35-hour working week law adopted
Published: 27 June 1998
France's new working time law was passed by Parliament in May 1998, and validated by the Constitutional Council in June. It sets the length of the statutory working week at 35 hours as of 1 January 2000 in companies employing more than 20 people, and from 1 January 2002 for smaller firms. Some provisions come into effect immediately after the law's promulgation. This new legislation has brought in radical modifications to French employment law, and both employers and trade unions are already engaged in its implementation.
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France's new working time law was passed by Parliament in May 1998, and validated by the Constitutional Council in June. It sets the length of the statutory working week at 35 hours as of 1 January 2000 in companies employing more than 20 people, and from 1 January 2002 for smaller firms. Some provisions come into effect immediately after the law's promulgation. This new legislation has brought in radical modifications to French employment law, and both employers and trade unions are already engaged in its implementation.
The "orientation and incentive law on the reduction of working time" was passed by Parliament on 19 May 1998, and validated by the Constitutional Council on 10 June.
The objective of this "incentive" law, which has dominated the industrial relations debate since it was first outlined at the national conference on employment on 10 October 1997 (FR9710169F), is to set out the principles for the reduction of the statutory working week, and to encourage employers and trade unions to bargain on the issue at company and sector levels before the new statutory rules are applied. The law will be followed in late 1999 by another, which will take account of what will have been decided in bargaining, and will establish the ways in which the reduction in hours will be implemented, notably concerning:
the situation of employees paid the statutory Minimum Wage (Guaranteed) (salaire minimum interprofessionnel de croissance, SMIC);
new regulations on overtime;
simplification of the methods of varying working time (for example, annualisation, or counting the hours over a one-year period); and
new regulations on working hours for managerial and professional staff.
Main provisions of the law
A new statutory working week in 2000 and 2002
Article 1 of the law reduces the "statutory length of actual work" to 35 hours per week, from 1 January 2000, in companies employing more than 20 people, and from 1 January 2002 for those in which 20 or fewer people are employed. The "statutory length of actual work" is a reference figure used as the basis for calculation. It does not mean that in 2000, and 2002, all employees concerned will be working 35 hours a week. This figure principally defines the threshold beyond which overtime is calculated. The 35-hour figures does not represent a maximum number of hours, or even the number of hours actually worked, which is often higher or lower.
Actual work goes European?
In the parliamentary debate on the law on the reduction of the working time deputies were split in the controversy surrounding the definition of "actual work" (travail effectif) (FR9804103F). Knowing what time exactly is to be reduced, and how to reduce it, is of course a fundamental question.
The new Article L.212.4 of the Labour Code introduces a new definition of "actual time worked", the result of a compromise between the various positions of the members of parliament and a willingness to implement EU Directive 93/104/EC of 23 November 1993 on certain aspects of the organisation of working time:
"The length of actual work is the time during which the employee is available to the employer, and has to follow the employer's directives without being able to go freely about his or her business. The length of time worked [...] means time actually worked, not counting the time required for getting dressed and snacks, as well as periods of inactivity in factories and businesses fixed by decree. These periods can, however. be paid in compliance with practice and collective agreements."
According to Employment and Solidarity Minister, Martine Aubry, "this definition tends towards a distinction between time actually worked and periods on standby, during which employees can go freely about their business, while being available to be called in sporadically to work. The definition reworks the established dividing lines regarding breaks - and travel - according to which the employee is, or is not obliged to remain available to the employer."
Daily rest period and breaks
The law is also intended to comply with the EU working time Directive's provisions on the minimum daily rest period. From now on, all employees will have a minimum daily rest period of 11 consecutive hours, except where a collective agreement exempts an activity which necessitates the provision of a permanent service, or fragmented periods of work. Moreover, the law states that no daily period of working time can last more than six hours without a minimum 20-minute break being provided for.
It should be noted that mobile employees in the transport sector will not be affected by these provisions.
The law's field of application
The law does not apply to civil servants, and an "inventory" should be compiled on the regulations and practices governing their working hours by the end of 1998.
The new legislation will affect all other employees in both the private and public sectors. However, the law provides that 45 state-run organisations, whose financial resources are for the most part supplied by the government, will not be entitled to the financial aid the new law offers other employers.
