Recent trends and developments in French Employment law

The year 2022, which saw the reelection of President Emmanuel Macron, has brought with it some changes to the French employment and HR landscape. The Macron damages scale for unfair termination was upheld by the French Supreme Court, French digital platform workers voted for employee representatives for the first time, and new legislation was implemented in order to enhance whistleblower protection.

1. The Macron scale upheld by the French Supreme Court

The French Supreme Court (“Cour de cassation”) rendered two significant decisions on May 11, 2022 that upheld the validity of the compensation scale for unfair dismissal, commonly known as the “Macron scale.”

The Macron scale was established in 2017 to set up minimum and maximum levels of damages for unfair dismissal based on the employee’s seniority and remuneration and the company’s headcount.

The French Constitutional Court held in 2018 that the Macron scale complied with the French Constitution.

However, its validity has since been challenged by various Employment Courts and Courts of Appeals on the grounds that it fails to comply with international law (in particular the International Labour Organisation (ILO) Convention) and European law, which imply that the employee be compensated for the total harm suffered and/or that the judge can order the payment of “adequate” compensation to the employee in case of unfair dismissal, on a case-by-case basis.

In the May 2022 decision, the Supreme Court ruled that the ILO Convention was directly applicable to domestic law but considered that the Macron scale was compatible with these texts for the following main reasons:

• The compensation provided under the scale was adequate since it was sufficiently dissuasive to avoid an unfair dismissal taking notably into account other amounts that the employer could be ordered to pay in case of unfair dismissal.
• The employer’s fault was taken into account, since the application of the scale is set aside when the dismissal is ruled null and void for one of the reasons defined by the law, namely: violation of a fundamental freedom, moral or sexual harassment, discrimination, etc.

The French Supreme Court also confirmed its opinion that the European Social Charter is not directly applicable to disputes between private individuals.

All in all, the Supreme Court has upheld that the Macron scale cannot be set aside by the courts (except for cases of null and void dismissal), even on a case-by-case basis. This decision therefore provides legal certainty to companies when dismissing employees in that it allows them to know at the time of dismissal the maximum amount of compensation that may be awarded in the event of unfair dismissal.

However, the battle over the application of the Macron scale is not over:

• The European Committee of Social Rights held in a March 23, 2022 decision (that was made public in October 2022) that the Macron scale runs afoul of the European Social Charter as the caps are insufficient, they do not serve as a deterrent and the courts have a limited scope of appreciation. However, this decision has no effect on French law as was recently made clear by the French Supreme Court.
• Certain Employment Courts and Courts of Appeals are still trying to avoid applying the Macron scale, such as the Court of Appeals of Douai in a recent decision dated October 21, 2022.

2. Changes to the status and representation of Digital platform workers

Status of digital platform workers

Digital platform work has become a hot topic in France in recent years. Although self-employed platform workers who are registered with the Trade and Companies Register (RCS) are not deemed to be “employees” pursuant to the French Labor Code, the classification of platform workers is routinely challenged in court.

In an effort to overturn this presumption of non-salaried status, numerous lawsuits have been filed by self-employed workers who have attempted to demonstrate that they are in a subordinate relationship with the platform by highlighting the fact that the platform manages and supervises them and has the ability to issue sanctions.

Certain Labor Courts and even the Supreme French Court have ruled in some cases that the service provider contracts were employment contracts, which may also have criminal consequences in situations of undeclared work as recently judged by the Paris Criminal Court in a specific case.

The Courts usually considered that the existence of a subordinate relationship was demonstrated by the following elements:

• management powers (as evidenced by the mandatory use of the company’s branded outfit, the rating of the driver’s skills according to a precise grid provided by the company, a schedule and a geographic area of activity determined by the company, etc.);
• oversight and supervision powers (as illustrated by the use of geolocation data and the absence of negotiations regarding applicable rates);
• disciplinary powers (as highlighted by the degree of measures to be taken in the event absenteeism (reminder of the rules, decreased rates, demotion in shifts, termination of the contract)).

In this context, the French government has already taken various steps in order to enhance the rights of digital platform workers.

Representation of digital platform workers

During Emmanuel Macron’s presidency, several attempts were made to establish a special legal regime for online platform workers.

The French Government adopted in April 2021 an ordinance implementing a system of collective representation of workers in the digital platform sector. It essentially allowed French platform workers to elect national representatives to initiate negotiations with the companies that own those platforms.

On April 6, 2022, a new ordinance was designed to strengthen the rights of self-employed workers working on mobility platforms i.e. drivers (known in France under the acronym VTC) and two-wheel delivery workers. This ordinance extended the rules governing social dialogue through three main mechanisms:

• The terms of the representation of the professional digital platform organizations (drivers and two-wheel delivery workers) were defined.

