EMPLOYMENT CONTRACTS

Employment law in France covering hiring (and firing) employees is detailed in the annually updated Code du Travail tome, found in the business section of any good bookshop. So, with this useful book available, there is no excuse for not knowing employees rights. At least employers can consult the extensive regulations and official procedures rapidly and make sure that any areas of possible future disagreement, which would tend to be judged in favour of employees, are reduced as much as possible.

CDD, CDl and CNE contracts

All employment contracts are either contrat à durée déterminée (CDD) or contrat à durée indéterminée (CDI). Contracts with French registered companies must of course be written in French throughout. English words such as ‘top’ and ‘look’ which are used conversationally are invalid, whilst words like ‘weekend’ which have been officially part of the French language for many years can be used.

The CDD is a fixed period contract which must be put in writing. It should contain the following elements:

• Names and addresses of both the employing company and the employee, with company registration number and employee’s social security number, preceded by Entre les soussignés;
• Introduction to what has been decided and agreed (Il a done été arrêté et convenu ce qui suit);
• Clauses (articles) specifying period and hours to be worked, the job description (poste occupé, définitions des missions confiées), remuneration, and asserting that professional confidentiality must be kept during the CDD. A clause preventing the employee from working afterwards for a competitor (article de non-concurrence) is no longer valid;
• If conditions, which may be lengthy, of the collective labour agreement (convention collective) covering the type of business (NAF) are not detailed in the contract, the employer should cover themselves by asking the employee to accept the convention conditions using a sentence such as: Pour toutes les dispositions non-prévues au present contrat, les parties déclarent se référer à la convention collective dont dépend la société. For example, cafés, hotels and restaurants – known collectively as CHR – share the same agreement.

The contract should be drawn up in duplicate with both examples dated and signed at the end of the last page by the employer and employee with the company’s location specified next to the date. The employer should sign over their company stamp and the employee’s name should be typed out for signature and preceded by their hand written agreement ‘Bon pour accord’ or ’Lu et approuvé’. Pages preceding the last page should be initialled in the margin by both parties.

Other than its application in contracts for young adults, the registered unemployed and the pre-retirement contract described further below, a CDD contract can only be used to replace an employee temporarily, such as maternity leave, and to help meet a temporary upsurge in business activity following, for example, the award of a large business contract or during peak seasons in the CHR and tourism trades. It can only normally last for an overall period of 18 months which includes any renewal periods, otherwise the employee must be taken on permanently. As it is a fixed period contract it can only be terminated before the end-of-contract date by mutual agreement between employer and employee, or in force majeure circumstances. The employee can be sacked in the case of professional misconduct such as embezzlement or theft. If the employee finds permanent employment elsewhere they can break the CDD contract by giving up to two weeks’ notice.

The CDI is considered as permanent employment as no fixed period is specified and is usually subject to a probationary period of up to three months during which time no notice to break the contract is required by employer or employee. After this period the usual redundancy or termination of employment regulations (see page 195) apply. It is advisable to draw up a written contract, although this is not obligatory if a full-time employee is taken on. Think very carefully before employing someone with a CDI contract. Once past the three-month trial period it is almost impossible to replace someone if they fall into an acceptable, but never improving, rut.

The contrat nouvelle embauche (CNE) is a new (introduced in 2005) employment contract considered as a CDI, but with an initial two-year trial period. It is applicable to small- and medium-size businesses with no more than 20 staff. A written contract is obligatory. It gives developing companies, which may encounter unforeseen problems, flexibility to lay-off staff without any justification during this initial period, simply by sending a recorded-delivery letter of notice. Two weeks’ notice is required between two and six months of starting the CNE and one month thereafter. If business picks up the same employee can be taken on again after three months with a new CNE contract. The restrictions for employers imposed by CDDs and standard CDIs are therefore avoided. This can be a good contract to use for small new businesses, particularly those owned and run by foreigners, if they are unsure if they will need someone long term or are inexperienced in assessing the real qualities of French candidates.

Special contracts for young adults

The contrat d’apprentissage is a fixed period sandwich course contract for apprentices between the ages of 16 and 25 and lasts from one to three years. It can be a useful means for an employer to develop the potential of a school leaver with future long-term employment in their business in mind. The salary paid to the apprentice is based on the national minimum salary and varies according to age and the professional exam that is being studied for. The apprentice must go to a training centre (centre deformation) for at least 400 hours a year.