Priority is given to collective bargaining
The "incentive" law calls on employers and unions to negotiate the practicalities of actual reduction of working hours, adapted to the sector and company levels, between now and the deadlines of 2000 and 2002. In the thinking behind the law, these negotiations should enable firstly, the most appropriate solutions to be found to the various differing situations, and secondly, the conditions for the changeover to the statutory 35-hour working week to be agreed in advance. Companies which achieve the new limit before the deadlines will receive state grants.
New protagonists in company bargaining - mandated employees.
Company-level bargaining will be the most influential, because it is at this level that the effects of reducing working time on work organisation can be measured. However, this imperative to negotiate at workplace level must face up to the problem caused by the low level of union membership in companies. It is currently estimated that 65% of companies with 50-90 employees, and 45% of those with 100-199 have no trade union delegate (délégués syndical). Additionally, only one employee out of five works in a company covered by a company agreement.
To address this situation, the Government has decided to extend the opportunity given to trade union organisations officially deemed representative at national level - CFE-CGC, CFDT, CFTC, CGT and CGT-FO- to "mandate" an employee to negotiate a company agreement. This "mandating" procedure was thought up by employers and unions themselves, in a national intersectoral agreement dated 31 October 1995 on the development of collective bargaining (an agreement signed by all the unions except the CGT). However, while the 1995 agreement and the law of 12 November 1996 (which gave the mandating procedure legal status) provided for the bargaining mandate to be granted only according to rules laid down in a sector-level collective agreement, the new law on the 35-hour working week considerably opens up the possible applications of mandating. Thus, Article 3 states that :
"In companies and establishments with no union delegate or staff representative designated as a union delegate, and where there is no sector-level agreement [...] a collective agreement can be concluded by one or more employees expressly mandated by one or more nationally representative trade union organisations."
Mandated employees (salariés mandatés) will be entitled to a similar kind of protection against dismissal as that enjoyed by union delegates. The conditions of the mandate granted by a union will be very precise. Moreover, the law stipulates that "employees who, because of the power they hold can be considered the equivalent, or near equivalent, of the head of the company cannot be mandated."
State funding for working time reduction
Companies which reduce the length of working time before the deadlines for the implementation of the 35-hour working week (2000 and 2002) through application of a collective agreement and which, as a trade-off, recruit new staff (the "offensive" section of the law) or save jobs (the "defensive" section) will receive an "incentive" grant.
The conditions which must be satisfied in order to receive this grant are as follows :
working time must be reduced by at least 10% of its original length;
the new collective timetable of working hours must allow for a maximum of 35 hours per week;
this reduction in hours must be accompanied by the creation of new jobs, equivalent to 6% of the workforce, or the maintenance of 6% of the workforce in cases where the company is implementing a "social plan" (plan social) - a compulsory redundancy programme of mitigating and accompanying measures; and
the employer must be committed to maintaining staffing levels - as raised by the new recruitment, in the case of an "offensive" agreement - for a period of at least two years.
The funding - which takes the form of a reduction in employers' social security contributions - will be granted for each of the employees to whom the working time reduction (réduction du temps de travail, RTT) applies, as well as for each of those recruited (under an "offensive" plan). It has three major features: it is granted for five years; it decreases steadily over that period; and it is more substantial at the time when the law is implemented than in the following years (see table below).
| Amount of basic annual grant | |||||
| Date of implementation of the measure | 1st year | 2nd year | 3rd year | 4th year | 5th year |
| June 1998-June 1999 | FRF 9,000 | FRF 8,000 | FRF 7,000 | FRF 6,000 | FRF 5,000 |
| 2nd half of 1999 | FRF 7,000 | FRF 6,000 | FRF 5,000 | FRF 4,000 | FRF 3,000 |
Increased funding
Further funding can be granted in three situations provided for by the law :
if a company reduces its employees' weekly working hours by 15% and recruits an extra 9% of staff, it will receive a FRF 4,000 yearly grant for five years per employee concerned, added to the progressively decreasing one mentioned above;
the funding will be increased by FRF 1,000 per year per employee, for five years, for companies that create more jobs than the 6% increase planned, or that take on a high proportion of young people or disabled or long-term unemployed people; and
labour-intensive companies, and those which employ at least a 60% blue-collar workforce, if 70% of the employees are paid at least one and a half times the SMIC, will receive extra funding that decreases over a three-year period from FRF 4,000 for the period between June 1998 to June 1999 to FRF 2,000 for the third year.
