August 15, 2022

Volume XII, Number 227

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August 15, 2022

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French Companies Must Seek Buyers Before Site Closures: Obligations Clarified

In April 2014 France introduced the so-called “Florange Law”. This obliged companies with more than 1,000 employees in France (or across Europe) to make “best efforts” to seek a buyer before closing an establishment and making large scale redundancies.

On 30 October 2015 the French Government issued a Decree to address certain questions which remained unanswered over the new obligations, in particular what amounts to the “closure of an establishment” for these purposes.

According to the Decree, an establishment is any economic entity which is subject to the requirement to establish a works council.   This means that any companies with at least 50 employees and those which have set up works councils will be affected, as well as those which have attempted to set up a works council but had no candidates.

In terms of what amounts to a closure for these purposes, this will cover any situation where an employer is obliged to establish a jobs-saving plan (“plan de sauvegarde de l’emploi”) because of the proposed dismissals of at least 10 employees over a 30-day period  as a result of one of the following: (i) the complete cessation of the business at a particular establishment; (ii) the merger of several establishments into another location; or (iii) the total transfer of an activity to another site.

A failure to comply with the requirement to seek a buyer and inform/consult the works council could result in various sanctions for companies, such as the jobs-saving plan not being approved and the Government seeking to recover all public aid previously provided to the company.

Although this Decree creates and reinforces some very strenuous obligations for employers, it is also very useful as it gives some clarity on the notions of establishment and site closure.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume VI, Number 19
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About this Author

Pauline Pierce Labor & Employment Attorney Squire Patton Boggs Paris, France
Partner

Pauline joined the Paris office of Squire Patton Boggs in January 2012. Previously, she worked for 10 years in the Labor and Employment team of a large American firm.

Her practice both in counseling and litigation includes coordinating the transfer of employees in merger and acquisition transactions, assisting with restructuring projects, advising companies on hiring and terminations and disciplinary measures, election of personnel representatives, policies, data protection, stock option plans, European and international transfer of employees....

33 1-5383-7391
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