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France – The ‘Macron scale’ challenged in labour tribunals’ rulings

Written by
Capstan Avocats, the law firm setting the benchmark for labour law in France.
Some French employment tribunals have refused to implement the Macron government’s scale of awards for unfair dismissals. This article sets out the legal background and reasoning behind the dispute and probable next steps.

Giving employers a better view of the costs they must bear in the event of an unfair dismissal was the main argument of the French government when a scale was implemented by one of the so-called Macron orders dated 22 September 2017 (N°2017-1387).

This scale, setting up minimum and maximum damages awards, should ultimately have a positive impact on employment, especially in small and medium-sized companies.

However, since December 2018 some Labour tribunals have considered this scale unenforceable, fostering legal uncertainty.

Before the implementation of this scale, employees whose dismissal was ruled unfair were entitled to damages to compensate for the loss suffered, without any ceiling on the amount. In that respect, the French Labour Code specified that an employee having accrued at least two years of seniority within a company with 11 employees or more should receive damages corresponding to at least his or her last six months of salary.

Some commentators consider those decisions as a sign of a revolt from Labour tribunals, which are composed of non-professional judges, representing employers and employees equally and who could be reluctant to seeing the dilution of their discretionary decision-making power.

The minimum and maximum amounts (over and above the statutory severance payments) provided by this scale must indeed guide the judges in determining the damages to repair the harm suffered by the employee. Nevertheless, judges are not bound by this scale if a dismissal is ruled null and void, for instance in cases of harassment or discrimination.

In this regard, Article L. 1235-3 of the French Labour Code provides for a grid determining the amounts which vary dependent on the employee’s years of seniority and company’s headcount. This amount corresponds to a multiple of the employee’s gross monthly salary and cannot exceed 20 months (for employees with at least 29 years of seniority). After 10 years of seniority, minimum and maximum amounts only depend on the employee’s seniority.

The Labour tribunals argued in their decisions that this scale breaches both convention 158 of the International Labour Organization (Article 10) and the European Social Charter (Article 24). Those two international texts, directly applicable in domestic law, provide for the necessity for the employees to be granted adequate compensation or appropriate relief.

Relying on this, more than ten Labour tribunal have so far ruled that the Macron scale does not apply due to its ‘unconventionality’. In at least one case the decision was issued by a professional judge who was appointed in order to decide between the views of non-professional judges.

It should nonetheless be noted that the French Constitutional Court (Constit. Court. 21 March 2018, Nr. 2018-761) ruled that this scale complies with the provisions of the French Constitution and the French Council of State decided (C. of State 7 Dec. 2017, Nr. 415243) that these international texts cannot be invoked against the ‘Macron scale’. In that respect, some Labour Courts have considered that the Macron scale applies, specifically on the basis of the Constitutional Court decision.

Presumably in response to the Labour tribunals’ decisions, the French Ministry of Justice issued a circular on 26 February 2019. The circular asks public prosecutors to inform its services about any legal decisions ruling on this issue as well as to take part in the proceedings by making known the opinion of the Prosecutor-General’s Office, which is quite an unusual request in employment litigation.

The first decisions of the French Courts of Appeal on this topic should be rendered by this summer and those of the French Supreme Court, which should put an end to this saga of conflicting legal decisions, are not expected for another two or three years.

The goal of the French government, which was to make employment relationships more predictable and secure, has not yet been fully met! In any case, the suspense has reached its peak, and employment lawyers are looking forward to the epilogue.