Pension reform in France : what consequences for employers ?

Emmanuel Macron’s hobby horse since his first Presidential campaign in 2017, the issue of pension reform had to be set aside in 2020 due to the Covid-19 pandemic, before being taken up again in 2022, with a bill being brought to the National Assembly in February 2023.

Finally entering into force on 1September 2023, this reform follows many months of highly publicised wrangling between economic and political players in France.

Indeed, early 2023 was marked by a number of strikes and demonstrations, breaking all records for mobilisation against this reform, and in particular its flagship measure, that of raising the statutory retirement age.

This social movement fuelled a media drama both in France and internationally, and was widely commented on.

The legislative process of this law was also covered extensively in the media, due to its atypical nature, since it was through recourse to a derogation mechanism, the famous “Article 49.3” of the French Constitution, that it was finally adopted.

The flagship measure of this reform, the element which was so strongly opposed, was an increase in the age of retirement, going from 62 before the reform to gradually reach 64 by 2030. The reform also aims to accelerate the lengthening of the contribution period already set out in the previous reform of 2014.

It should be noted that, of all OECD countries, France had the lowest effective average age for leaving employment and the lowest average retirement age and, of all EU countries, the longest average retirement period. The Government has therefore set a twin objective of preserving the current system and achieving financial balance.

The reform contains a number of additional measures relating to employment, including an extension of the phased retirement scheme and new arrangements for combining work and retirement which may, under certain conditions, create new rights for the employees in question.

The reform also includes a whole section devoted to occupational burn-out prevention and recovery, including the ability to draw on the occupational protection account to fund a vocational retraining project.

Finally, another measure deserves a mention here. This reform modifies the social security regime for contractual severance pay, increasing the cost to businesses, with the stated objective of avoiding widespread recourse to contractual severance in the years leading up to statutory retirement age. This measure is likely to have an impact on the numbers seeking contractual severance, regardless of the age of the employees concerned.

Want to ask a question? Need further information? Our team of employment law experts is here to help you decipher these new measures.