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Legislative changes

Legislative changes

LAW OF 27 DECEMBER 1973
Creation of the wage guarantee scheme

Law No. 73-1194, published in the Journal Officiel (JO), the French official gazette, on 30 December 1973, enacted to make up for the inadequate employee protection during corporate bankruptcies. It marked the birth of the AGS.
It came into force for the judicial decisions made on and after 1 March 1974. Its provisions are restated in the articles….of the French Labour Code.
The scheme applies to employers, retailers, and legal entities subject to private law.

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LAW OF 25 JANUARY 1985
Reforming the law of receivership proceedings

Law No. 85-98, applicable on and after 1 January 1986, extensively amends the substantial conditions and the means of intervention for the wage guarantee scheme, which is extended to craftsmen.

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LAW OF 26 JULY 2005
Business protection law

Law No. 2005-845 of 26 July 2005 on the protection of businesses (JO of 27 July 2005) reforms the law of 25 January 1985 on receivership and judicial liquidation of businesses. By introducing the protection procedure, in cases where there is no insolvency, it integrates a new legal approach based on anticipating and finding solutions to corporate difficulties.

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ORDINANCE OF 18 DECEMBER 2008
The legislation for companies in difficulty

The ordinance of 18 December 2008 which came into force on 15 February 2008, reforms the legislation for companies in difficulty and reinforces the business protection law of 26 July 2005.
Its goal is to promote the prevention of corporate difficulties and improve restructuring conditions for businesses, while emphasizing preemptive action and transparency.

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ORDINANCE OF 12 MARCH 2014
Reform of measures to prevent company failures and of insolvency procedures

The combined provisions of articles L.621-4 and R.621-2-1 of the French Commercial Code, which apply to companies that have been placed in protection, receivership or compulsory liquidation procedures, require the courts to ask AGS for its observations on the appointment of an insolvency practitioner in cases involving at least 50 employees.
AGS may submit its observations at the hearing or in writing. Likewise, articles L.621-10 and R.621-24 of the Commercial Code provide that the institutions referred to in article L.3253-14 of the Employment Code – in other words, AGS - shall be appointed controller if they seek such an appointment.

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THE RECAST (EC) REGULATION NO. 2015/848 OF 20 MAY 2015
on cross-border insolvency procedures

This new regulation marks a significant change in European insolvency law. It takes full account of recent changes to laws on companies in difficulty aimed at encouraging debt restructuring rather than liquidation. As such, the new regulation is consistent with the Commission recommendation of 12 March 2, 2014 that negotiated procedures and restructuring plans be included in the national insolvency laws of the Member States.
The changes and innovations introduced in this new regulation concern key aspects of European insolvency law. For example, the scope of application has been extended, essentially as regards the types of procedure that qualify as ‘insolvency procedures’; the main criterion for determining jurisdiction — namely the debtor’s centre of main interests — is better defined and is now consistent with general efforts to prevent forum shopping; the relationship between main and secondary procedures has been clarified; and the new regulation devotes an entire section to groups of companies. Lastly, the situation of creditors has also been significantly improved through major innovations covering the establishment of interconnected national insolvency registers, information for creditors and formal statements of claims. This regulation will only apply to insolvency procedures started after 26 June 2017.

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LAW NO. 27 DECEMBER 1975
Amending the intervention conditions of the wage guarantee scheme

Law No. 75-1251 enacted to supplement law No. 73-1194, by setting the limits for the guarantee. Its application decree (No. 76-1065) is signed on 25 November 1976.

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LAW OF 10 JUNE 1994
The prevention and processing of corporate difficulties

Law No. 94-475 on the prevention and processing of corporate difficulties, reinforcing the right of claimants. This law does not amend the key points of AGS intervention.

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LAW OF 30 JANUARY 2008
Towards European harmonization

Driven by the policy to achieve balanced economic and social development within the European Union, the European directive of 23 September 2002 implements the principle of equal treatment between men and women with respect to access to employment, professional training and promotion, and employment conditions and makes it mandatory for Member states to take the necessary steps to ensure that the “guarantee institutions pay the outstanding claims of salaried workers… “.
Law No. 2008-89 of 30 January 2008 transposed into French law, the European Directive of 23 September 2002 regarding the protection of salaried workers in case of the employer’s insolvency. It stipulates that the wages of employees of a business located in another Member State of the European Community, insofar as they carry out or used to carry out their activity on a regular basis on French territory, shall be guaranteed by the AGS in the event where the employer becomes insolvent.

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SECURITY OF EMPLOYMENT ACT OF 14 JUNE 2013
Conditions for AGS intervention

Article 18 of the French Security of Employment Act of 14 June 2013 reformed the procedure for collective redundancies carried out within the framework of a PSE job protection plan (plan de sauvegarde de l’emploi).
Article L.3253-8 of the Employment Code on the AGS wage guarantee scheme was amended to allow the scheme to cover support measures and to introduce a new 21-day guarantee period applying to court-ordered liquidations when a job protection plan exists.
These provisions are implemented in accordance with the principles governing AGS intervention. Accordingly, the legal principle of subsidiarity which underpins all AGS interventions applies and must be reiterated.
Support measures designed to facilitate re-employment are included as part of the job protection plan measures. The plan must be drawn up on the basis of the company’s resources and possibilities, and not with the objective of obtaining AGS financing.
As a result of this reform, the local government department for employment (DIRECCTE), the insolvency practitioner and AGS are expected to work in close collaboration and as far upstream as possible on the draft job protection plan, which will then require accreditation or approval by the authorities.

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ACT OF 6 AUGUST 2015
On growth, business and equal economic opportunities

This Act, also known as the Macron Act, was published in the French Official Journal on 7 August 2015. Several provisions concern employment law and the treatment of failing companies.
One section is entirely devoted to the profession of insolvency practitioner, and includes new rules on eligibility and practising the profession.
The Act introduces a number of adjustments to provisions deriving from the Security of Employment Act of 14 June 2013, two years after its introduction. These include changes to the rules regarding redeployment of employees in other countries. The rules on collective redundancies within the framework of insolvency procedures have also been modified.
Lastly, the Act recognises the active role played by the AGS in combating fraud, by allowing it to access the national database for agencies responsible for managing mandatory social security systems, funds responsible for payment of paid leave and agencies responsible for managing complementary or additional mandatory pension schemes, pursuant to article L.114-12-1 of the Social Security Code.

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