French labour reform hits constitutional hurdle

Caps for redundancy packages at issue
||Last Updated: 08/07/2015

PARIS (Reuters) - France's top constitutional body has thrown out part of a law aimed at capping the size of redundancy packages, prompting the government to say it would adjust a measure it argues is a much-needed labour reform.

The new arrangements were part of a wider deregulation bill passed in parliament last month and were intended to encourage employers to make more hires by removing the current confusion over their liabilities in the event of a labour dispute.

In a ruling published late on Wednesday, the Constitutional Council - following a complaint by opposition parties - ruled that the provision for lower caps on compensation payments for workers in small companies was unconstitutional.

"The different treatment proposed by the law disregards the principle of equality," the court said in its ruling.

Under the Macron deregulation bill - named after Economy Minister Emmanuel Macron - industrial tribunals could award no more than 12 months salary to people made redundant after having worked at least 10 years in a company with under 20 employees.

But that award could rise to maximum 20 months for people in companies with up to 299 employees and to 27 months for people in companies with more than 300 employees.

In a statement, Macron said the government would address the points raised by the Council in coming weeks with a view to continue the reform of industrial tribunals but welcomed the fact that the Council had approved the principle of the move.

"We take note that the Constitutional Council confirms the cap on redundancy payments is in the public interest," he said.

Macron noted the Council rejected only 17 provisions among 308 articles, thus approving nearly the entire reform package. He said other elements will be tabled again, notably in the budget law at year-end.

The court also scrapped an amendment to the bill intended to clear the way for the Cigeo project for deep geological storage of nuclear waste from reactors operated by utility EDF.

Macron said the government would draft a new Cigeo law in the first half of 2016.

The Macron bill cuts red tape in a wide variety of areas. It brings greater competition to para-legal professions including notaries, allows more shops to open late or on Sundays, and allows bus companies to offer long-distance domestic services hitherto reserved for state-owned SNCF railway.

The jobless rate in the euro zone's second largest economy remains stuck around 10 per cent, despite modest signs of a pick-up in economic growth.

While modest by comparison to reforms undertaken by some of France's European neighbours, the law has triggered a rebellion by some leftist lawmakers, forcing the government to bypass parliament and push it through by decree.

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