A number of countries have implemented policies to help startups and companies face the consequences of a potential COVID-provoked economic downturn. While these measures might have come to some as a welcome relief, others might not be as fortunate and could be confronted with tough budget decisions, and in some cases, may not have another choice but to let some staff go.
In our webinar, we discussed the impacts of Covid-19 on predating hires and on layoffs, the different legal alternatives in France if a company has to let staff go, and the obligations that come with receiving government help to protect employment.
Some of the key aspects discussed:
Group layoffs can take different legal forms, depending on
- the company’s context, and of the layoffs objectives (e.g.: how much compensation will be offered to employees, which employees will be part of the layoff, how many jobs are to be included in the layoff plan)
- the number of employees that will be affected (with 10 employees being an important threshold in French labor law)
- the size of the company (with 50 employees being also an important threshold)
The implementation of a Plan de Sauvegarde de l’Emploi or PSE (Employment Safeguard Program) is one of the options to manage group layoffs. It enables to target specific jobs and their location. However, it requires to justify tangible economic motives such as a complete activity shutdown, economic hardship, considerable technological disruption, or a necessary company reorganization to safeguard its competitiveness.
The PSE process is a rather reassuring one, but it also is fairly heavy and costly.
Additionally, be wary of implementing a PSE after having benefited from government-assisted partial activity related to the COVID-19 pandemic: these 2 systems are contradictory, as partial activity aims to maintain employment while the PSE’s core purpose is to let staff go, and activating both systems leads to a high risk of litigation.
The collective performance agreement (Accord de Performance Collective) is an alternative to the PSE to handle group layoffs. The aim of this protocol isn’t to reduce staff per se, but to implement measures aiming to maintain both a company’s employment and its competitiveness. Indeed, it enables to lower wages and facilitate internal mobility without needing to justify of economic motives.
Also, the collective conventional termination (Rupture Conventionnelle Collective) is another alternative to manage group layoffs. It enables to proceed to amicable staff reduction without using unilateral layoffs. This is a fairly flexible approach to group layoffs, which entails less constraints and obligations than a PSE (no obligation to internal employee redeployment, no re-hire priority) – however, it requires to sign a collective agreement and hence suggests strong dialogue between a company and its unions & employee representatives.