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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, something which was extended in the area of working time by the 2008 legislation; the 2007 legislation dealt with national negotiations; while 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. 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 46 national level texts were agreed in 2011, although 35 of these were amendments to existing agreements. Issues covered by the new agreements included youth employment, job security, additional pensions and unemployment benefits.1

Industry level bargaining is the most important level for collective bargaining, in terms of numbers employees covered. The ministry of labour’s annual report on collective bargaining shows that, in 2011, 1,195 industry level agreements of various types were signed, although only 489 of them dealt with pay increases and in some cases there were several pay agreements linked to the same main agreement. Other subjects covered included training, procedural issues, bonuses, retirement, employment contracts and gender equality. (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 industry level agreements covering at least 5,000 employees (300 in 2011), the proportion which had minimum rates below the national minimum wage in November/December each year had fallen steadily from 28% in 2007 to 9% in 2011. However, many of these industry agreements have minimum rates at the national minimum or just above it. This is 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 May 2013, which implemented an agreement on employment security signed by three of the five nationally representative union confederations in January 2013, makes it possible for companies in financial difficulties to reduce some pay rates, although not the very lowest, as well as making changes to working time. However, these agreements will need the support of unions representing a majority of employees and will last a maximum of two years.

Figures from the annual report on collective bargaining show that there were 33,869 company level agreements signed in 2011, very similar to the 33,826 signed in 2010. Of these, the largest group dealt with pay and bonuses, followed by working time and equal opportunities. Figures from the ministry of labour’s research arm DARES indicated that of companies employing 10 or more, 16.8% of companies with 63.9% of employees, had taken part in negotiations at company level in 2008.2

Overall, the obligation to negotiate and the fact that government often extends the terms of industry level agreements to all employers mean that formal collective bargaining coverage is very high. A study by DARES estimated collective bargaining coverage in the private sector at 97.7%% in 2004, with most (90.4%) being covered by industry level agreements, although sometimes combined with a company agreement.3

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 of company level agreements providing higher pay. However, this gap also reflects the widespread use of individualised pay. Overall the gap between the industry level rates and actual earnings increases with the size of the company. In companies with 10 to 49 employees actual earnings are 39% higher; in companies with more than 2,000 they are 55% higher.4

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 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 they will also have to have 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 often extends the terms of an agreement making it binding on all employers. Since 2006, more than 800 agreements have been extended in this way each year. The figure for 2009 was 831, although fewer than half of these (367) dealt with pay.5

At company or plant level, agreements can normally only be signed by the trade unions present in the workplace, as represented by the union delegate, or delegates. The 2008 legislation introduced a new requirement for the appointment of union delegates. They must now 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 – and they must be nominated by a union which has at least 10% of the votes in these elections (see section on workplace representation).

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 have for some time been able to negotiate and reach agreements.

The 2004 legislation set new rules for company level negotiations in companies without union delegates. However, these rules only applied in industries where a collective agreement reached by unions and employers at industry level had been extended to cover all employees in the industry. Under these rules, it is the two sides who agree the appropriate negotiating mechanisms for their industry. They decide, for example, the areas open for negotiation and the rules for ensuring that agreements have majority support. In the first instance, where it has been agreed that company level negotiations should proceed without union delegates, they should be undertaken by existing elected employee representatives, the works council, if there is one, or if not, the employee delegates (elected representatives of all employees – see section on workplace representation). However, the agreements they sign must be endorsed by a joint employer-union commission for the industry. In companies with no elected representatives and no trade union delegate, individual employees can be mandated by unions to negotiate on specific issues. In such cases, the agreement must be endorsed by a majority of employees. Although the 2004 legislation changed the rules on mandating individual employees to negotiate on behalf of the union, this is not the first time the procedure has been used. Many of the company agreements on the reduction in working time, at the time of the introduction of the 35-hour week, were signed by mandated employees.

The 2008 legislation has changed the rules further and from January 2010 similar processes can also be used for companies in industries where the industry level agreement has not been extended to cover all employees. From January 2010, all companies with fewer than 200 employees, where there is no union delegate, can now reach agreements with either the existing employee representatives, or with specially mandated employees. The rules on getting the agreement endorsed by a joint commission, in the case of agreements negotiated by employee delegates, or by a majority of the workforce, in the case of mandated employees, continue to apply.

The 2008 legislation also 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.

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 are changing because of the 2008 legislation. However, at company level, the pace of change is faster.

In companies where there have been no works council elections since the 2008 legislation came into effect, the existing arrangements apply. These are that a valid agreement must either have majority support or it must not be opposed by the union organisations in the company that have majority support. Majority support can be demonstrated by either the support of unions which won a majority of votes in the most recent works council or employee delegate elections, or by the support of the majority of employees in a ballot.

However, in companies which have held works council or employee delegate elections since the 2008 legislation came into effect – a large and growing number – there are new rules. These are that 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 (in effect only 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 on the way the works council is informed and consulted about employment developments, and on how changes in employment and skills should be dealt with. 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 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, while 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 – essentially those with more than 50 employees – there is an obligation to negotiate annually covering not just the central issues of pay, hours of work and work organisation, but also occupational equality between men and women, salary savings schemes, measures to aid disabled workers and equal pay, although if there is already an agreement on occupational equality or disabled workers this need not be renegotiated for three years. As already noted, in larger companies, there should also be negotiations on the way the works council is informed and consulted and mechanisms for dealing with changes in employment every three years. Employers and unions are also free to negotiate on other issues such as leave or training.

In addition the state plays a very direct and important role by setting a national minimum wage (SMIC).

L. Fulton (2013) 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.