European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
Labour Code: Article L2312-8 (transfer of undertaking) Commercial Code: Articles L23-10-1 to L23-10-6 (sale of business)
Information and consultation on business transfers
There is no specific provision requiring the transferee to inform and consult the works council. The information and consultation procedure in case of transfers shall follow the general principles of information and consultation, as under French law, the employer is responsible for informing the works council.
However, the Labour Code denies information and consultation rights to the employees when no representative bodies are present within the company. In fact, the French legislation has not directly implemented article 7 § 3 of the European Directive on transfers of undertakings that states that 'the information and consultations shall cover at least the measures envisaged in relation to the employees'. In two decisions, the Social Chamber of the Supreme Court refused compensation to an employee, working in a company without an information and consultation body who had not received information from their employer in case of a transfer.
Information and consultation on sale of business
Since 2014, employers of companies employing fewer than 250 employees and with a turnover of less than €50 million (or a balance sheet total of less than €43 million), have to inform their staff about any project to sell the company, so that they are able to look for a buyer or take over their company. The information to provide to the employees' representatives or directly to the employees if there are no information and consultation bodies shall include
The employer must provide such information by any means:
Once the employees are informed, the employer has two years to complete the sale of the company. If he/she fails to sell within this time period, he/she will have to start a new information and consultation process (Commercial Code, [articles L23-10-1 to L23-10-6]). For companies with fewer than 50 employees, if all employees inform the employer before the end of the two months’ period that they will not submit an offer to take over the company, the transaction can be completed earlier. The employer is entitled to reject the offers made by the employees as the law does not grant the employees a right of first refusal in this matter. If the employer fails to comply with these regulations (no information provided or information provided too late), employees can introduce an action before the civil court against the employer to obtain damages.
Since 2015, no sale has been cancelled due to non-compliance with the regulations.
A first assessment on the new commitment to inform employees about a sale of the company quoted a survey launched by the data, insight and consultancy company IFOP on behalf of the employers' organisation CMPE and the consultancy firm KPMG highlighted that 64% of employers agreed with this provision. The measure has been adapted in 2015 to replace the sanction provided for in case of non-compliance with the regulations – the cancellation of the sale – by a sanction determined by the judge.
Eurofound (2015), France: Staff information and consultation on business transfers, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/staff-information-and-consultation-on-business-transfers/france
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