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Collective Bargaining

Collective bargaining takes place at national, industry and company level and at each level there are detailed rules about who can negotiate and the requirements for an agreement to be valid. Industry level agreements are the most important level for negotiation in terms of numbers covered, although the rates they set are generally well below what is actually paid.

The framework

Collective bargaining can take place at three levels: at the national level covering all employees; at the industry level which can involve national, regional or local bargaining; and at company or plant level.

The framework for collective bargaining has been changed by legislation, approved in May 2004, January 2007 and in August 2008. In essence, the 2004 legislation made it easier for company agreements to diverge from industry level agreements, and this was extended into the area of working time by the 2008 legislation; the 2007 legislation dealt with national negotiations; and both the 2004 and 2008 legislation changed the rules on who on the union side is entitled to sign valid agreements (see below).

The position of national level bargaining has been enhanced by the legislation, passed in January 2007, which gave unions and employers a much clearer role in the development of legislation in the areas of industrial relations, employment and training. Under its terms, when the government wishes to make changes in these areas, it must first consult with employers and unions on the basis of a document setting out its analysis of the situation, aims and potential options, and allow them, if possible, to reach an agreement on the issue. The government must also formally consult on the draft legislation. This system does not commit the government to accept any agreement and in cases of “urgency” it can bypass the process entirely, but it clearly strengthens the importance of the negotiations between unions and employers at national level.

An indication of the significance of this level of negotiation is provided by the fact that the legislation reforming the rules on the representative status of unions (see sections on unions and workplace representation) was in line with a common position reached by the CGT and CFDT, although not the other unions, and employers in these national level discussions. Figures from the report on collective bargaining produced each year by the ministry of labour indicate that 44 national level texts were agreed in 2013, although 32 of these were amendments to existing agreements. The new agreements reached in 2013 included the major accord on employment security, which lead to significant legislative changes, as well texts on complementary pensions, health and safety and occupational training.[1] Since the election of the socialist president François Hollande in 2012, national level negotiations have been given greater impetus through the annual social conferences, held in the summer, where unions, employers and the government meet to discuss issues on which the government plans to legislate.

Industry level bargaining is the most important level for collective bargaining, in terms of the numbers of employees covered. The ministry of labour’s annual report on collective bargaining shows that, in 2013, 962 industry level agreements of various types were signed, although only 422 of them dealt with pay increases and in some cases there were several pay agreements linked to the same main agreement. Other subjects covered in 2013 included occupational training (182 agreements), bonuses (169), complementary pensions and health coverage (169), employment contracts (140), gender equality (124) and health and safety (75). (Each agreement may cover several subjects.) Where unions and employers’ organisations have already signed an agreement on pay there is an obligation to negotiate annually on pay rates, and every five years on job classifications.

In the past, some of the agreements signed had only limited importance in determining pay, as the rates they set were below the national minimum wage, which therefore superseded them. The government has recently encouraged the negotiation of new industry level agreements and has had some success. The annual reports on collective bargaining show that, among the 300 industry level agreements covering at least 5,000 employees, the proportion which had minimum rates below the national minimum wage in November/December each year had fallen steadily from 28% in 2007 to 12% in 2013.[2] However, many of these industry agreements have minimum rates at the national minimum or just above it. This was shown by the fact that a 2.1% increase in the national minimum wage in December 2011 meant that the proportion of agreements whose lowest rates were below the statutory minimum increased from 9% to 37%.

At company level there is also a requirement for the employer to negotiate annually on pay, working time and other issues (see below) where there is a trade union delegate – essentially companies with more than 50 employees – and in contrast to the obligation at industry level, this is backed up by penalties in case of non-compliance. However, there is no obligation to reach an agreement, and sometimes the employer will listen to the unions' demands and then fix pay and conditions unilaterally.

In the past, company level agreements could not provide worse terms and conditions than those set by the appropriate industry agreements. However this has changed over time. Legislation introduced in 2004 allows company level agreements to diverge from the industry agreement in areas where this is not specifically prohibited by the industry agreement, with the exception of a number of key issues such as minimum pay rates, where divergence is prohibited. And the 2008 legislation gave primacy to company level rather than industry level agreements in the area of working time.

