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Social Dumping - the legal position in France

Employers who either have a branch in France or send employees on secondment to France should have regard to a new French law on social dumping.

Bénédicte Querenet-Hahn is an employment lawyer in Paris from the Franco-German law firm GGV Grützmacher / Gravert / Viegener, a full service commercial firm. She specialises in advising internationally operating companies on French commercial and employment law.

Katie Rigg, a solicitor in the team at Farrer & Co, asked Bénédicte about the new French law.

 1. What is social dumping?

The freedom to provide services is a fundamental principle of the internal EU market and restrictions on this freedom are prohibited. Employers in one Member State have the right to send their own workers temporarily to another Member State to provide their services. Such workers are known as "posted workers".

"Social dumping" was a term coined in this context to describe various practices by which employers take advantage of opportunities for cheaper labour, for example:

(i)               Employers based in one Member State may second or "post" workers to provide short-term services in another Member State with lower wages and worker protection than the minimum requirements in the host country.

(ii)              Foreign service-providers may undercut local service-providers because their labour standards are lower. This may force employers in the higher wage Member States to reduce their employment standards to compete with cheaper workers from the newer eastern and southern Member States.

2. What are the relevant EU directives and what do they aim to achieve?

Directive 96/71/EC and Directive 2014/67/EU provide a series of guarantees aimed at preserving the social rights of posted workers and at avoiding social dumping when companies make use of the freedom to provide services within the EU.

(i) Directive 96/71/EC

Directive 96/71/EC requires Member States to ensure that posted workers enjoy the same key employment rights available to other workers in the host country (including maximum working time, minimum paid leave and rest periods, health and safety, pregnancy and maternity protection, and a minimum salary).

 (ii) Directive 2014/67/EU

Directive 2014/67/EU was intended to improve the implementation, supervision and enforcement of Directive 96/71/EC. It seeks to do so by better informing seconded workers and companies of their rights and obligations concerning employment conditions and by improving the cooperation of national authorities in treating secondment matters. It also includes measures to prevent and sanction any abuse or circumvention of the applicable rules.

 3. What is the relevant new French law?

The law concerning the "fight against unfair social competition" was enacted on 10 July 2014 to implement Directive 2014/67/EU. It strengthens the requirements of the EU directives. The new law imposes stronger controls over the conditions for posting workers abroad, by forcing French companies to verify that their foreign service-providers have fulfilled all of their obligations under French law and by holding them jointly responsible.

 4. What are the main components of the new French law?

The main components of the new law are the following:

  • The public authorities may request from a company which is not established in France the presentation and immediate supply of copies of documents relating to the secondment of employees.
  • The user or client of services in France who contracts with the foreign service-provider must ensure that the foreign service-provider has signed a compliant declaration about posting workers. In the absence of a compliant declaration, the contracting parties may be jointly liable for a fine of up to €2,000 per posted employee.
  • There are high due diligence requirements on the user or client. It must take active steps to ensure that the foreign service-provider respects the fundamental employment rights of its employees (non-discrimination, maternity and paternity leave, right to strike, working hours, public holidays and paid leave, minimum salary, health and safety, accommodation). In the event of non-compliance, the user or client must order the foreign service-provider to comply and, if the non-compliance persists, inform the public authorities.
  • The potential sanctions have been strengthened. Users and foreign service-providers who breach their obligations may be faced with a financial sanction, such as having to pay the salaries, indemnities or accommodation costs of the posted employees. Companies which are convicted of illegal work can be "blacklisted" for a maximum of two years (on a public internet website).
  • The new law acknowledges the right of labour unions to take legal action to defend seconded employees without having been mandated by the interested employee (but on the condition that the employee does not object).

5. What would your advice be for UK or international employers with workers in France?

The battle against social dumping is one of the priorities of the French authorities and should be taken seriously. The new control mechanisms and sanctions resulting from the law of 10 July 2014 apply to all foreign employers of employees posted to France as part of a service to a client in France. Such employers should ensure that they comply with French labour laws, especially those concerning declarations. They should expect the French users to be exacting about requiring evidence of their compliance with the French laws. In the event of non-compliance, the foreign employer may receive an order from the user to stop the offence and could face serious sanctions for continuing non-compliance.

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