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New Legislation | In depth look: Collective Mutually Agreed Terminations: an alternative to the PSE?

Published on : 06/04/2018 06 April Apr 04 2018
News

The Macron reform introduces a new character onto the stage of French employment law: the rupture conventionnelle collective (RCC), collective mutually agreed terminations!

The RCC’s are intended to achieve headcount reductions without going through the dismissal process. The major innovation for employers is that these RCC can be entered into outside any economic difficulties or any threat to competitiveness.

What are the advantages for employers? Well, they allow the employer to:
  • anticipate a reduction in headcount that seems inevitable, even if the conditions of a real and serious cause for a collective dismissal are not met;
  • accompany a reorganization without having to demonstrate that it is in response to the need to safeguard competitiveness;
  • prepare a refocusing on the core business by reserving the RCC to employees engaged in activities that will be abandoned;
  • redeploy human resources, by eliminating jobs in one sector of activity while creating jobs in another;
  • avoid the burdensome search for internal reclassification, the order of dismissals and the priority of re-employment.
The RCC can also be a bargaining chip in an agreement of economic and social necessity.

On the other hand, the advantages for the employees and, consequently, for the unions are much less obvious. Employers will have to put forward significant advantages so that the employees agree to give up the guarantees offered them by a redundancy.

The Ministry of Labor will have to validate the RCC and it has announced that it would be reluctant to do so if the agreement only provides financial benefits, without putting in place suitable external redeployment measures.

Employers can contemplate putting forward the following benefits:
  • pre-retirement systems;
  • substantial support for starting a business;
  • the financing of long-term training;
  • external redeployment actions pre-negotiated with other companies;
  • renouncing to any economic redundancy for a specified period after the end of the implementation of the RCC.
RCC’s aren’t perfect. Employers need to be aware of their potential shortcomings.

The main problem will be if the call for volunteers is a failure. The overflow of applications is relatively easy to manage but the insufficiency of requests will prevent the company from achieving its objective, which is difficult to resolve. Indeed, no Plan B is possible since, by definition, a RCC excludes, pursuant to the French labour code, "any dismissal to achieve the objectives assigned to it in terms of job cuts."

The other disadvantage is the cost. As stated above there is a need for substantial external measures to convince the unions, the Ministry of Labor, and the concerned employees to accept the RCC.

Companies experiencing economic difficulties have little advantage in venturing into RCC’s, and should find their remedies in the PSE, which is still the go-to method for really downsizing company personnel in the short term.

Flichy Grangé Avocats will be able to assist you in choosing and implementing the best strategy.
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