Means of reducing working time
Although the law takes a working week as its basis, it nonetheless varies the means by which the number of hours can be reduced, in particular by calculating the number of hours worked over a year or even longer. The methods outlined are:
annualised hours - calculating the number of hours worked over a one-year period (annualisation) - can limit the volume of overtime worked and avoid the extra cost generated by the reduction of the number of hours worked. Thus, a company agreement can enable the cut in working time to be expressed as days off. This principle will enable working time to be annualised for all companies, including those which are not receiving the grants mentioned above. This measure is likely to be more appropriate to management staff; and
calculating the number of hours worked over a period longer than one year (pluri-annualisation). The law thus provides the possibility of combining annualised hours with a "time savings account" (compte épargne temps) in which time off may be accumulated as holidays and carried over for a period of several years.
Part-time jobs
The legislation in effect until the new law was promulgated exempted companies from 30% of employers' social security contributions if they created part-time jobs of between 16 and 32 hours per week. Henceforth, this reduction will be applicable only to part-time contracts for between 18 and 32 hours.
Parliament has thus altered the French definition of part-time work. This is defined by comparison with full-time work: a part-time contract cannot be for more than 80% of the statutory or collectively-agreed length of the working week. If the agreed working week was reduced from 39 to 35 hours, the maximum part-time hours would fall from 32 to 28. From now on, the maximum number of hours for a contract to be considered "part-time" - and thus render the employer eligible for exemption from contributions - is between 28 and 32 hours. This new definition is, however, probably temporary, as EU Directive 97/81/EC of 15 December 1997 on part-time work (EU9712175N) which France has to apply in the next two years, should simplify this issue. The Directive states that a part-time worker is "an employee whose normal hours of work, calculated on a weekly basis or on average over a period of employment of up to one year, are less than the normal hours of work of a comparable full time worker".
To reduce abuses to a minimum in the use of "fragmented" part-time work, from 1 January 1999, the law will stipulate that employees' working can include just one interruption per day, and that no interruption can be longer than two hours.
Compensatory time off for overtime
According to the Government, the law on the 35-hour working week has the goal of fostering job creation. That is why recourse to overtime working is made more difficult. In companies with more than 10 employees, overtime of more than 42 hours within an annual 130-hour quota must be compensated with time off of 50% of the time worked. The law lowers the threshold from which this compensatory time off applies to 41 hours.
Pay compensation for hours cuts
The law does not deal with the consequences for pay of the reduction of working tine. This matter is left to bargaining between unions and employers, although the Minister of Employment has stated that in some cases, a cut in working time may be accompanied by pay moderation.
One particular matter relates to employees paid the SMIC. The SMIC is currently calculated on an hourly basis (FRF 39.43 since 1 July 1997 - FR9706153N) and for a 169-hour month (assuming a 39-hour working week) corresponds to FRF 6,663.67. Martine Aubry has ruled out any wage cut for people paid the SMIC if their working week is cut below 39 hours. In her opinion, the smicard(person earning the SMIC) should keep his or her entire pay. However, she added that, "it does not seem opportune that the pay of an employee still working 39 hours and paid [on the basis of the hourly SMIC rate] should automatically rise by 11.4%, on top of which payment for overtime should logically be added." This is the reason why the government is considering defining "a minimum monthly remuneration, parallel to the hourly SMIC" standing at FRF 6,663.67, for employees earning the SMIC whose working week is reduced to between 35 and 39 hours. The introduction of two different SMICs - one standing at 39.43 FRF for employees working 39 hours, and another the equivalent of 49.93 FRF for those working 35 hours a week - will not be unproblematic. This matter will be the subject of consultation with employers and unions and will be finally decided in late 1999, in the second law on the reduction of working time.
