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Board-level Representation

Legislation passed in 2013 greatly extended the range of companies covered by the obligation to have employee representatives at board level, and this was widened again in 2015. As well as state-owned companies which were previously covered, large private companies must in future also have at least one employee representative at board level. This is in addition to representatives of employees holding shares and employee representatives who can be present at board meetings, but are not board members.

Employee representatives at board level representing all employees were until 2013 generally only been present in state-owned and privatised companies. However, the law on employment security, adopted in June 2013, substantially extended this representation, and legislation on social dialogue and employment, enacted in August 2015, and the so-called Pacte legislation, adopted in 2019, produced a further widening.

 

As a result, employee representation at board level is obligatory in larger share-based companies (Société anonyme (SA) with 1,000 or more employees in France or 5,000 or more worldwide (France and other countries). (Before 2015, the thresholds were 5,000 and 10,000 respectively.) There must be one employee representative, where there are up to eight board members, and two where there are more than eight. (This threshold was reduced from the previous figure of 12 in the 2019 Pacte legislation.)  This applies whether the company has a single board (conseil d’administration) or a two-tier board system (less common) in which case the employee representative or representatives become members of the supervisory board (conseil de surveillance).

 

The mechanism for choosing the employee representatives is decided by an extraordinary shareholders’ meeting, after taking advice from existing bodies representing the employees, the group committee, the central Social and Economic Committee (CSE) or the company CSE, as appropriate.

 

The meeting can choose between four options:

  • elections, either direct or indirect, with nominations made by the unions;
  • appointment by the existing bodies representing the employees – the group committee, central CSE or CSE;
  • appointment by the union with the largest share of the vote in the CSE elections (the two unions with the highest votes, if two employee representatives are to be chosen); or
  • a combination of one of the three options set out above plus an appointment by the European Works Council or, in a European Company, the SE representative body. (This option is only available if at least two employee representatives are being selected.) 

 

Where board-level employee representatives are chosen through elections, the list of candidates must contain an equal number of male and female candidates. Where two are appointed by the group committee, central CSE or CSE, one must be a man and one a women. The individuals must have at least two years’ service in one of the companies covered by the board.  

 

The period of office of an employee representative at board level is set by the statutes of the company. However, it cannot exceed six years. Board-level employee representatives can only be dismissed with the permission of the local labour inspector, and this protection continues for six months after they have stepped down. They are also entitled to 40 hours of training (increased from 20 by the Pacte legislation in 2019).

 

The introduction of the obligation to have employee representation at board level has led to a clear increase in their number. In 2018, according to the corporate governance monitoring group Ethics &Boards, there were 111 employee representatives at board level in the companies in the SBF 120 group of key French companies – equivalent to 7.4% of the total.[1] In 2013 there were only 37.[2]

 

In state-owned companies with fewer than 200 employees, up to a third of the seats on the board (with a minimum of two) are reserved for employee representatives. In those companies with more than 200 employees, employee representatives account for one third of the board. The situation is different in the subsidiaries of state-owned companies, where there are no employee board seats if they employ fewer than 200, three seats if they employ between 200 and 1,000, and a third of the board if they employ more than 1,000. In all cases employee representatives at board level are elected by the employees on the basis of nominations made by representative unions or at least 10% of the members of the CSEs in the company.

 

Other companies can also choose voluntarily to have employee representatives on the board, although this is rare. The number of employee representatives in these companies is limited to a maximum of four (five in the case of listed companies) and the number also cannot exceed one third of the total of board members.

 

One important aspect of the French system of board-level representation is that the position of an employee representative at board level cannot be combined with any other elected position, such as a member of the CSE or a trade union delegate. This applies in all cases (private companies with more than 1,000/5,000 employees, state-owned companies and companies voluntarily choosing to have employee representatives on the board).

 

Employee representatives can also be present as board members representing employee shareholders. At least one member representing employee shareholders is mandatory where employee shareholders have at least 3% of the shares.

 

Finally, the law provides for either two or four representatives of the CSE (depending on the number of managers employed) to attend board meetings (or meetings of the supervisory board where this exists). Where there are already employee board members, only one works council representative has the right to attend. These works council representatives are not board members – for example, they cannot vote. However, they can raise issues, and have the right to have their points answered. They also have the right to receive the same information as other board members.

[1] Ethics & Boards Weekly Governance Ratio 19/10/2018  https://www.ethicsandboards.com/studies/469-weekly-governance-ratio-19-10-2018?lang=en (Accessed 12.02.2019)

[2]La présence des salariés se renforce dans les conseils d'administration, by Laurence Boisseau, Les Echos, 24.10.18  https://www.lesechos.fr/24/10/2018/lesechos.fr/0302433445493_la-presence-des-salaries-se-renforce-dans-les-conseils-d-administration.htm (Accessed 12.02.2019)

L. Fulton (2020) National Industrial Relations, an update. Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.