The contrat jeune en entreprise (CJE) contract is an unlimited-period contract designed to encourage the employment of people in the 16- to 23-year-old age group who left school without taking the baccalaureat exam and also those in the 16- to 26-year-old age group who have no educational qualifications at all. The contract can be for full-time or part-time employment and the corresponding salary must at least equal the pro-rata amount of the national minimum salary for the number of hours worked. Government financial incentive is substantial for the employer, who receives either 150 or 300 euros a month depending on the educational level of the employee for a period of two years, and then 50 per cent in the third year which is paid quarterly. Part-time, which must be at least half of the full-time hours, CJE employees entitle their employer to a pro-rata amount of the appropriate (150 or 300 euros) amount. Charges patronales social security contributions are also reduced.

The contrat de professionalisation contract is either a limited period contract, usually for six or 12 months, or an unlimited period contract. It is designed for all adults up to the age of 26, and also the unemployed who are over 26, who require a professional qualification to help their future employment prospects. It provides professional training in a centre deformation of between 150 and 260 hours, and sometimes more in exceptional circumstances, and a qualification which is usually closely linked to the specific activity of the employer. Salary is based on effective working hours in the enterprise and also depends on age if candidates are under 26. Employers use it to mould future full-time employees to the requirements of their business.

These three contracts should not be confused with unpaid higher education students who are accepted by businesses as part of their academic course onto a non-productive, training or observational basis as stagiaires. Beware of the temptation to pay full-time students who are occasional stagiaires for work on a non-salaried, and therefore illegal basis. CIDJ (Centre information de la jeunesse) careers advisory centre offices recommend a written agreement outlining the in-company study programme and duration for stagiaires. Since January 2006 all stagiares remaining more than three months with a business must be paid a salary.

Pre-retirement contract for the unemployed

This recent contract is for those over the age of 57, who have been registered for at least three months as unemployed and looking for their final job to take them up to the normal retirement age of 60. Employers requiring an experienced person at a reasonable price for a medium-term assignment will be attracted by it. The contract is in fact a CDD for a maximum period of 18 months which can be renewed once more for the period initially contracted.

Other contracts for the unemployed

Employers taking on employees under CIE and CI-RMA contracts have financial advantages.

The contrat intiative emploi (CIE) contract is either a CDI or a CDD lasting from 12 to 24 months on a full-time or part-time basis of at least 17.0 hours per week. It is designed to help the long-term unemployed back into employment as the government subsidise their salary. Provided an agreement is signed with the ANPE the employer is entitled to a monthly government cheque, paid in advance, amounting to up to 47 per cent of the national minimum hourly wage. The actual amount depends on the type and legal form of the business and its location. In addition the employer is exempted to the tune of 26 per cent of the national minimum hourly wage of the charges patronales social security contributions they would normally pay.

The contrat d’insertion-revenu minimum d’activité (CI-RMA) is a CDD on a full-time or part-time basis of at least 20 hours a week. It is reserved for people on social security and the salary paid must equal the national minimum hourly wage rate for the number of hours worked. The salary is subsidised by the government who pay the employer 425.40€ a month in advance. The contract is signed either with the Conseil Général (County Council) or the ANPE depending on the type of social security the candidate receives. In addition the employer is exempted from charges patronales social security contributions similar to those for the CIE.

Part-time contracts

If just a few hours a week extra help is required, an employer contributes 30 per cent less to charges patronales for social security, accidents at work and family allowances, subject to the following conditions:

• The hours worked must be less than one fifth of the legal working week. (This is ideal for businesses that have particularly busy periods after normal office hours; after the weekend on Monday mornings; Saturday mornings; during staff holiday periods, etc.)
• A written contract either for CDD or CDI employment. (Businesses with under 11 staff, with no délégué du personnel, just have to advise the employment inspectorate (l’inspection du travail) at the Direction Départementale du Travail (DDT) office.)

If an applicant for part-time employment is salaried elsewhere for at least four fifths of the legal working week, it may not be necessary to pay any charges sociales for them at all, provided they agree to this. Check the position with the DDT showing proof of their employment elsewhere with their working hours.

Portage salarial contract

This recent concept solves the problem of finding experienced salaried executives for part-time work (which is usually half of the working week hours), either long or short term, instead of on a full-time basis which would be too costly for the business. Portage salarial cannot be used for manual workers. It is a tripartite system. The person working for you is employed by an administrative organisation that pays their salary and social security contributions and which invoices your business for an amount which includes the total employment cost and a service fee of around 10 per cent. The portage salarial ‘employee’ is available because they can complete a full working week elsewhere with another contract managed by their administrative organisation. Visit www.portagesalariale.org for further details and a list of national federation members.

