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 in some cases the rates they set are below the national minimum wage.

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 53 national level texts were agreed in 2009, covering issues such as training, short-time working and the impact of the crisis on levels of employment. 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 2009, 1,108 industry level agreements of various types were signed, although only 421 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 bonuses, training, 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.)

However, some of the agreements signed have only limited importance in determining pay, as many of the rates they set are below the national minimum wage, which then supersedes them. The government has recently encouraged the negotiation of new industry level agreements and has had some success. Despite this, the annual report on collective bargaining shows that among the 276 industry level agreements covering at least 5,000 employees, there were still 48 (17%) at the end of 2008, which had minimum rates below the national minimum wage; at the same point in 2008 there were 56 (20%); and in 2007 76 (28%).

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. 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.

Figures from the annual report on collective bargaining show that there were 28,185 company level agreements signed in 2009, 3.8% more than in 2008. Of these the largest group dealt with pay and bonuses, followed by working time and employee financial participation. 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. There are also 1.9% who are just covered by a company agreement and 5.4% whose terms and conditions are set by legislation. ³ However, another DARES study emphasises that negotiated general pay increases are only part of the picture for most French employees. In 2004, only 34% of those whose pay went up depended on a general increase; 49% saw their pay increase because of a combination of a general increase and individualised pay rise, and 17% depended entirely on an individualised pay rise.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. These are currently the five large national union confederations, although this may change in the future (see section on unions). These national agreements can currently be blocked if three of the five confederations object. However, this will change in 2013, as a result of the 2008 legislation. After that date, agreements will only be valid if they have been signed by a confederation or confederations with at least 30% support nationally, as demonstrated in works council and similar elections, and if they are not opposed by other confederations that together have majority support.

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 a degree of support in the specific industry. To be valid, an agreement must currently have “majority” support. Whether an agreement has majority support can currently be determined in two ways. The first possibility is that majority support is decided according to a set of rules previously agreed by the unions in the industry. The second possibility, which applies where no rules have been agreed, is that the blocking procedure applies. In other words an agreement is not valid if a majority of unions in the industry object to it. This too will change in 2013. From that date, an agreement will only be valid if it has been signed by unions with at least 30% support in the industry, based on works council and similar elections, and it is not opposed by unions with majority 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.

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).