French employment law update – foreign companies: few traps you should be aware of

For most foreign investors, operations in France are often a source of insecurity when it comes to social matters like « Prud’hommes » litigation or URSSAF reassessments. But other areas with significant financial implications are less known to employers.

Recent Continental layoff cases, put forward this financial risk on various criteria.

The Annual Day Package Agreement (“ forfait-jours”)
With this Annual Day Package Agreement, employees work a certain amount of days during the year (approx. 218 depending on the applicable collective bargaining agreement).

The main advantage for the employers is that their employees are not subject to certain employment regulations like the 35 working hours per week or the 10 hours maximum length per day.

This Package can be used under two conditions:

it must be expressly authorized by a collective bargaining agreement.
it must be clearly mentioned in the employment contract signed with the employee.
However, this system has recently been the subject of a legal turmoil as several courts’ decisions have held that this package was illegal in three kind of industries (chemistry, wholesale and services).
As a consequence, employees who, in principle, were contractually exempt from any overtime compensation, became entitled to claim such compensation.

The translation of work documents
French Employment Code requires that work documents that impose obligations to employees are written in French. In particular, Article L.1221-3 of the French Code requires that all the employment contracts must be translated into French.

Failure to provide an employee with French version of this documents can lead to the employer’s liability. The penalty is a 4th class offense (fine of 750 euros) but in a case decided in 2006, GE Medical Systems was ordered to pay a penalty of 580,000 euros for refusing to translate several work documents at the request of its work council.