In the area of labor law, the Action Plan for the Growth and Transformation of Companies known as “PACTE law (1)”, has several consequences, including the simplification of the workforce thresholds (2) specified in the Labor Code (3).

Before the adoption of the PACTE law on April 11, 2019, the Labor Code provided for 88 workforce thresholds creating a “legal environment that was difficult to understand, complex and a source of anxiety for business leaders“, according to the terms reported by the government.

Fortunately, the PACTE law has simplified workforce thresholds since January 1, 2020.

On the one hand, the law has rationalized workforce thresholds which, since January 1, 2020, have been reorganized primarily on three levels: 11, 50 and 250 employees, without however completely eliminating the threshold of 20 employees.

In particular, several thresholds have been raised to make this reorganization possible. It is interesting to illustrate this with a few examples.

For example, since January 1, 2020, the threshold above which company internal rules of conduct are mandatory has been raised from 20 to 50 employees.

Similarly, the threshold above which catering premises (4) are compulsory in companies has been raised from 25 to 50 employees, pursuant to the new article R. 4228-22 of the Labor Code.

In addition, until January 1, 2020, companies with fewer than 25 employees were required to provide a place for employees to eat and drink. From now on, this requirement only applies to companies with fewer than 50 employees.

Furthermore, the aforementioned law introduced a new article L. 130-1 II of the Social Security Code (5), which made it possible to mitigate the effects of crossing thresholds over time.

Crossing an employee threshold will only impact a company when this threshold has been reached or exceeded for 5 consecutive calendar years.

Conversely, falling below a threshold in terms of the number of employees will no longer be binding on the company as soon as it falls below this threshold after a single calendar year. And, if the company’s workforce falls below the threshold triggering a requirement, such threshold will have to be reached again for five consecutive years in order to generate the same requirement.

This new rule applies to certain provisions of the Labor Code. In practice, companies have a period of five years to fulfill certain employment law obligations required by the Labor Code in the following relevant areas:

Handicapped workers: companies which reach or go beyond the threshold of 20 employees for 5 consecutive years will be subject to the obligation to employ handicapped workers (6);

Professional training and apprenticeships: companies which reach or exceed the threshold of 50 employees for 5 consecutive years will be required to contribute to the personal training account (Compte Personnel de Formation), more commonly known as the “CPF”, in the event of the absence of a professional interview and of a training (7);

Compulsory compensation in the form of time off in the event of exceeding the annual overtime quota equivalent to 50% for companies with up to 20 employees and 100% for companies with 21 or more employees (8);

Harassment: as soon as companies cross or exceed the threshold of 250 employees, they will be required to appoint a representative for matters relating to the prevention of sexual harassment or sexual behavior.

Nevertheless, this rule stipulated under the new Article L. 130-1 II is not universal and absolute since it does not apply to all situations. Indeed, some exceptions still remain.

Since January 1, 2020, the requirement to establish internal rules of conduct applies to companies with at least 50 employees, provided that this number of employees has been reached for 12 consecutive months (9) (and not 6 consecutive months as in the past). Thus, the PACTE law has set a deadline twice as long to allow companies to get organized in this respect.

In addition, in terms of staff representation and the methods used to calculate the number of employees to establish or renew the Social and Economic Committee (CSE), the French Labor Code provisions remain unchanged.

In substance, the simplification of workforce thresholds resulting from the PACTE law considerably lessens the burden generated by employment law obligations, at a minimum, for small and medium-sized companies… Nevertheless, companies should remain vigilant with regard to exceptions to the law.

(1) Law No. 2019-486, 22 May 2019, Journal Officiel of 23 May
(2) From a legal point of view, the concept of “threshold” makes it possible to adapt the rules applicable to the size of the workforce and to maintain workers’ rights
(3) Law No. 2019-486, 22 May 2019, Journal Officiel of 23 May – Art. 11
(4) Decree 2019-1586 art 2, 5°; Labor Code, art. R. 4228-22 par. 2 new
(5) Social Security Code, art. L..130-1, ed. L. No. 2019-486, 22 May 2019
(6) Labor Code, art. L 5212-1 as amended et seq.
(7) Labor Code, art. L. 6315-1 and Labor Code, art. L. 6323-13, ed. L. No. 2019-486, 22 May 2019
(8) Labor Code, art. L. 3121-33 and Labor Code, L. 3121-38, ed. L. n°2019-486, 22 May 2019
(9) Labor Code, art. L. 1311-2 par. 1 et 2 as amended

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