Ten months after its launch, the New Employment Contract (CNE) is gaining traction among very small enterprises (TPE). It guarantees flexibility, security, and simplicity for those most affected by the fluctuating economic conditions. “Those who have used the CNE have primarily done so to address uncertainties in business activity or to test employee skills for a longer period,” asserts Gérard Larcher, the Minister of Employment, Social Cohesion, and Housing.
The CNE is the third scheduled contract type following permanent contracts (CDI) and seasonal employment for the next six months. According to a survey conducted by the Central Agency of Social Security Organizations (Acoss), seventy out of a hundred employees recruited under this contract have remained with the company. According to the Federation of Approved Management Centers (FCGA), 30% of hirings would not have occurred without the CNE.
The flexibility of the contract is reciprocal. Acoss points out that in over half of the cases, the termination of the contract is initiated by the employee or both parties. Regarding the employer, URSSAF mainly cites three reasons for contract termination: “mismatch of the employee to the position,” “serious misconduct,” or a slowdown in business activity.
Economic instability spurred the Ministry of Employment to think about a contract that aligns with the needs of TPEs, especially the smaller among them. Success! 80% of CNE hirings are in companies with 0 to 9 employees. URSSAF observes that 7 times out of 10, an employee dismissed under CNE is immediately replaced by another CNE hire.
However, the long-term effect of the CNE remains to be proven. Acoss notes a significant decline in recruitments in June 2006. Seasonally speaking, seasonal jobs are making a strong comeback. URSSAF recorded 63,600 hiring intentions in January 2006 compared to 33,400 in June.
Although the CNE has gained popularity (as of March 2006, 60.9% of entrepreneurs are aware of the scheme), it still raises skepticism among business leaders. The main reasons listed are: favorable business outlooks (74% of employers), habit of hiring under permanent contracts (70% of recruitments), the desire to motivate the employee (60% of recruitments), and the intention to attract the best candidates (45% of employers). According to Gérard Larcher, economic growth is accelerating and shows a 2% increase. Is this enough to prompt a return to CDI, with its quality demands?
The profile of employees under the CNE is similar to those under permanent contracts. The “New Hire Contracts Utilization” survey conducted by Acoss-Dares in October 2005 shows this: 82% of new recruits are aged between 20 and 40 years, 61% are men, and 76% work full-time. The majority sector involved in this contract is the service sector, accounting for 69% of CNEs, followed by 11% in industry and 20% in construction. For now, the “new hire contract” is more appealing to TPEs with fewer than 10 employees who have limited resources. However, it attracts fewer TPEs with more than 10 employees, who prefer to opt for permanent contracts. Moreover, Acoss observes that some hiring intentions under the CNE transform into other contracts, or do not materialize at all. Nevertheless, no hasty conclusions should be drawn. The “New Hire Contract” will likely demonstrate that it has more tricks up its sleeve by the end of the peak season.
The CNE was introduced in August 2005 for businesses with fewer than 20 employees. During a “consolidation period” of two years, the contract can be terminated without the need for the termination to be motivated. The employer does not have to provide reasons for dismissal, and the employee can resign without notice. In case of premature termination by the employer, they commit to paying the employee severance payments (except in the case of serious misconduct) which amount to 8% of the total gross salary paid since the start of the contract. They must also pay 2% of the same amount to Assedic for supporting the employee. Like with a permanent contract, the employee is also entitled to unemployment benefits.
Learn more:
– [www.fcga.fr](https://www.fcga.fr)
– [www.urssaf.fr/general/actualites/actualites_generales](https://www.urssaf.fr/general/actualites/actualites_generales)
– [www.travail.gouv.fr](https://www.travail.gouv.fr) (Study and Statistics Section)
