France tries to defuse dispute over Sunday trading
* French retailers defy Sunday-trading ban
* Unions sue Leroy Merlin, Castorama to close on Sunday
* Former La Poste CEO to propose changes
PARIS, Sept 30 (Reuters) - France's Socialist government tried to defuse a growing dispute between retailers and unions over Sunday-trading laws, acting to clarify rules that business leaders say are holding back hiring.
Trade unions, defending a century-old ban, are fighting retailers and some willing workers to ensure the laws are enforced after several home improvement chains defied a court ruling on Sunday to lift sales at a time of low economic growth.
Prime Minister Jean-Marc Ayrault tasked the former chief executive of France's postal service to propose ways to fix "weaknesses" in current legislation, which is riddled with inconsistent exceptions.
However, Ayrault said the government would uphold the principle of giving workers a day of rest on Sunday enshrined in law since 1906, and called on retailers to obey court orders.
Labour Minister Michel Sapin said the government had no intention of changing the law.
"There is one principle to which... French society is attached, and that is the day of rest on Sunday," he told journalists before a meeting of concerned ministers.
The decision, delaying a solution by months, highlights the left-wing government's reluctance to alienate union supporters ahead of municipal and European elections next year.
It means that retailers Leroy Merlin and Kingfisher-owned Castorama - which opened on Sunday in the Paris region in defiance of a court order - face hefty fines unless they comply with the judge's decision. LVMH-owned cosmetics store Sephora was forced to close its Champs Elysees outlet at 9 p.m. instead of midnight after unions won a separate ruling.
The head of the Medef employers' association said last week he was "disgusted" by the decisions and asked for a repeal of a ban he said was preventing the creation of thousands of jobs.
The law allows exceptions for stores in designated "tourist zones" and for some types of businesses including restaurants, museums, food and furniture stores and press outlets.
While some workers say they are happy to earn two or three times their normal wages on Sundays, unions are set on defending a ban dating back to the origins of the French labour movement.
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