The council's decision puts the onus on President Jacques Chirac to either implement the law as is — at the risk of further unrest — or negotiate a compromise, perhaps by sending the law back to parliament or by proposing modifications.
Rarely has a decision by the council, which rules on the constitutionality of French laws, been so awaited. The student- and union-led protest movement has plunged Chirac's government into crisis, and a decision to strike the law down would have offered a way out.
Instead, the ruling by the council's nine appointed members would allow the law to go into effect — depending on Chirac's action — making it easier for employers to fire workers aged under 26, a degree of flexibility that the government argues will spur hirings.
Lawmakers in Chirac's governing majority said they expected him to put the law into effect quickly — a decision likely to further infuriate protesters. To soften the anger, Chirac may offer talks with labor leaders or appoint a mediator to deal with their concerns, lawmakers said.
Chirac's office said he would speak on the issue Friday night, leaving him 24 hours to mull his decision.
The leader of the opposition Socialist Party, Francois Hollande, immediately asked Chirac not to promulgate the law and send it back to parliament.