Agent commercial

If representation to sales outlets for immediate results is required, consider appointing a commission-only sales agent (agent commercial). Your business will not have to bear the cost of any sales prospecting which does not produce any orders. An experienced agent will know the territory, have a good relationship with their existing customers and know which ones to contact for new and future business, and generally be able to gain acceptance from the trade for a fresh product.

Sales agents calling on wholesalers and retailers will expect a commission rate of up to around 15 per cent calculated on trade invoice amounts, exclusive of VAT (HT). The rate of commission will depend on the unit value of the product(s), the size of the territory and the call cycle required. While trade sales agents remain independent and usually represent several businesses, property sales agents are usually attached to just one estate agency business as if they were a salaried employee although they are free, unlike salaried employees, to organise their work as they see fit. Property sales agents receive up to 50 per cent of the commission on a property sale received by the estate agency if they have both found and sold the property; and up to 25 per cent of the estate agency’s commission if they just find or sell the property.

Contracts with all agents should contain the following elements:

• Names and addresses of the principal and the agent, with the principal’s registration number, preceded by Entré les sous-signes;
• Introduction to what has been decided and agreed (Il a done été arrêté et convenu ce qui suit);
• Clauses (articles) confirming that the contract cannot be considered as an employment contract subject to employment legislation (Code du travail); that the agent will produce (within a specified time) proof that they are registered as an agent commercial with their local Tribunal de Commerce and are also registered for obligatory contributions to social security organisations (caisses sociales); that the principal mandates the agent to represent their business and that the agent promises professional confidentiality; the territory concerned (lieu d’activité) – with property sales there is usually 1no limit – and the duration of the contract. The duration may be open-ended like a CDI for estate agency work with increasing periods of notice the longer the contract runs, or subject to review, after one year, for trade sales agents.
• The Commission rate for the agent and conditions of sale and prices should be separate clauses. The right to negotiate prices with, or without, prior referral to the principal should be specified. With trade sales agents contracts it is usual that the agent can take new customer contacts with him, but not business contracts, if the contract between the principal and agent is terminated. This is an important point to consider before signing an agent commercial contract. While agents are free to accept other representation contracts (cartes), a fidélité clause should be a condition of any contract, preventing agents from representing a competing business.

Contracts should be approved, signed and dated as with salaried employment contracts. It is sensible to draw them up in triplicate with one example being sent to the registrar (greffe) at the Tribunal de Commerce concerned.

EMPLOYING HUSBANDS OR WIVES

Regardless of the legal form of the business a husband or wife (conjoint) can be a salaried employee like anyone else with most of the tax advantages and social security benefits enjoyed by all salaried employees. NB: at the time of writing the French authorities’ position regarding the UK’s December 2005 Civil Partnership Act was unclear. A British civil partner setting up a business in France wishing to protect the other partner in the same way as a husband or wife who were married in the UK should check for any latest clarification with the British Embassy or Consulate office in France or with a specialised lawyer. Visit www.service-public.fr (the website is in English) for any updated information. If the business is a company which has opted for IS tax the salary of the conjoint salarié is accounted for in the usual way as a non-taxable pre-profit cost. If the business or company is taxed on a personal income (IR) basis the salary will also be a pre-profit cost, provided that the couple were married under the séparation des biens contract, meaning they are taxed separately. Couples married under the communauté universelle or participation aux acquêts agreements – described in Chapter 3 – may be entitled to considerable tax advantages provided the business belongs to a CGA or AGA accounts organisation.

Or if the business is an El or EURL – farming excluded – and cannot afford to pay the conjoint, they can be covered as the conjoint collaborateur (colleague) by the entrepreneur’s obligatory assurance for sickness, maternity and retirement pension. This retirement pension covers the basic and complementary systems for artisans and commerçants and just basic pension for the professions. A conjoint collaborateur can also work up to, but not more than, half the working week elsewhere in salaried employment, thus helping the business and gaining a regular income at the same time.

A third possibility of obtaining social security cover for a spouse is if he or she is a capital-holding partner in a company business. SA companies are excluded. As a salaried minor share-holder the spouse enjoys all of the social security benefits excluding unemployment cover.

