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Courts resist Macron's efforts to loosen labour market

Paris

ONE of President Emmanuel Macron's most emblematic measures to free up France's labour market is at risk after three separate courts decided last month to disregard the cap he set on unfair dismissal damage awards to workers.

An employment tribunal in the eastern French city of Troyes first ruled that the cap violates international law, and in particular regulations set out by the International Labor Organization and the European Social Charter. Soon after, courts in Amiens and Lyon dealt a similar blow to the measure Mr Macron signed into law just a few months after taking office.

The cap on damages "prevents judges from assessing individual situations of workers unjustly fired and to fairly repair the prejudice they suffered", according to the Troyes employment tribunal.

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Mr Macron sought to limit awards by judges to about one month's pay for a year of service up to 10 years, and cap the maximum payout to 20 months.

The 41-year-old president has vowed to loosen labour laws to turn France into "a startup nation" and make the country more appealing to investors. The court rulings will create uncertainty for foreign employers, one lawyer said.

In UK unfair dismissal cases, workers are limited to a maximum award of £84,000 (S$145,128) unless they can prove other circumstances, for instance that they are whistle-blowers.

The uncertainty in France will likely last for a few more years before the cases are examined on appeal and then by the country's top court. Representatives at the Labour Ministry declined to comment on the rulings.

France's 3,582-page labour code governs everything from the length of bathroom breaks to window dimensions in work areas. Easing the burden of this code on small-to-midsized companies has been central to Mr Macron's promise of an economic revival to lower unemployment that has hovered near 10 per cent for years.

One of the biggest risks for small French companies is an adverse ruling by the labour tribunals that adjudicate employer-employee disputes; damages payouts for unfair dismissal claims average 24,000 euros but can run into the hundreds of thousands, according to Justice Ministry figures from 2016.

An analysis by the European Union found that employment growth at companies with fewer than 250 workers in France was the second-lowest in the region and ranked far below the EU average. BLOOMBERG