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Firms will not be fined for closing factories, French court rules

Text by FRANCE 24

Latest update : 2014-03-27

A top French court on Thursday rejected a law that would have fined companies for closing their factories unless they had exhausted all other options, deeming it unconstitutional.

The law would have required firms with more than 1,000 employees to prove they had done everything possible to try to sell the factory before closing it down.

Stiff fines were foreseen for firms that failed to prove they had tried hard enough to find a buyer.

Such requirements would “impose burdens on companies’ business decisions... that amount to an unconstitutional infringement on property rights and freedom of enterprise”, the Constitutional Court wrote in a statement.

The decision is a setback for President François Hollande, who pushed the law through parliament in October to regain support from blue-collar workers disappointed over what many perceived to be market-friendly reforms implemented during his first months in power.

Business leaders had criticised the so-called Florange law – named after a steel factory in northern France where Hollande told workers he would pass legislation to protect their jobs during his 2012 campaign for the presidency.

The legislation would have allowed commercial courts to fine firms up to 20 times the minimum wage (€1,430 or $1,900) per laid-off worker if the sale of a factory was found to be unjustified.

Such penalties were “out of proportion with the seriousness of the targeted behaviour”, the court wrote.

With joblessness still above 10 percent despite billions of euros spent on subsidised jobs for youths, Hollande’s approval ratings have fallen further since October to reach their lowest level for any French president since World War Two.

Frustration over joblessness contributed to the Socialist Party’s poor showing in the first round of local elections on Sunday and helped the far-right National Front party make strong gains, notably in blue-collar areas.

Marine Le Pen’s National Front seized the town hall of Henin-Beaumont, a former Socialist bastion in northern France, and the party is positioned to win several more in the second round on Sunday.

(FRANCE 24 with REUTERS)

Date created : 2014-03-27

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