In addition to the traditional criteria of representativeness (respect for traditional French values, independence, financial transparency, etc.), the ordinance requires a minimum voting score that is measured with regard to the number of workers registered on the platforms and the total amount of revenue generated by the platform. The elections of these representatives were held from May 9 to 16, 2022 under the supervision of a new public institution, the Authority for Employment Platform Social Relations (ARPE). Participation in these elections was particularly low: only 1.83% of two-wheel delivery workers and 3.91% of VTC drivers voted.

Two recent decrees of September 21, 2022 have enhanced the social dialogue mechanism for digital platforms.

The outcome of these negotiations should be carefully monitored over the coming months.

• Collective agreements can now be concluded in each sector by representatives of workers’ trade unions and representatives of platform organizations. A collective agreement will be considered valid if it is signed by workers’ organizations representing more than 30% of the votes cast. Valid agreements may be made binding for all platforms and self-employed workers in the sector concerned by means of an approval from the ARPE.
• It sets out new obligations for platforms, such as the obligation to disclose the location of the services offered and give workers a reasonable timeframe to decide whether or not to accept them. It also reinforces the independence of workers by prohibiting platforms from imposing the use of specific equipment, subject to regulations concerning health, safety and the environment, and guaranteeing them the right to freely choose their itinerary. The exercise of these rights may not be sanctioned by any measure, such as occasional disconnections or the suspension or termination of the VTC driver’s or delivery person’s commercial contract with the platform.

3. New whistleblower status in France

France’s whistleblower protection regime is derived from the law of December 9, 2016, commonly known as the “Sapin II Law.” The Sapin II Law is generally considered as the French anti-corruption gold standard.

The French Parliament has adopted new legislation to bring the country’s whistleblower protection framework in line with the EU Directive on Whistleblowing of October 23, 2019, which aims to unify the protection of whistleblowers across the EU.

A transposition law dated March 21, 2022 has made substantial changes to the existing provisions on whistleblower protection and includes other provisions that go beyond the minimum standard requirements of the Directive.

A broader definition of whistleblower

Several changes have been made to the definition of whistleblowers, which are individuals who “report or disclose, without direct financial compensation and in good faith facts regarding: (i) a crime or an offence, or (ii) a threat or prejudice to the general interest, or (iii) a violation or an attempt to conceal a violation of an international commitment duly ratified or approved by France, of a unilateral act of an international organization adopted on the basis of such commitment, or of EU or French legislation and regulation.”

A whistleblower must no longer disclose the information “disinterestedly” but “without direct financial compensation” in order to benefit from the protection. The facts disclosed will no longer need to be “serious and manifest.” Finally, the need for the whistleblower to have “personal knowledge of the facts reported is removed with the “professional context.”

Extension of protection offered to “facilitators”

The scope of protection has also been extended, in particular, to cover “Facilitators” i.e., individuals or non-profit organizations (such as NGOs or trade unions), on which whistleblowers must be able to rely during the process.

The new law thus defines facilitators as “any natural person or non-profit legal entity under private law who assists a whistleblower in making a report or disclosure.”

Elimination of “tiered reporting”

The system currently in force in France requires that an internal report first be filed at the company in order to qualify for protection. One of the most noticeable changes in the new system comes directly from the EU Directive which has eliminated this “tiered reporting” – i.e. the hierarchy between reporting channels called “internal channels”, “external channels” (i.e public authorities), or “public disclosure”. Internal and external reporting channels may now be used by whistleblowers in an alternative or cumulative way.

Moving away from the previous strict three-tiered reporting model, whistleblowers will now be allowed to:

• report externally (with or without a prior internal report) to specific authorities or courts at the French or EU level, including as set out by a decree; and
• disclose publicly in certain cases set out by law (in some cases, after at least an external report that was made did not lead to appropriate follow up actions).

Companies with more than 50 employees should note that the elimination of the priority given to internal reporting does not mean that the obligation to establish a specific process for collecting such reports has disappeared. In order to avoid damage to their reputations, companies should consolidate their internal line of whistleblowing, so that all whistleblowers give priority to the internal reporting channel.

Reinforcement of whistleblower protection

The types of protection that are currently in force in order to facilitate whistleblowing have been enhanced:

• the list of prohibited types of retaliation against whistleblowers or their relatives has been consolidated to include intimidation and harassment; reputational damage (including online); financial losses (loss of business or revenue), etc.
• the protection of whistleblowers against abusive proceedings has been strengthened (i.e the maximum fine has been increased to EUR 60,000 and the whistleblower may be awarded a provision for legal costs or, when his/ her financial situation has been seriously impacted as a result of the report or public disclosure, a provision for financial assistance (in French “subsides”);
• the protection of whistleblowers in terms of liability has been extended so that they will not be criminally or civilly liable for damages caused by reporting publicly if they had reasonable grounds to believe that public disclosure was necessary to protect the interests at stake;
• the guarantees of confidentiality are strengthened, in particular concerning “any third party mentioned in the alert.“

The above changes entered into force on September 1, 2022. Companies will therefore need to adapt their existing whistleblower processes, policies and information notices to comply with these new requirements.

By Pascale Lagesse and Emilie Iafrate

Bredin Prat