France: Employers seek ambitious reform of employment contracts
At the behest of the government, France's main trade union confederations and employers' organisations are engaged in major negotiations on labour market "modernisation", with the aim of reaching an agreement by the end of 2007. The talks are based on a document drawn up by the employers, which proposes a series of reforms to all stages of the employment relationship and to the unemployment insurance and jobseeking system. We examine the main proposals, which include a reform of employment contracts and new ways of terminating them.
On this page:
"Historic" negotiations
Entry into employment
Development within employment
Lifelong learning
Occupational and geographical mobility
Forward-looking management of employment and competences
Changes to conditions of employment
Access to rights
Exit from employment
Termination of contract
More secure career paths
Return to employment
Unemployment insurance and benefits
Getting unemployed people back to work
Key points
|
In June 2007, the central social partner organisations decided to launch national cross-industry negotiations on the "modernisation of the labour market". The prime minister, François Fillon, had asked them to open talks on this issue, with a view to reaching agreement by the end of the year. Following a preparatory meeting in July, the talks got under way in September.
Representatives of the five main union confederations (CFDT, CFE-CGC, CFTC, CGT and FO) and three employers' confederations (Medef, CGPME and UPA) are meeting once a week and aim to reach an agreement by the end of 2007.
The talks are structured around the four "stages of working life": entry into employment; development within employment; exit from employment; and return to employment. For each of these themes, the three employers' bodies have drafted a "note" as a basis for discussions. After each theme has been discussed, the aim is to produce a single "detailed plan", covering all four stages and incorporating the positions of the trade unions. This document will form the basis for further negotiations, and the parties hope to reach at least a partial agreement by the end of the year.
Several issues have already emerged as central to the negotiations, notably a reform of employment contracts, and especially the ways of terminating them. Medef, the main employers' confederation, wants to introduce a new form of "amiable separation" to end employment contracts, rather than the often complicated and conflictual procedures that now apply. This idea has received the support of Nicolas Sarkozy, the president.
Employers and unions agree on the need to apply a "collective framework" to negotiated terminations of contract, but disagree on how to achieve this objective. The unions argue that the employers are too fixated on perceived rigidities of employment contracts and the Labour Code and have a "phobia" about the role of the courts in this area. They see the employers' note on this subject as "unbalanced", seeking to make it easier to end contracts without giving employees new rights in return.
While not going as far as describing the current talks as "historic" - which the Medef president, Laurence Parisot, has done - the unions seem determined to reach an agreement, however difficult the negotiations prove. Both sides appear keen to conclude a major accord, thereby reaffirming their joint role in France's economic and social development and their ability to work together. This is particularly significant at a time when the social partners' representative status and finances, and the system whereby they jointly manage various aspects of working life, are undergoing something of a crisis. This was highlighted on 15 October when the leader of the employers' delegation in the negotiations on employment contracts, Denis Gautier-Sauvagnac, withdrew from the talks because of a "scandal" relating to the finances of the UIMM metalworking employers' federation, of which he is the president. There have been allegations that UIMM has paid several million euros to fund certain trade unions.
Below we summarise the main demands and proposals of the employers' organisations in the current negotiations.
Entry into employment
The employers' note calls for: longer probationary periods; the creation of a form of open-ended employment contract linked to the completion of a particular project; and the adaptation of standard open-ended employment contracts to increase security for employees and flexibility for employers, for example by simplifying the obligatory content of contracts. The aim is to respond to the feelings of "insecurity, or even precariousness" among employees caused by the widespread use of short fixed-term contracts, which currently account for the majority of new recruitment.
Fuller details of the employers' proposals in this area are provided in an earlier EER article.
Development within employment
For the employers' organisations, new ways of allowing workers to have a "coherent and valorising" career development are required. They suggest action in five areas, as follows.
A national cross-industry agreement signed in 2003 (EER 358 p.21) gave employees an individual right to vocational training and introduced a "training passport" and new systems for the evaluation of skills and the recognition of experience gained. The employers now want to review and develop the measures in this agreement, with special attention to workers with a low level of initial training, or whose training is poorly adapted to current demands, or those who have little access to training leading to a qualification.
