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Collective layoffs : how to avoid a job protection plan ?
This article was originally published by Isabelle Pontal.
A job protection plan is difficult to implement. Depending on their situation and objectives, companies can turn to other more flexible and less stringent measures. It is important to be able to anticipate in order to prepare them well.
Sometimes it is necessary to cut jobs, either because the company is facing a transformation of its economic model, or because it is experiencing difficulties characterized by a drop in at least one economic indicator (drop in orders, sales, etc.) over a period of time that varies according to the size of the company.
An expensive and restrictive mechanism
The job protection plan (JPP) is a restrictive tool subject to strict legal rules: drafting of an economic note justifying the difficulties encountered, drafting of a document including in particular the professional categories whose positions will be eliminated, orders for redundancies and measures proposed to support the employees concerned by the JPP, consultation of the company's Social and Economic Committee (CSE) on the project, meetings with the company's trade unions to negotiate the accompanying social measures, obtaining the agreement of the labor administration on the content of the JPP in order to be able to proceed with the redundancies.
Before being successful, this procedure mobilizes different key players within the company: the HR teams, of course, the administrative and financial management, which is asked to provide figures to support the economic reason, and the management, which will present the project to the elected representatives. And the JPP can be costly, whether it be the incompressible costs associated with any dismissal (notice period, redundancy payment) but also the accompanying social measures (redeployment leave, outplacement unit) or finally the litigation risks that may result.
Some companies are therefore turning to other, more flexible measures: the Long-Term Partial Employment Scheme (LTPES), the Collective Performance Agreement (CPA) or the Collective Bargaining Agreement.
The LTPES, an alternative to economic layoffs.
The Covid-19 and the economic slowdown have plunged some companies into major economic difficulties. This is the case in the aeronautical sector, for example, where the objective is to safeguard some of its skills while waiting for the crisis to end.
This is the type of need to which the LTPES responds, providing security for employees while they wait for better days.
Companies may reduce the legal working hours of their employees in exchange for commitments to maintain employment or provide training. The hours not worked (up to 40% of the legal working hours) are paid for by the State and partial activity can be implemented for a maximum of 24 months over a period of 36 consecutive months.
The implementation of this system is more flexible than that of a collective layoff for economic reasons, in particular if the LTPES is implemented by means of a company collective agreement. However, this agreement will still have to be validated by the labor administration. The LTPES is useful for companies that have visibility over the next three years since the company undertakes not to terminate the employment of employees placed on LTPES.
The Collective Performance Agreement (CPA), a controversial tool?
Another support mechanism, the CPA, is more controversial. The purpose of this agreement is to respond to "the needs linked to the functioning of the company or with a view to preserving or developing employment" (article L 2254-2 of the French Labor Code) by adapting its inflexible social status. In order to meet its objective, the company has the possibility of adjusting the duration of work, its organization and distribution, the employee's remuneration while respecting the hierarchical minimums and determining new conditions of professional mobility.
Even if the company is experiencing economic difficulties, the implementation of this agreement does not entail the obligation to justify them or to put in place accompanying measures. The CPA takes the form of an agreement negotiated with the representative trade unions in the company without being controlled by the labor administration.
This agreement is binding on employees and replaces any clauses to the contrary in their employment contract. An employee who does not accept this new agreement, of which he or she has been informed in writing, will then be terminated for a specific reason and according to the procedure for termination for personal reasons, without the company having to implement a collective layoff for economic reasons.
The CPA is thus a way to adapt certain agreements on working hours.
Which system should be adopted?
Another mechanism available to companies is the collective bargaining agreement. Here too, a collective agreement is concluded with the representative trade unions in the company, but the labor administration must validate it. In order for this mechanism to be sufficiently attractive and to allow the company to achieve its objectives of reducing staff, the plan must be accompanied by rather generous measures, including additional layoff payments.
Alternative mechanisms to collective redundancies for economic reasons exist. Although criticized for attacking the employment contract, the CPA is currently favored. The management of a company has at its disposal a number of mechanisms, all of which have their advantages and disadvantages. Whatever the choice, it must above all evaluate the constraints specific to each system and negotiate with the trade unions to reach an agreement.