Background and context
Since 2016, the French government has modified the law on economic dismissal on several points.
Under French labor law, any economic dismissal must be justified by actual and serious grounds (Article L. 1233-2 of the Labor Code).
Economic reasons are those are non-inherent to the person of the employee and which only relate to economic considerations.
The economic ground is identified by the Labor Code as a ground non-inherent to the person of the employee, resulting from suppression or transformation of employment or a change, refused by the employee, of an essential element of the employment contract, due in particular to economic difficulties or technological changes (article L. 1233-3 of the Labor Code).
Law of August 8, 2016 (El Khomri’s law)
The definition of the economic motivation has been clarified to take into account the contribution of case-law from the French highest jurisdiction, the Court of Cassation.
The new definition of economic motivation
The first contribution of the Law is to add two new reasons to the list of economic grounds of Article L.1233-3 of the Labor Code : the reorganization of the company necessary to preserve its competitiveness and the cessation of company’s activity.
It is not a real innovation as Case law had long ago admitted those two grounds as justifying an economic dismissal.