Occupational and geographical mobility
To facilitate mobility both between jobs and geographically, the employers want an "organised and concerted" company-based process, aimed at allowing employees to have greater control over their careers. Where an employee's career development involves geographical mobility, the employer should ensure that the way that this is organised is compatible with the employee's family responsibilities. Further, in cooperation with the public authorities, ways should be found of making it easier to transfer from one "employment law status" to another - for example, moving from being a public sector employee to a private sector employee, or from employment to self-employment.
Forward-looking management of employment and competences
The law encourages agreements on "forward-looking management of employment and competences" (gestion prévisionnelle des emplois et des compétences, GPEC), aimed at managing employees' jobs and skills so as to prevent or mitigate job losses in a context of enterprise restructuring.
The employers' organisations argue that this scheme could be made more effective with the introduction of "simple and practical tools", adapted to the characteristics and size of individual companies, rather than a complicated, one-size-fits-all approach. Further, they oppose a number of recent court rulings that the adoption of a GPEC approach should be an obligatory part of the "plans to safeguard employment" (plans de sauvegarde de l'emploi, PSEs) that companies must draw up when contemplating collective redundancies.
Changes to conditions of employment
The note calls for a "clarification" of the legislation governing modifications of employment conditions and employment contracts. At present, an employee's acceptance of such changes is required expressly in certain cases, and considered implicit in others.
The employers' organisations want a single system, and the introduction of a rule whereby an employee's absence of response to a planned modification within a set timescale is always considered as acceptance of the change. Further, where the modification of an employment contract is refused by an employee, leading to a termination of contract, this should not be considered as a redundancy, as it is at present.
Access to rights
At present, employees require a certain period of service with their employer to become eligible for a number of legal and collectively agreed rights. This excludes from these rights some employees who, because of the nature of their employment contract, do not achieve the required seniority. The employers' note suggests that sector-level collective bargaining could introduce a more flexible way of calculating seniority in order to avoid this situation.
Exit from employment
Of 215,000 cases brought to industrial tribunals (conseils des prud'hommes) each year, some 90% relate to individual terminations of employment contract. Further, 26% of all individual dismissals (other than on grounds of redundancy) give rise to legal proceedings. According to the employers' organisations, this is because the procedures for terminating open-ended employment contracts are complex and often involve long delays and high costs. The legal uncertainties, it is claimed, discourage employers from recruiting people on open-ended contracts, which leads to a greater use of fixed-term contracts.
The employers argue that changes are required to make termination of a contract a less uncertain area, for both employers and employees. Such changes should enhance the flexibility of the labour market and promote recruitment and higher levels of employment, while being accompanied by greater security in overall career paths for workers, with any "periods of transition" (ie losing their jobs) being made "positive for their career development".
Termination of contract
Where an employment contract is terminated by the employer, the employers' organisations propose that the employee's rights and entitlements should increase in line with their length of service, as follows:
- during the probationary period, the legal rules on termination of contract should not apply. However, a limited notice period of termination could be required after a few months of probation;
- during a proposed period of "economic validation" after the probationary period - during which the employer would decide if permanent recruitment of the employee is financially viable - termination by the employer would entitle the employee to a severance payment similar to that currently paid when a fixed-term contract is terminated early. In cases relating to unfair termination during the "economic validation" period, courts could award only limited compensation. This compensation would vary depending on whether the termination was unfair because it was unjustified or because the correct procedures had not been followed; and
- after the "economic validation" period, employees would have the full rights related to termination. However, there would be a ceiling on the compensation awards that courts could make in termination cases (higher than that proposed during the "economic validation" period), varying between cases where the employer is found not to have followed correct procedures and cases where the dismissal is found to have no "real and serious" cause.
In all cases where their contract has been terminated by the employer, employees should have full entitlement to unemployment benefits after termination.
