy of 2 to 9 employees
In this case, the employer must determine the order of redundancies, taking into account a certain number of criteria set out in the Collective Agreement or the Labor Code. These criteria allow employees to earn "points." Those who earn the fewest points are the most likely to be dismissed. Among the criteria assessed are: family responsibilities, professional skills, and the employee's seniority. The company must, however, take into account profiles likely to encounter difficulties in their job search, and protect them as much as possible.
Economic layoffs for 10 or more employees
In the absence of a Social and Economic Committee or staff representatives in the company: the employer must conduct an interview with each employee according to a specific schedule. The employer must first invite employees to an interview prior to the dismissal, then respect a period of 5 working days between the delivery of the letter and the interview. During the interview, the reasons for the dismissal must be discussed with the employee. The employer must also provide their employee with information regarding the existence of a personalized redeployment agreement or redeployment leave.
If a Social and Economic Committee or staff representatives are present (for a company with fewer than 50 employees): the collective will assist the employer with a major part of the project. Several successive steps must be followed:
- Prepare the collective redundancy file before convening the staff representatives.
- Organize the conditions for the first meeting of staff representatives.
- Prepare an official request to Pôle emploi, for the creation of a professional security contract (CSP) file. Let us recall that the establishment of a CSP in the case of a redundancy for economic reasons is mandatory if the company has fewer than 1,000 employees (all establishments combined), and if the company is in a situation of recovery or liquidation, regardless of the workforce (5).
- Hold the first meeting of staff representatives then notify the administration of the planned redundancy.
- Convene the staff representatives for a second consultation meeting, then organize this meeting.
- Propose redeployment solutions for the employees affected by the project.
- Give each employee a professional security contract file.
- Notify the employees of the termination letters.
Conclusion: you are now better informed about the steps to take during a planned redundancy. However, the employee is entitled to question the underlying motives that lead the employer to consider redundancy. In any case, be aware that the employee is entitled to distinguish between "intentional" cases and "wrongful but unintentional" behavior.
In fact, it can be established that the economic reasons invoked to support the dismissal originate from decisions that have a disastrous impact on the future of the company. In this case, the Labor Code refers to a misconduct that would render the redundancy "without real and serious cause." The Court of Cassation has already ruled on numerous occasions on the issue of management errors and negligence committed by the employer leading to wrongful dismissal.
Economic dismissal: what is the notice period?
Whether it is an individual or collective economic dismissal, the notice period is established according to the seniority of the employee concerned:
- Less than 6 months: the duration is set by collective agreement;
- From 6 months to 2 years: the notice period is 1 month;
- More than 2 years: the notice period is 2 months.
In all cases, the notice period begins on the day the dismissal is notified.
What are the remedies of the employee in the event of a redundancy procedure?
Redundancy is a termination of the employment contract that can be contested by the employee(s) concerned. The dispute can relate to various points:
- Economic grounds;
- Failure to follow the steps in the redundancy procedure;
- The order of redundancies.
These disputes may give rise to the payment of damages and must be addressed to the Industrial Tribunal by way of a petition (complaint to the judge). However, certain deadlines must be respected for appeals to be valid:
- 12 months to contest the economic reason, even if the employee has accepted a CSP;
- 2 years to contest the order of dismissals or compliance with the procedure;
If the judge rules in favor of the employee, the amount of damages will be calculated according to a predefined scale. This depends on the seniority of the person being dismissed and the number of employees in the company.
In the event of termination of the employment contract for reasons other than economic, find out the stages of a standard dismissal procedure.
(4) https://www.demarches.interieur.gouv.fr/professionnels/licenciement-economique-obligations-employeur
