Companies face penalties if no agreement on employment of older people

The social security finance bill for 2009 included an obligation to negotiate company agreements on the employment of older people and penalties for not doing so. The fact that the implementing decree was not published for some months led to trade union concerns. The decree eventually appeared towards the end of May 2009. It outlines the list of areas of action, age thresholds for defining targets, communication arrangements and a procedure for verifying compliance.

The law on funding the French social security system in 2009 (FR0901029I) was adopted on 17 December 2008 and introduced an obligation to negotiate company agreements on the employment of older people. In the absence of such an agreement or plan of action by 1 January 2010, companies and public establishments employing at least 50 employees will have to pay a penalty of 1% of their wage bill to the National Old Age Insurance Fund (Caisse nationale d’assurance vieillesse, CNAV). For companies employing fewer than 300 employees, a sectoral-level agreement is sufficient.

However, the law leaves certain details to an implementing decree (décret d’application), but it took a long time for this decree – which was presented to the Supreme Administrative Court (Conseil d’État) at the end of December 2008 – to be published. Given current economic difficulties, it was feared that the penalty would be lifted. The trade unions raised this point with the government on several occasions. The decree was finally published on 21 May 2009 in a version that is almost identical to the December draft.

Decree on employment of older people

The decree sets out more detail on the following provisions:

  • the list of areas of action – measures envisaged by the agreements must concern at least three of these areas:
  • recruitment of older employees in the company
  • anticipation of career development
  • improved working conditions and prevention of arduous working situations
  • development of skills and qualifications, as well as access to training
  • adjustments for people approaching the end of their careers and with regard to the transition between economic activity and retirement
  • transmission of knowledge and skills, and development of mentoring;
  • age thresholds for defining quantitative targets for keeping employees in employment (55 years) and recruiting older employees (50 years);

• arrangements for communicating quantitative targets for sectoral and group agreements or plans of action. Arrangements for company and group agreements are to be defined in the agreements themselves; however, the decree does not specify the arrangements concerning monitoring and communicating results for companies covered by a sectoral agreement;

• the procedure by which a company will be able to request a prior opinion from state services on whether it is meeting its obligation to negotiate.

Trade union reaction to delay in publishing decree

Since the beginning of the year, trade unions had reacted to a possible postponement or suspension of the penalty. For the French Confederation of Professional and Managerial Staff – General Confederation of Professional and Managerial Staff (Confédération française de l’encadrement – Confédération générale des cadres, CFE-CGC), ‘there cannot be double standards for older people’. It announced that, if penalties were abandoned, it would call on the government ‘to suspend the programmed and gradual disappearance of dispensation from seeking employment’.

The General Confederation of Labour (Confédération générale du travail, CGT) demanded that the decree be published. It considered that, even if the obligation to negotiate is limited, it constitutes a ‘bargaining tool regarding the reception, improved working conditions and vocational training of older people’.

The General Confederation of Labour – Force ouvrière (Confédération générale du travail – Force Ouvrière, CGT-FO) has reservations about the effectiveness of this obligation and its implementation in the current economic context. Nevertheless, it ‘could not accept that companies – whether they are having a difficult time or not – use the postponement to make adjustments to their workforce such that 50 year-olds would once again be the main balancing variable’.

Commentary

The threat of a penalty is a major incentive to negotiate. However, given the current economic crisis, the employment of older people is not considered to be a priority. On the contrary, in order to reduce their workforce, companies tend to promote the departure of older employees by using various measures that are still at their disposal. These include the end of dispensatory agreements on retirement, agreements on the early retirement of certain employees (FR0507105F) and company early retirement.

The obligation to negotiate that has just been defined by the decree is only an obligation regarding means. Certainly, companies must set quantitative targets and define actions, but no penalty is liable if these targets are not achieved. The initiative is still far from being a ‘bonus-malus’ or reward and penalty situation linked to the employment rate of older people, as envisaged last year by the former Minister of Labour, Social Relations, Family and Solidarity, Xavier Bertrand.

Annie Jolivet, Institute for Economic and Social Research (IRES)

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