Redundancies Post Covid-19
The health crisis has paralyzed the country for several months, and despite the support measures implemented by the State, companies are facing serious difficulties and a wave of redundancies is feared.
As a reminder, redundancies are motivated by economic difficulties, a cessation of activity, a reorganization necessary to safeguard the company’s competitiveness, or the introduction of technological change within the company (Article L. 1233-3 of the French Labor Code). Any dismissal that is not due to the employee’s personal circumstances is therefore considered to be an economic layoff.
In practice, this means that any employee who is not dismissed because of his or her behavior or skills can, in principle, only be dismissed for economic reasons.
However, the employer’s choice of whether or not to apply the economic redundancy procedure has an impact, as the support measures available to the employee to help him/her cope with the termination of his/her employment contract are very different in the two cases.
CSP (“Contract for Professional Securitization”):
The CSP is a highly employee-friendly unemployment insurance scheme, which must be offered to employees in the event of dismissal for economic reasons.
Its aim is to offer the dismissed employee a package of measures to help him or her find a new job as quickly as possible.
The employer must propose the CSP in writing to the employee, and provide all relevant information. The timing of the proposal may vary according to the procedure.
The employee has the choice of accepting or refusing the CSP. In both cases, the employer must send the employee a written document setting out the economic reasons for the termination, as well as the priority for re-employment. Failing this, the dismissal would be deprived of real and serious cause.
If the employee accepts the CSP, his or her employment contract is terminated by mutual agreement at the end of the 21-day cooling-off period. The employee also benefits from an individual pre-assessment interview on skills and career orientation within 8 days of acceptance.
The employee receives redundancy pay according to seniority within the company, as well as any other indemnity provided for by the applicable collective agreement, but no compensation in lieu of notice, as his or her contract is terminated as soon as the cooling-off period ends.
The employee benefiting from the CSP is entitled to payment of the Allowance for Professional Securitization (Allocation de Sécurisation Professionnelle – ASP), equivalent to 75% of his or her daily wage if he or she has at least one year’s seniority with the company at the time of dismissal.
This amount is far more favorable than the “classic” unemployment benefit, namely the Return to Employment Allowance (Allocation de Retour à l’Emploi – ARE), which corresponds to 57% of the employee’s daily wage. The allowance is paid at the end of each month. Payment ceases if the employee resumes work or fails to comply with the conditions of the CSP.
What’s more, there is no deferral of compensation under the CSP scheme, whereas under a conventional unemployment insurance scheme, the employee may be subject to a waiting period of up to 5 months.
The duration of the CSP may not exceed 12 months, but may be interrupted by periods of professional activity up to a maximum of 3 additional months.
Note that acceptance of the CSP does not prevent the employee from contesting the legality or basis of the procedure used to terminate his or her employment contract within 12 months.
At the end of the CSP, the beneficiary may receive the ARE. However, the duration of this benefit will be reduced by the number of days during which the CSP beneficiary received the ARE.
If the employee expressly refuses the offer, or fails to respond within the 21-day cooling-off period, the dismissal procedure will follow its normal course, and the employee will serve the normal notice period. At the end of the notice period, the employee registers with Pôle Emploi and receives the ARE if the conditions are met, i.e. at least 57% of the daily reference salary.
Groups with over 1,000 employees: reclassification leave:
A company or group with at least 1,000 employees contemplating redundancy must offer each employee concerned reclassification leave in the redundancy letter. This leave replaces the CSP, which is not offered in this case, and is financed by the employer. The purpose of the leave is to enable the employee to take advantage of training courses and the services of a support unit to help him/her find a new job (skills assessment, training courses, validation of prior learning).
The employee has 8 days from notification of dismissal to accept (or not) the leave.
The duration of the leave is set by the employer, after consultation with employee representatives. It is between 4 and 12 months. It may not be less than 4 months, only with the employee’s agreement.
The leave begins during the notice period, which the employee is exempt from serving. If the period of leave exceeds the notice period, the employment contract is maintained until the end of the notice period.
During this period, the employee is remunerated in two stages: during the notice period, the employee receives his/her usual salary. Thereafter, he/she will receive at least 65% of his/her average gross pay over the last 12 months, or 85% of the minimum wage (€1,308.50).
Each month, the employer will issue a pay slip specifying the amount and method of calculation of this remuneration.
At the end of the reclassification leave, if no new job has been found, the employee is entitled to traditional unemployment insurance, the Return to Employment Allowance (Allocation de Retour à l’Emploi – ARE).
Priority for re-employment:
An employee who has been made redundant is entitled to priority re-employment for 1 year from the date of termination of his or her employment contract, in any job that becomes available and is compatible with his or her qualifications at the time of termination or those acquired since.
The employee must have expressed his or her wish to benefit from this scheme within 12 months of the termination of his or her employment contract, including in the event of joining the CSP. Moreover, in the case of reclassification leave exceeding the notice period, the 12-month period runs from the end of the leave.
The employer must inform all employees who have requested it of the positions that have become available (permanent or fixed-term contracts), without making any selection between them. They must also inform the CSE of available positions.
Priority for re-employment applies even if the employee has found another job, or if his or her dismissal proved to be without real or serious cause.
Failure by the employer to give priority to re-employment is punishable by compensation equal to at least two months’ salary (L 1235-13 of the French Labor Code) if the company has at least 11 employees and the employee 2 years’ seniority. Failing this, the judge will assess the existence and extent of the prejudice suffered.
If all the above measures are not complied with, an employee dismissed for economic reasons has twelve months to contest the reason for and/or procedure of the dismissal before the competent industrial tribunal.
It should be noted that the Administrative Court is competent to rule on disputes relating to the Employment Planning Scheme (PSE) (content, drafting procedure, collective agreement/unilateral document). The time limit for taking action is just two months, and its starting point varies according to the person concerned (employer/employee). The court has 3 months to rule on the petition.
Our lawyers are available to answer all your questions and advise you. Our meetings can be held in person or by videoconference. You can make an appointment directly online at www.agn-avocats.com
AGN AVOCATS – Employment Department
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