Is Capping Compensation By Industrial Tribunals Another Way Of Attracting Foreign Investors?

Author:Ms Valérie Blandeau
Profession:Gowling WLG

Introducing legislation to cap or restrict the amount of compensation paid to employees who are dismissed without good and sufficient cause is one of the issues that President Macron has committed to take a fresh look at, after an initial attempt in August 2015. What will a cap look like and is it likely to work in France?

This initial proposal from 2015 was refused by the French Constitutional Council because the cap and floor assessment criteria were not directly linked to the harm suffered by the employee. The idea of restricting compensation via a cap and floor is therefore not anti-constitutional in principle. In addition, the floor already exists: the minimum compensation for an employee with two years' seniority, who is dismissed without good and sufficient cause from a company with more than 11 employees, is six months' pay. Any additional compensation must be justified by harm.

To date, the two decrees announced on 23 November 2016 provide informative scales in the event of conciliation and, if both parties agree to it, a compensation scale in the event of dismissal that is deemed by the industrial tribunal as being without good and sufficient cause. The only criterion taken into account in legislation thus far is employee seniority, without any additional considerations relating to the employer (its size) or the existence of any harm to the employee. This is perhaps one of the possible options that should be suggested to the government as it prepares its orders. Indeed, an employee who is dismissed, even without good and sufficient cause, clearly should not be compensated in the same way depending on whether or not he/she has found another job.

Could we design a scale system based on seniority, which is comparable to the scale in the decrees from November, but weighted depending on whether or not the employee has found a new job with compensation paid by Pole Emploi (French Job Centre) serving as evidence of this fact?

The issue of capping is divisive. Capping compensation appears to strip the employee of the right to compensation for the harm he/she has suffered. However,...

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