REDUNDANCY (UCENCIEMENT ÉCONOMIQUE) AND DISMISSALS (LICENCIEMENTS POUR MOTIF PERSONNEL)

There is a set redundancy procedure which employers must follow. The former boss of Marks and Spencer was fined in 2005 by the French authorities for not following the correct procedure before Marks and Spencer withdrew from the French market in 2001. The procedure can vary, giving additional compensation and retraining opportunities for employees, depending on the convention collective for the type of employment. Earning better profits is not a valid reason for making employees redundant, but ensuring a company’s survival by remaining competitive in the marketplace is. Remaining competitive may involve a change or pruning of the workforce following economic difficulties or technological advances in the business’ speciality.

The procedure for a company with less than 50 employees, i.e. with no comité d’entreprise, is an initial instruction to attend an explanatory interview when the possibility of redundancy is mooted and any other employment opportunities within the company are discussed. The employee can be accompanied by the délégué du personnel who represents the staff’s interests, or failing this, can choose to be accompanied by an official from a locally appointed independent ‘redundancy’ panel. If redundancy is the employer’s only solution they must confirm this by registered letter to the employee. The obligatory period of paid notice can be worked, or not worked, at the employer’s discretion. Two hours a day paid time of the employee’s normal working day is allowed for prospecting for new employment.

The management of companies with at least 50 employees and planning to make at least 10 staff redundant must consider any solutions put forward by the comité d’entreprise, such as regrading, redeployment, outplacement, retraining, reduction of the working week, etc. Companies with over 1,000 employees, planning massive lay-offs, must provide a paid period of organised counselling and training (congé de reclassement) lasting several months.

The amount of redundancy payment depends on the number of years the employee has been continuously employed by the same company with a CDI contract and also on the convention collective. The payment includes outstanding holiday pay (indemnité de congés-payés) and any dismissal indemnities entitlement (indemnité de licenciement). The local Direction Départementale du travail office can confirm entitlement. All employees made redundant have priority in the first 12 months after redundancy for any new job opportunity, subject to any required training, with their former employer.

Temporary lay-off (licenciement technique), which may become permanent, can be applied immediately in force majeure circumstances which close down or hamper the business. This may include natural catastrophes, criminal damage, striking suppliers unable to deliver raw materials or parts, etc.

Employees can be dismissed for gross misconduct (faute grave), which includes theft and violence, and intentional gross misconduct (faute lourde), without any notice period or indemnities. Faute lourde may be difficult to prove so make sure grounds, such as often being late for work, not obeying work orders or not working at all, are well founded otherwise an industrial tribunal (conseil des prud’hommes) will give the benefit of the doubt to the employee. The basic procedure of a written notice (convocation) sent to the employee for an explanatory interview, followed by a recorded-delivery letter confirming any dismissal decision, must be followed if incompetence or unsatisfactory performance (insuffisance professionnelle/faute simple) are the reasons sought for dismissal. The interview must establish that the grounds are justified, and any outstanding holiday pay, the normal notice period and any other indemnities will not be effected.

In all fautes instances a first warning (avertissement) can be followed by a second warning (blâme) before leading to a 14-day suspension period. This procedure may be advisable, if it is felt that the fault was an isolated one, a result of extenuating circumstances, unlikely to be repeated, and that the employee deserves a second chance.

Whatever the circumstances, all employees leaving a company must be provided with:

• a Certificat de Travail which confirms the period of employment and the post occupied by the employee;
• a final payslip;
• and an Attestation ASSEDIC for the unemployment benefit authorities showing period employed, number of weekly hours, details of monthly salary over the preceding 12 months and final payment, including indemnities.

Employees are also entitled to a Reçu pour solde de tout compte which they must sign. This document confirms receipt of the Certificat de Travail, Attestation ASSEDIC and final pay slip and cheque for all outstanding salary and indemnities ’en paiement des salaires, accessoires du salaire, remboursements defrais et indemnities dus au titre de I ‘execution et de la cessation de mon contrat de travail’ or wording to that effect. The employee has up to two months to make any further payment claim after having received this Reçu.

Regrettably, redundancies may be the prelude to an unplanned sale of the business. How to sell a business is not the aim of this book, however, brief familiarity with the procedure below is important as it should be realised that redundancies can take time and will cost money:

• creditors, social security and tax offices should be informed and notified of the business’ avocat or notaire;
• the final trading date should be established as well as the final set of accounts, clear of any debts;
• a copy of these accounts should then be sent to the tax office;
• once the tax office is satisfied that no further tax is due they will authorise your lawyer to release the sale proceeds which must be paid into the business’ trading bank account which has been kept open for this very purpose.

USEFUL VOCABULARY