This month: Economic dismissal related to the pandemic

Published on : 02/10/2020 02 October Oct 10 2020

As we enter the third season of the pandemic, many businesses are feeling the hard economic consequences of the crisis. In order to offset some of the damage or in order to protect themselves from future unavoidable difficulties, many businesses are unfortunately having to consider economic layoffs in order to cut costs.

French labour law allows for economic dismissals. However, as there is no hire and fire at will in France, such dismissals are subject to numerous conditions and must follow strict procedures.

It is possible that in the coming months judges and labour administrations will scrutinize layoffs quite closely, in order to avoid employers “using” the pandemic as an excuse to downsize. Therefore, it will be crucial to properly prepare the economic rationale and to attentively respect the procedures set out in the French labour code, in order to avoid the job cuts being challenged in a court of law…and in the public arena.

Here are some tips to use as a starter checklist when considering economic dismissals in the pandemic context:

Do collect solid, quantified evidence of economic hardship that your business is facing.
Don’t assume that the pandemic will suffice as legal grounds to dismiss staff.

Do show that your business must react to a clear economic threat.
Don’t base your dismissal solely on “fear” of the economic downturn.

Do tie the dismissal to clearly identified economic reasons. The absence of valid dismissal reasons backing the employees’ dismissal may have a financial impact on the dismissal costs for the employer, as it could entitle the dismissed employee to successfully claim damages for abusive dismissal.

Do not tie the dismissal to the performance of the concerned employee(s).

Do consult an attorney to see how to “frame” the economic difficulties: The fact that a company is trying to be more successful and to obtain better results or increase its profits does not constitute an acceptable justification for the reorganization.

Do remember that in groups of companies, in order to validly justify economic dismissals, the economic situation alleged by the company must concern the whole specific sector of activity of the group to which the company belongs, in France. 

Don’t limit yourself to just the company’s situation, if you are in a group!

Do consult the staff representatives on the contemplated project.

Don’t forget that some employees concerned by the project might be considered “protected” and will be treated with a special procedure involving the labour inspector.

Do try to redeploy employees to other positions.

Don’t forget to establish an order of employees concerned: you mustn’t randomly pick and choose them. (Note: this doesn’t apply if all the employees are being made redundant).

Do remember that an economic dismissal will offer your employees state-and-employer financed redeployment measures. The form of this will depend on the size and characteristics of your company, but it will help your employees bounce back.

Flichy Grangé Avocats can assist you with every step necessary to ensure a legally sound economic dismissal procedure that safeguards everyone’s rights.

 

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