HR Strange But True!
August 05, 2005

A new law allows companies to lay off workers anytime in their first 2 years of employment, without giving any reasons. That might not sound like a big deal to you, but in France, the country that just enacted this law, it's highly controversial.

The new plan takes effect Sept. 1 and applies only to companies with 20 or fewer employees, according to the Associated Press. Workers laid off under the new conditions will be given at least 2 weeks' notice and will be entitled to unemployment benefits, though not the usual levels of severance pay.

The intent is to cut the cost and red tape associated with layoffs in France. The main French employers' group, Medef, has long cited the heavy cost of cutting jobs as a deterrent against hiring. Though France's jobless rate fell in June--the first time that has happened in 4 years--unemployment still stands at 10.1 percent, constituting a major drag on the economy.

Yet the "New Recruit Contract," as the new law is called, has generated controversy, in part because Prime Minister Dominique de Villepin and his ministers rushed several employment-related laws--including that one--onto the books under an "emergency procedure" that allowed them to act without consulting lawmakers. In addition, trade unions charge that the new measures will undermine working conditions and confidence while failing to creating new jobs.

"If we want to create jobs, we should be creating economic activity, not new types of contract," Socialist Party spokesman Julien Dray said. "This will increase job insecurity, not job creation."

The left-wing CGT union, France's second largest, vowed to organize street demonstrations against the new measures next month.

Source: The Associated Press, via Yahoo!

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