French court strikes down hire-and-fire jobs law

PARIS, July 6 (Reuters) The Paris Appeals Court struck down today a ''hire-and-fire'' jobs contract introduced two years ago, a ruling that could complicate President Nicolas Sarkozy's efforts to revise France's restrictive labour code.

The Appeals Court ruled the ''contrat nouvelles embauches'' (CNE), introduced by the previous conservative government as part of an emergency plan to cut high unemployment, violated international law and basic labour rights.

According to official data around 900,000 workers are employed on the CNE contract, which allows small firms to lay off staff during their first two years without giving a reason.

The Appeals Court ruled the CNE breached International Labour Organisation conventions, deprived staff of most of their rights on dismissal and was ''not applicable as it stands''.

''In the fight against unemployment the protection of staff in their job seems to be something that is at least as relevant as the ease given to employers to sack them,'' the court said.

''It is paradoxical, to say the least, to encourage hiring by making dismissals easier,'' it added.

Employers say they are reluctant to hire staff because it is difficult and costly to let them go in an economic downturn.

The government can appeal today's ruling in France's highest court, the Cour de Cassation.

The previous conservative administration touted the CNE as key to its fight to cut jobless queues, though an official study published in spring last year said only 10 per cent of CNE contracts were in fact new jobs.

Today's ruling follows a case brought by an employee sacked one month after being hired. Her case was taken up by three major trades unions which are already up in arms over Sarkozy's plans to slap curbs on public transport strikes.

Prime Minister Francois Fillon said on Tuesday he wanted to replace the current complex system of contracts with a single labour contract, in which employee rights would increase over time. Supporters of the idea say the increased flexibility would encourage employers to hire more staff.

Fillon wants to start discussions with unions and management on labour law this autumn, but union bosses have indicated they are unhappy with the proposed reform.

The previous government was forced into a humiliating withdrawal of a youth version of the CNE last spring after weeks of mass street demonstrations by students and unions.

REUTERS GT BST1841