The social partners mobilise
Since before the law was passed, trade unions and employers have tried to mobilise their activists and members, in order to explain what, from their perspective, is at stake in the reduction of working time and the negotiations to be conducted before the end of 1999.
Employers' organisations
The National Council of French Employers (Conseil National du Patronat Français, CNPF) the main employers' organisation, has continued to criticise what it considers the "absurdity" of the reduction of the statutory working week to 35 hours. After the tripartite conference on 10 October 1997 (FR9710169F), the CNPF was shaken by heated controversy which resulted in the resignation of its president, Jean Gandois. The organisation then launched an information campaign amongst its membership and the public (FR9711176F). The new president, Ernest-Antoine Seillière, elected in December 1997 (FR9712188N), made opposition to the 35-hour week bill into his main issue and considered freezing collective negotiations.
As the passing of the law approached, the new CNPF president asked to meet the Prime Minister, Lionel Jospin, for the first time, on 30 March 1998, to ask for a two-year postponement of the law's implementation, and draw his attention to "unresolved matters", such as the SMIC, which will be difficult to manage once the law entails the co-existence of an hourly SMIC and a guaranteed monthly remuneration. Immediately after this, Mr Seillière undertook a series of interviews with the unions, to discuss the themes for bargaining that it would be possible to address in the following months.
Although the CNPF is still opposed to the law, Mr Seillière explained to its membership on 26 May at a meeting of human resources directors, that "the CNPF does not intend to tell companies how to deal with the reduction of working time [...] If they manage it, then well done! The CNPF is not fighting an ideological battle. Successful negotiations will not be considered a slap in the face for the organisation that represents employers." Many sector-level employers' federations have denounced their collective agreements or suggested that they be redrafted in order to adapt them to the new state of affairs brought about by the law on the reduction of working time (see below).
Trade unions
French trade unions have been mobilising for some time to be in the best position to take up the challenge of the coming negotiations on the length of working time, and to use the mandating procedure in order to establish union representation in companies without it. All the unions are involved in awareness-raising on the law among their activists and explanation of its content. They are also publishing "negotiator's guides" and stepping up their training efforts to take maximum advantage of the new opportunities open to them.
The CFDT committed itself very early in its activities to supporting the reduction of the working week to 35 hours, as a first step towards reducing it to 32 hours (the objective adopted at its most recent conference). Even though it did not share the idea of establishing a deadline for the implementation of the 35-hour week, it intends to use the law, as its secretary general, Nicole Notat, emphasised, to find "the desired context for action and bargaining. We wanted the implementation of a measure for massively reducing working hours which would leave the door open to a further reduction to a 32-hour week, and we got it." This opinion was given on Tuesday 12 May, during a major gathering of more than 25,000 of the union confederation's members. The CFDT feels that the success of company-level negotiations is crucial. The union has set itself the goal of signing 25,000 agreements on the 35-hour week in 18 months. To achieve this, it has implemented a specific procedure: 6,000 negotiators will be trained in 1998, while 12 national officials will be available to give assistance to union representatives in companies.
After long internal debates, covered in Le Peuple (issue no. 1478), its official paper, the CGT has stated that the 35-hour week may be "a rejuvenating experience for demands" by the union movement. It thinks that it will be possible to "create jobs, raise pay, and transform work when the 35-hour week comes into being". The CGT intends to use the law to "find its footing again on union territory".
The CFTC has not displayed much optimism about the law's consequences. It feels that "the momentum generated by the issue of the 35-hour week will result in something positive only if the initial negotiations create jobs."
The CFE-CGC, which has been mobilising its activists around the opportunities opened up by the mandating process, is concerned about the application of the 35-hour week to management staff. In the opinion of this union, "the measurement of working hours, when applied to management, poses obvious problems that the law creates but does not allow to be easily solved." As far as Marc Vilbenoît, the CFE-CGC president, is concerned, "management staff must not be the sacrificial lambs of the negotiations on the 35-hour week."
