French industrial tribunals have hit companies with stiff financial penalties
for what they term “abusive layoffs” of people hired under so-called new-hire
contracts, according to a report. The contracts were introduced by the
government of then-Prime Minister Dominque de Villepin in 2005 to encourage
recruitment, especially in small firms, and allow them to fire people for any
reason in the first two years.
However, during an 18-month period the tribunals ordered companies to pay
damages and interest to ex-employees, averaging more than e 7,000 ($9,895) each,
for contract terminations they considered abusive for various reasons, according
to the report.
The local tribunals are made up of an equal number of salaried workers and
employers. That fact “makes their decisions all the more surprising,” says
Evelyne Serverin, a Nanterre, France-based research director at the Centre
National de la Recherche Scientifique and one of the report’s authors.
Serverin argues that the government’s legal basis for the law was flawed, and
so its effect has been to expose employers to potentially unlimited penalties
imposed by the tribunals, which based their decisions on common law.
“The law tried to say that during a two-year initial period, companies could
fire employees without giving any reason whatsoever. But what they did not
consider was that if a terminated employee filed a complaint anyway, the
tribunal would require the employer to provide a justification for the firing,
and then it would proceed to decide whether it was justified or not,” she
says.
“The fact is that work contracts are contracts, just like any others, and an
abrupt breaking of any legal contract can always be contested in court,”
Serverin says.
Filed by Rick Mitchell of Business Insurance-Europe, a sister publication to Workforce Management.
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