International Labor and Employment Law

Post-Brexit UK Employment Reform: Three month cap on non-competes and other changes

The UK Government has published a policy paper entitled ‘Smarter Regulation to Grow the Economy’ (10 May 2023) that outlines a series of upcoming employment related regulatory reforms designed, in part, to take advantage of the UK’s post-Brexit regulatory freedom. The stated aim is to reduce unnecessary regulation for businesses to ensure economic growth whilst maintaining existing UK labour standards.

What are the proposed changes?

  • Non-Competes limited to three months: The biggest news is that, the UK Government plan to limit the length of non-compete clauses in employment contracts to three months post-termination. The upper limit of what was enforceable in the UK has tended to be 12 months in an employment context, subject to considerations such as the employee’s role, the scope of the restriction and the legitimate interest of the employer. It is interesting that this proposal follows shortly after the US Federal Trade Commission’s proposal to ban non-competes.

There is no timeframe for this change to come into effect and, until the legislation is papered, the specific scope of this cap is yet unknown. For example, it is not yet known how this may impact non-competes in arrangements contained outside of the employment contract but that are related to employment (e.g. within incentive agreements). Whilst currently employers will still be able to include longer non-competes in employment contracts for now, in light of the proposed change, greater consideration should be given to notice periods, garden leave provisions, the use of non-solicitation and non-poaching provisions, and the wider set of protections available to employers when drafting and negotiating contracts of employment.

  • Minor changes to TUPE: The Transfer of Undertakings (Protection of Employment Regulations) (known as TUPE) provide a number of protections to employees and obligations on employers in the event of a business sale or where there is a so-called “service provision change”. With a view to simplifying the requirements and reducing the burden on employers, the Government are looking to allow businesses, where there are fewer than 50 employees and for transfers affecting less than 10 people, to consult directly with affected employees rather than having to elect representatives. Whilst this is a welcome easing of the rules, in practice this is only a minor change and there remain a number of aspects of TUPE that businesses would like to see reviewed.
  • Changes to Working Time Records: Due to retained EU law, several requirements remain on UK employers in respect of working hours. The Government will consult on proposals to remove the requirement to keep working hours records for most members of the workforce.
  • Changes to Holiday pay: At present, UK employees have two separate holiday entitlements made up of a core 4 weeks leave (under EU law) and an extra entitlement to 1.6 weeks (under UK law). The Government plan to combine these entitlements to one “pot of statutory annual leave”. In addition, rolled up holiday will be permitted to allow workers to receive their holiday pay in every payslip.
  • No more sunset clause: As part of the Retained EU Bill, controversially, the plan was that a raft of EU derived laws would be automatically removed at the end of 2023 unless replaced or expressly retained. However, the Government have now announced that this “sunset clause” will be removed and instead only a specific list of relatively obscure EU derived employment law regulations will be removed.

Guide to Whistleblowing – France Chapter

In this new age of accountability, organizations around the globe are having to navigate a patchwork of new laws designed to protect those who expose corporate misconduct. IEL’s Guide to Whistleblowing examines what constitutes a protective disclosure, the scope of regulations across 18 countries, and the steps businesses must take to ensure compliance with them.

Learn more about the response taken in specific countries or build your own report to compare approaches taken around the world: Guide to Whistleblowing – France Chapter

The Long-Awaited Decisions of the Social Chamber on the Macron Scale Have Just Been Rendered

The Social Chamber of the Court of Cassation today issued two long-awaited decisions on the compensation scale currently applicable in the event of dismissal without real and serious cause.

The so-called “Macron Scale” is the result of an ordinance of 22 September 2017 (No. 2017-1387) and appears in Article L. 1235-3 of the Labour Code. It holds that, in the event of dismissal deemed to be without real and serious cause, a judge may propose the reinstatement of the employee in the company. If either party refuses this reinstatement, the judge then awards the employee an indemnity payable by the employer, the amount of which is between minimum and maximum amounts.