The CGT-FO is certainly the most circumspect of the unions regarding the effects of this law. Its secretary general, Marc Blondel, has not "given the demand for a 35-hour week top priority". This is because, he says, "I don't think reducing the working week by 10% will create 10% more jobs, as some, in my opinion unfounded, theories imply [...] I don't believe that the 35-hour week is the only mechanism for creating jobs." Mr Blondel feels that if reducing working time is "integrated into a whole package - including Keynesian measures - in other words, supporting demand" then "yes, unemployment can be reduced."
The first negotiations
Company level
Some companies have already signed agreements on the 35-hour week. By early June 1998, three of them had demonstrated the diversity of the new law's possible applications:
at Malichaud-Atlantique, an aeronautic subsidiary of the American Chromalloy group, the 35-hour week will be achieved by the introduction of the four-day week. There will be no wage cuts, but there will be a wage freeze in 1998 and 1999;
at Téléassurances, a subsidiary of GMF, the agreement concerns the company's "tele-advisors" (who have only telephone contact with the customers). Their working hours have been reduced by 10%, and 6% more staff have been taken on. Regarding their pay, an overall 1.3% rise has been decided for 1998. However, as a trade-off, the limits within which the hours are to be worked have been extended. This agreement was signed by CGT-FO, CFE-CGC and an independent union, but not by CFDT or CGT; and
in the Boiron pharmaceuticals laboratories (employing 1,800 staff), an agreement on a 10% reduction in working hours (with 95 new staff to be taken on) was signed by CGT and CGT-FO, but not CFDT or CFE-CGC. The matter of management working hours was the subject of special discussion: this category of staff will have 47 half-days of time off. If a time savings account is created, management employees will not be able to accumulate more than 12 half-days per year. There will be a wage freeze in 1998. Before this agreement was signed, the company's profit-sharing scheme had been activated when productivity rose by 2%. In 1998 and 1999, this threshold will be placed at 5%.
Sector level
After the conference of 10 October 1997, collective agreements were denounced (ie terminated) by employers in some sectors - this was true of banking (FR9802194F), high street department stores (FR9804105N) and most recently the sugar industry.
The Union of Metallurgy and Mining Industries (Union des industries métallurgiques et minières, UIMM), which has traditionally played a key role within French employers' circles, has not denounced the numerous collective agreements to which it is a signatory. It has however, raised the possibility of this, stating that "it would be opportune to bring the national collective agreements applicable to this sector up to date [...] The pernicious effects of the law should be compensated, enabling the work of individual employees to be organised in a way that satisfies the imperatives of business competitiveness."
During a meeting held on 2 June 1998, the UIMM emphasised two objectives that it wished to achieve :
an increase in the annual quota of authorised overtime, raising it from 94 to 318 hours (188 hours resulting from the move from 39 to 35 hours for 47 weeks' work, plus the 130 statutory hours); and
the creation of a "one-off free-timetable agreement", similar to the one for executives, to be made available to employees paid over FRF 240,000 per year. This step would mean that the hours worked would no longer be calculated, but that as a compensation, extra days off would be given.
Although the CGT-FO and the CFE-CGC feel that taking part in negotiations on these issues and suggesting amendments or substantial modifications, is preferable to termination of all the collective agreements in the metalworking industry, the CFDT, the CGT and the CFTC have protested against this employers' initiative, seeing it as a way of "sabotaging" the working time reduction. The first negotiations are to begin on 30 June 1998.
Commentary
Beyond the arguments over the effects of working time reduction on job creation, the new law and initial reactions from employers and unions have revealed two major issues at stake in industrial relations terms:
will the growth of company-level collective bargaining actually provide an opportunity for unions to gain a foothold in small and medium-sized businesses, from which they are currently absent, and especially to have an influence over the decisions that will be taken regarding the organisation of working hours as well as that of work itself? Or, conversely, are we witnessing a further fragmentation of the representation of workers and more difficulties for unions in influencing employers' decisions regarding the organisation of production?
after an attitude of pure and simple rejection of the law, the CNPF and some of its individual industry-level federations have attempted to "neutralise its harmful effects" by a truly aggressive strategy of challenging the body of collective agreements built up over more than 50 years. The way that negotiations and conflicts develop on this issue will determine how matters develop in the years to come.
(Alexandre Bilous, Ires)
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