Corporate bankruptcies in France soared last year, with almost 58,000 cases filed in 2023, a 36% increase compared with 2022, according to Altares. Meanwhile, the final quarter of 2023 was one of the worst fourth quarters in 30 years in terms of insolvencies – these often being the last step after attempts at restructuring, which are becoming a strategic priority for many company leaders in France. Coming on the heels of post-pandemic enthusiasm in 2021, geopolitical headwinds and shifting consumption patterns are affecting a broad range of economic sectors, from industrial players to technology, retail, and other industries. At the same time, the need for massive investments – in renewable energy infrastructure and artificial intelligence, amongst others – coupled with a political drive for reindustrialization and sovereignty in France, is creating opportunity.
In this evolving landscape, companies, particularly big multinationals, are reassessing their priorities, team structure, and geographical presence, resulting in restructuring.
The complexity of Code du Travail, the French labour law, causes unease for companies restructuring operations in France. Comprehending its particulars is crucial when planning changes to operational structure and headcount. Beyond the legal aspects, however, the primary business risk surrounding layoffs in France stems from the highly politicized environment— against a backdrop of deindustrialization, contentious unions, and eroding social cohesion.
Communications have a role to play in mitigating these risks. In preparing for a restructuring in France, here are some guidelines to consider, which together with adherence to the strictly codified legal process, will help navigate challenging situations, protect corporate reputation, and preserve the license to operate.
1. Assemble your team
Restructuring requires seamless coordination among various functions, including finance, legal, human resources, and communications. It is crucial to involve the right individuals and build a reliable decision-making process, while maintaining confidentiality. This is especially crucial in France, as any leak might be seen as a “délit d’entrave,” an attempt at bypassing employee representatives who should be informed first as per the official process. Choose those trusted internal leaders who will be genuinely needed to address the situation rather than adhering to hierarchical structures. Be mindful that those who will be impacted, whether directly or through their teams, may struggle to remain objective. Finally, seek assistance from external experts who can offer an unbiased perspective – because layoffs are both highly processed and highly politicized in France, you will need advisors will the specific experience of the various steps involved to avoid mishaps, and strong inroads with both media, public officials, and workers’ unions to facilitate a constructive dialogue.
2. Build the case for change
Present a compelling strategic vision and objectives to convince stakeholders that the change is both essential for the company's survival and a crucial step in ensuring its long-term viability and growth. This is a must, as your “economic rationale” is an official requirement which can be challenged in court and, if the layoffs are found to be insufficiently justified economically, lead to the plan getting cancelled altogether, employees reintegrated, and penalties inflicted to the company. Rationales that do not clearly showcase that change is needed for the survival of the company – such as increasing returns for shareholders – are not enough.
3. Provide advance notice to key stakeholders and cultivate relationships
French labour law mandates that the works council (CSE) be informed before anyone else of any mass layoffs (known as PSE, Plan de Sauvegarde de l’Emploi) in France. Breaking this rule and publicly announcing a precise headcount reduction plan before meeting with the CSE is a no-go. However, keeping all information under full lockdown before the CSE and failing to share intentions to key stakeholders, notably in government, will result in PR and legal troubles – many recall the French government’s and local officials’ cries of “scandal”, “treason”, and “humiliation” after learning about tiremaker Bridgestone’s 800+ layoffs project through the media.
Timing is of the essence: map out the relevant public officials and determine whom to pre-inform and when. The Ministry of Economy and Interministerial Committee for Industrial Restructuring are always sensible choices, as is the local prefect, who can assist in anticipating potential protests. The French government has also put in place dedicated Commissioners for Restructuring and Prevention of Business Difficulties that can intervene in such matters. Additionally, depending on existing relationships, the scale of the layoffs and political affiliations, consider informing some local officials such as the local member of parliament (a national representative, but elected at local level in France and attached to a specific constituency), regional president, and mayor.
Finally, cultivating constructive relationships with employee representatives and unions is a key part of succeeding at implementing change. Defending jobs also means being aware that sometimes changes are needed for a company to thrive on the long run. Make sure you maintain and nurture these relationships in times of peace so dialogue can continue in more difficult times.
4. Anticipate and control the media narrative
If large numbers of employees are affected, any hope of staying under the radar is futile – local media in particular in France are well-connected to local companies and unions, and keen to cover news around labour issues. The French habit of going on strikes to protest layoffs also increases media traction, as it generates an event to cover. Rather than waiting for the inevitable media inquiries, proactively make the announcement and explain its rationale. Schedule your CSE almost concurrently with the public disclosure to maintain control of the information while meeting guidelines. For smaller-scale restructurings, a reactive approach can be considered, but be prepared for public attention and have your messaging at hand.
5. Exercise caution with language
Don’t give the impression that everything has been decided. A final decision can only be reached after the information-consultation process with employee representatives is completed and approval from public authorities has been obtained – this, again, is a must, and any definitive language in your communications before the process with employee representatives is wrapped up may result in a court challenge: circumventing these steps may not only do reputational damage but have legal repercussions too, leading to the rejection of your PSE project and sending you back to square one.
6. Keep your people on board
When all employees learn about a headcount reduction simultaneously, managers may feel disempowered, posing a high risk of opposition to leadership or failure to fulfil their roles. However, rules surrounding notification to employees prevent from putting in place a progressive, long term cascading plan over the course of many weeks. During this critical period, managers’ contribution to implementing necessary and difficult decisions, while retaining talent, is indispensable. Employ a minute-by-minute express cascading plan on the day of the announcement, involving everyone from top management to line managers and employees. This is key to engaging everyone in the correct order, equipping each level with suitable arguments and data to fulfil their roles and reassuring them on the company’s vision and perspectives for the future. This process must occur within a few hours and with the utmost precision to guarantee that managers are informed and that employees receive the news from their employers rather than union representatives or, worse still, the media.
Additionally, keep in mind that the timeline is guided by the process and that several months will likely pass between the initial announcement, the signature of the plan, and its execution. As an example, for a project of over 250 layoffs, the CSE has 4 months to deliver its opinion on the plan, an essential step before getting it approved by public authorities. Notice periods in France are also longer than in many other countries. Internal communications to keep employees informed regularly, focused on their work and to give them a positive perspective for their future is key during times of change and uncertainty.
7. Show empathy
An essential aspect of any restructuring announcement is leadership's ability to remain empathetic amidst the legal constraints, internal and external pressures, and stress of the situation. People's livelihoods are at stake. Make sure you plan to support those affected and help them secure new employment, providing them with time and resources to plan their futures. Acknowledge their contributions, not just through words but through actions. Offer reassurance and perspective to those who remain. Finally, assume responsibility for the company's decisions. Make it about impacted people’s feelings, not your own as a company leader.
Conclusion
Successfully navigating business restructuring in France requires a thoughtful and well-planned communications approach that considers the complexities of the country's legal system, political landscape, and social sensitivities. Adhering to these guidelines and maintaining a human touch throughout the daunting process can help companies manage the delicate balance between their strategic goals and the wellbeing of their employees. By assembling the right team, fostering open communication, and demonstrating empathy, organizations can safeguard their reputation and ensure a smoother transition.