New legislation passed in June 2013, which implemented an agreement on employment security signed by three of the five nationally representative union confederations in January 2013, introduces a new type of company agreement on job protection. This widens the possibilities for companies in financial difficulties to reduce some pay rates, although not the very lowest, and also to make changes to working time in exchange for employment guarantees. However, these agreements need the support of unions representing a majority of employees and can only last a maximum of two years. So far the use of this type of agreement has been limited. Figures from the annual report on collective bargaining, show that only 70 such agreements were signed between the date the law came into force (June 2013) and the end of the year, out of a total of around 39,000 agreements (see below). The report notes that it is “likely to need a period of time before it is taken up by companies”.[3]

Other figures from the report show that there were 39,363 company level agreements signed in 2013, an increase of 1% on the figure for 2012. Of these, the largest group dealt with pay and bonuses, followed by working time and employment. Separate figures from the ministry of labour’s research arm DARES indicate that for companies employing 10 or more, 16.8% of companies with 63.9% of employees had taken part in negotiations at company level in 2008.[4]

However, another DARES study emphasises that negotiated pay rates are only part of the picture for most French employees. It found that on average earnings were 47% higher than the appropriate industry level rates. This was partly because earnings include other elements such as bonuses and overtime, and partly because

Who negotiates and when?

Negotiations are normally conducted by the trade unions on one side and employers’ federations or individual employers on the other. However, the rules setting out precisely who has a right to negotiate and the circumstances under which agreements are valid are complex.

Legislation introduced in 2004 and 2008 produced important changes in the rules for bargaining at all levels – national, industry and company. In the past, it was sufficient to get just one representative union to sign for an agreement to be valid, but this is no longer the case.

At national level, agreements can only be signed by “representative” trade unions. There are five large national union confederations, which are nationally representative: CGT, CFDT, FO, CFE-CGC and CFTC (see section on unions). National agreements are only valid if they have been signed by a confederation or confederations with at least 30% support nationally, and if they are not opposed by other confederations that together have majority support. However, in calculating levels of support and opposition, only the results of the five national representative confederations are included; the votes for the other confederations like UNSA and Solidaires are ignored. This means that the current voting strength in national negotiations is as follows: CGT (30.62%), CFDT (29.74%), FO (18.23%), CFE-CGC (10.78%) and CFTC (10.63%).

At industry level, the organisations that have negotiating rights on the union side are the industry federations of the nationally representative union confederations together with other unions which have shown that they have at least 8% of the votes cast in works council and similar elections in the specific industry. (The automatic representative rights of the industry federations of nationally representative confederations only last until 2017. After that date, the rules will be the same as those which apply at national level. In other words, they will need 8% of the votes cast in the industry to be representative.) To be valid, an agreement must have been signed by unions with at least 30% support in the industry, based on votes cast in works council and similar elections, and not be opposed by unions with more than 50% support.

Once signed the terms of the agreement are binding on all the employers who are members of the employers’ federation which has signed the agreement and must be applied to all employees. The government also generally extends the terms of an agreement making it binding on all employers. Since 2010, around 900 agreements have been extended in this way each year. The figure for 2013 was 925, although only half of these (457) dealt with pay.[7]

At company or plant level, agreements can normally only be signed by a union delegate nominated by a representative trade union present in the workplace. A representative union must, among other things, have the support of 10% of the workforce, as indicated by the votes in the first round of the elections for the works council or employee delegates (see section on workplace representation). Union delegates must also receive at least 10% of the votes as individuals in the first round of the works council or employee delegate elections – previously there had been no need for any specific level of support.

However, although the right to negotiate is generally reserved for the union delegate, in some cases, where there are no union delegates, other representatives of the employees are able to negotiate and reach agreements.

The 2008 legislation introduced a new representative with a right to negotiate in some exceptional circumstances – a representative of the union section in the workplace who is not a union delegate. This individual can be only nominated when the union concerned has won the support of fewer than 10% of the company’s employees (see section on workplace representation). However, the right of the representative of the union grouping to negotiate is very limited and depends on there being no union delegate, and there being no legislation or agreement allowing existing employee delegates or specially mandated employees to negotiate. In any case any agreement negotiated by a representative of the union grouping, must be supported by the majority of the workforce in a vote to be valid.