These amounts are expressed in months of gross salary and depend on the number of employees in the company and the seniority (in full years) of the employee. The scale is progressive and the maximum amount is capped at 20 months for employees with  at least 29 years of service.

According to the French government, the introduction of the scale aims to increase predictability and secure the employment relationship or the effects of its termination for employers and their employees. Other European states, notably Belgium, Denmark, Finland, Germany, Switzerland, and Spain, have set up similar scales.

France’s scale (and mainly the compensation ceiling) gave rise to lively debates that focused on the question of its enforceability, on the grounds that it would disregard international rules of treaty law, mainly:

  • Article 10 of ILO Convention No. 158, ratified by the France in 1989, which provides that national courts must “be empowered to order the payment of adequate compensation or any other form of compensation considered appropriate”; and
  • Article 24 of the European Social Charter, which requires national law to provide for “the right of workers dismissed without just cause to adequate compensation or other appropriate redress”.

The argument can be summarized thusly: given the compensation ceilings to which the judge is bound, the scale would not allow adequate compensation to the employee dismissed without valid reason.

The debate gave rise to numerous actions in France. The Court of Cassation considered, in an opinion of 17 July 2019, that the scale was compatible with Article 10 of the ILO Convention (it considered on this occasion that Article 24 of the Social Charter had no direct effect).

Despite this opinion (which does not has the value of a decision) , a number of French industrial tribunals have decided to set aside the scale. Some jurisdictions have decided that the scale is not compatible with international law (CPH of Angoulême of 9 July 2020 RG F 19/00184). Others, such as the Reims Court of Appeal (25 September 2019, No. 19/00003), considered that if the scale was not unconventional, the review of conventionality did not exempt the judge from assessing whether it did not disproportionately infringe the employee’s rights by imposing burdens disproportionate to the result sought.

The decisions of the Social Chamber were then expected. At the Chamber hearing held on 31 March, the First Advocate General had suggested that the Court should engage, like the Reims Court of Appeal, in an “in concreto review”.

This is not the route followed by the French Supreme Court today. In summary, the Court of Cassation:

  • Recognizes the conventionality of the scale with regard to Article 10 of ILO Convention No. 158 (judgment No. 654: “The provisions of Articles L. 1235-3, L. 1235-3-1 and L. 1235-4 of the Labour Code are thus such as to allow the payment of adequate compensation or compensation considered appropriate within the meaning of Article 10 of ILO Convention No. 158. It follows that the provisions of Article L. 1235-3 of the Labour Code are compatible with the provisions of Article 10 of the above-mentioned Convention”)
  • Refuses to engage in a review of conventionality in concretocontrary to the suggestions of the First Advocate General and the position adopted by the First Civil Chamber in 2013 (judgment n°654: “In ruling in this way, when it was only up to her to assess the concrete situation of the employee to determine the amount of compensation due between the minimum and maximum amounts determined by Article L. 1235-3 of the Labour Code, the Court of Appeal violated the above-mentioned texts”)
  • Refuses to recognise the direct effect of the European Social Charter (judgment no. 655).

The conventionality of the Macron scale is thus again affirmed without reservation by the Court of Cassation.

This is very good news for French employers.

The decisions provide indeed legal certainty: judges cannot in principle deviate from the scale and must assess damages awards within the limits of the scale.

Will this however  make it possible to put an end to the contentious debates on the unconventionality of the scale? Nothing is less certain as  industrial courts mays well decide to disregard these decisions and take the risk to have their decisions cancelled by higher Courts.

They should however be more and more reluctant to do so.

Reorganisations in France: How to Select the Best Tool

Alexandra Stocki, French & EU Employment Group partner, authored an article titled “Reorganisations in France: How to Select the Best Tool” in IEL (International Employment Lawyer).

This article discusses the points that must be checked before considering the best tool for a reorganisation.

To access the full article, please click here.


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