France set for a labour law shake-up in 2018

France set for a labour law shake-up in 2018

20 September 2017

Now equipped with the power to change French labour laws through a simple presidential decree, President Emmanuel Macron is set to make a number of workplace law changes.

French President Emmanuel Macron has received formal authorisation from the state council to unilaterally change labour laws by simple presidential decree - thus skipping the usually required parliamentary debates and approvals.

The purpose of this accelerated process is to try to liberalize the French labour market as fast as possible, so as to curb the nation’s 10% unemployment rate. The planned labour law changes are as follows. It’s important to note that these changes will be confirmed and clarified in detail throughout Q4 2017, and won’t become effective until 2018.

Dismissal process

A new standardised dismissal letter template will be drafted and published on the government website. The reason for dismissal will be quickly summarised in the template. The employee will have to react immediately to dispute or request clarification of the dismissal reasons. Failure to react immediately will cause the dismissed employee to lose their right to take the case to court. In case of technical error from the employer in following the new dismissal process, the employee will obtain a dismissal indemnity of a maximum one month salary.

Redundancy process

Where planned downsizing affects the French work sites of international companies, redundancy plans will no longer need to consider the financial health of other units of the same group outside of France; making it easier to close down French plants.

Sizeable ‘voluntary resignation’ agreements will also be encouraged in order to avoid mass layoffs during redundancy plans. Employees would receive a resignation indemnity.

Dismissal indemnity- eligibility and amount

The length of service required to be eligible for the standard dismissal indemnity will be lowered to eight months instead of the current one year. The standard dismissal indemnity amount would be increased by 25%.

Unfair dismissal litigation

The delay in which a dismissed employee is be able to go to court would be reduced to 12 months after dismissal. Beyond 12 months, their right to litigate would expire.

Unfair dismissal indemnity cap

 Where a dismissed employee wins their unfair dismissal case in court, they will no longer be able to claim unlimited unfair dismissal indemnity. An official dismissal indemnity schedule would be published, based on the employee’s seniority in the company and the company size. The planned schedule would be:

  • Three months’ salary for employees with less than two years of service in a company with 11+ employees (compared to six months’ salary currently)
  • In companies with less than 11 employees, the dismissal indemnity would be lower (between half and two and a half months’ gross salary)
  • The maximum indemnity would be 20 months for an employee with 30 years’ service.

The standard dismissal indemnity amount received upon dismissal could be deducted from the unfair dismissal indemnity amount. In severe cases such as harassment or discrimination, the unfair dismissal indemnity would be six months’ salary.

Negotiation of company policies

Further to the El Khomri law, on some labour law items, local company agreements will be able to supersede wider industry agreements or national law. The government will add clarifications on which items of laws will be covered and which level will take precedence on the other.

Some negotiations will become mandatory, and the negotiation rules in companies without union delegates will be redefined.

Restructure of elected staff representation

In companies with 11+ and 50+ employees, both institutions of ‘délégués du personnel’ (staff delegates), ‘comité d’entreprise’ (workers’ council) and ‘CHSCT’ (health and safety work council) will merge into one single institution called ‘comité social et économique’ (social and economic council). An additional, separate, health and safety council would still be required in 300+ employee companies.


The extra employer tax for physically demanding work (designed to fund an early retirement for manual workers) would be cancelled.


Today, only 17% of employees benefit from telecommuting. Remote work will be encouraged more extensively in France than it is today, via negotiations and company policies.

Fixed term contracts

The maximum duration of a fixed term contract is 18 months, including two renewals. And a waiting period must be served in the case of successive fixed term contracts with the same employee. These limitations will be removed via negotiations in branch agreements.

Talk to us

Once these changes are confirmed, TMF France's payroll experts can help you to analyse the impact of the law changes on your employees, and on your company HR processes.

Need more information? Get in touch with our HR and payroll team in Paris.

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Written by

Alix Mugnier

Payroll Manager, TMF France

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