In practice the vast majority of company agreements are signed by union delegates. A 2013 report on the operation of the 2008 and subsequent legislation found that the opportunity of getting agreements signed by representatives other than union delegates had been “little used … other than in the area of employee saving schemes”, where an agreement is normally required to set up such a scheme. The report found that 19% of the agreements signed in 2012 had been signed by elected representatives other than the union delegate, but 91% of these had dealt with employee savings.[9]

Just as at national and industry level, there are also rules at company level on the level of support unions must have before the agreements they have signed are valid. And as at national and industry level, these rules have changed because of the 2008 legislation. However, at company level, the pace of change has been faster.

Under the 2008 legislation, a valid agreement can only be reached if it is signed by unions which have 30% support in the company, and not opposed by unions with majority support. The support in both cases is as shown by the most recent election results for works councils or employee delegate elections.

The law requires that at company level, where there is a union delegate (which is a legal obligation only in companies with more than 50 employees), there should be annual negotiations on a wide range of issues (see next section). In companies with more than 300 employees there should also be negotiations every three years on long-term staffing plans and career development. At industry level, where unions and employers’ organisations have already signed an agreement on pay, there is an obligation to negotiate annually on pay rates, and every five years on job classifications. It should again be emphasised that at both levels there is only an obligation to negotiate, not to reach agreement.

The subject of the negotiations

National level negotiations for the whole economy cover a wide range of issues, including social security and industrial relations. For example, the new arrangements on the level of support necessary for a union to have the status of a representative union and other changes introduced by legislation in August 2008 were based on a common position agreed by the CGT and the CFDT together with the employers’ associations in April 2008. Other issues covered recently have included stress, the modernisation of the labour market, life-long learning and dealing with occupational risks. The legislation on employment security, introduced in 2013, was based on an agreement between the employers and three union confederations – CFDT, CFTC and CFE-CGC.

Industry level and company negotiations cover pay, pay structures, equality between men and women, financial participation, working time and a range of other working conditions.

Company level negotiations should also cover a wide range of topics. In companies with a union delegate there is an obligation to negotiate not just on the central issues of pay, hours of work and work organisation, but also occupational equality between men and women, employee savings schemes, maintaining employment for older workers, measures to aid disabled workers and gender equality, as well as long-term staffing plans and career development in larger companies. The 2015 legislation on social dialogue and employment attempted to simplify the process of negotiation by grouping the 12 separate topics where the employer had a duty to negotiate into three blocks. These are pay, working time and the distribution of the value added by the company; gender equality and the quality of working life; and, in companies with at least 300 employees, long-term staffing plans and career development.

Employers and unions are also free to negotiate on other issues such as leave or training. Unions at company level can also be involved in negotiating redundancy agreements (see section on workplace representation).

In addition, the state plays a very direct and important role by setting a national minimum wage (SMIC). This is uprated at least annually, based on the inflation experienced by the poorest fifth of French households, plus half the increase in purchasing power of all employees. In addition the government can, and sometimes does, increase it by more than this. In 2013 1.9 million employees (12.3% of employees in the private sector other than apprentices and temporary staff) were paid the minimum wage.[10]

References:

[1] La négociation collective en 2013, Ministère du travail, de l’emploi et du dialogue social, Paris 2014

[2] The agreements are split into three groups in the tables: metalworking, where 7% were below the national minimum wage at the end of 2013: building and public works where 19% were below; and other agreements – the largest group – where 11% were below.

[3] La négociation collective en 2013, Ministère du travail, de l’emploi et du dialogue social, Paris 2014

[4] Négociations collectives et grèves dans les entreprises du secteur marchand en 2008, DARES, June 2010

[5] La couverture conventionnelle a fortement progressé entre 1997 et 2004, DARES, 2006

[6] Salaires conventionnels et salaires effectifs : une corrélation variable selon la catégorie socioprofessionnelle et la taille de l’entreprise ; DARES, December 2012

[7] La négociation collective en 2013, Ministère du travail, de l’emploi et du dialogue social, Paris 2014

[8] LOI n° 2015-994 du 17 août 2015 relative au dialogue social et à l'emploi

[9] Rapport sur l’application des dispositions de la loi n° 2008-789 du 20 août 2008 relative à la démocratie sociale et de la loi n° 2010-1215 du 15 octobre 2010 les complétant, Ministère du travail, de l’emploi de la formation professionnelle et du dialogue social, Paris December 2013

[10] Les bénéficiaires de la revalorisation du SMIC au 1er janvier 2013, by Line Martinel and Ludovic Vincent DARES, December 2013

L. Fulton (2015) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.