The employers' organisations want a number of other changes to the law on dismissals, notably the abolition of all requirements on employers to reinstate employees (except "protected" employees, such as pregnant workers and employee representatives) whose dismissal has been ruled null and void.
The note states that the complexity of dismissal procedures and the resulting risk of litigation has led to a growth in informally negotiated individual terminations of contract, outside the legal framework. The employers' organisations now want to put such situations on a legal and "collective" footing, creating a new form of termination - "separation by mutual agreement", with no opportunity for subsequent litigation. They propose that in such cases, the employees:
- would have a 15-day "cooling-off" period during which they could retract their agreement to the separation;
- could be assisted in the talks over the separation by a trade union representative or an external adviser;
- would receive a severance payment equal to the statutory or collectively agreed payment to which they would be entitled if dismissed; and
- following termination, would be entitled to unemployment benefits in the same way as if they had been dismissed.
Terminations by mutual agreement would not be considered as redundancies and statutory redundancy procedures would not apply.
More secure career paths
In return for the proposed changes to the rules on termination of contract, the employers' organisations offer a series of measures aimed at giving employees' career paths greater certainty and continuity, even where there are breaks caused by job loss, allowing each employee to have a "coherent and valorising" career development, independent of their link with a particular employer.
To achieve this aim, the employers propose six main areas of action. Measures in these areas should be coordinated, made coherent and, where they already exist, simplified; and there should be cooperation between the social partners, public employment services, local authorities and other relevant parties. The six areas are listed below.
- GPEC. Companies with 300 or more employees are currently obliged to negotiate on GPEC (see "Development within employment") every three years. The employers' organisations want to give sector-level collective bargaining the role of finding ways of spreading this approach to smaller companies, using "simple" and "practical" tools adapted to the characteristics and size of individual enterprises. There should also be more action at sector and local level to look at the wider picture of the development of the economic environment and the resulting changes in skill and job needs.
- Vocational training. Together with GPEC, training should allow all employees to "develop, complete or renew their qualifications, knowledge, skills and aptitudes" by participating in the measures set out in the 2003 cross-industry agreement on training. The signatories are currently assessing the implementation of this agreement, and they should evaluate whether or not it is meeting its objectives - especially in terms of transferable skills and improving workers' employability - and amend its contents if necessary. The employers' organisations also suggest specific training measures as part of the proposed new form of open-ended employment contract linked to the completion of a particular project (see "Entry into employment").
- Recognition of acquired experience and "training passports". Giving formal recognition to skills and training acquired by employees on the job (known as validation des acquis de l'expérience, or VAE) contributes to their professional development, the employers' note states. In their current assessment of the 2003 training agreement, the social partners should seek ways of facilitating VAE, notably by simplifying the existing scheme and giving the employees concerned more information, advice and support. They should also examine ways of encouraging greater use of the "training passport".
- Portability of rights. At present, employees who lose their jobs lose many employment-related rights until they find a new job. The employers' organisations propose that sector-level bargaining could examine ways of ensuring that some rights continue during the period of unemployment. This would apply to rights to training and to coverage by supplementary health insurance and social welfare schemes.
- Payment of a "replacement income" in the event of job loss. See "Return to employment".
- Personalised assistance to help unemployed workers return to employment. See "Return to employment".
Return to employment
The employers' organisations believe that certain aspects of the current system of benefits and assistance for unemployed workers hinder them in finding new jobs and enjoying a secure career development.
Unemployment insurance and benefits
At present, in order to receive unemployment benefit, workers: require a minimum contribution and employment history; must have lost their job involuntarily; and must be registered with the public employment services as a jobseeker. As a result, only a minority of unemployed people (46.1% in July 2007) receive unemployment benefits under the general insurance scheme (which is managed by the social partners and largely financed by employers' and employees' contributions). A further 12.3% receive benefits under a state "solidarity" scheme.
The employers' organisations want a greater proportion of unemployed people to receive a "replacement income". They propose a system, made up of: a basic general scheme, covering all unemployed people, run by the state and financed out of public expenditure; and a supplementary insurance-based scheme, financed by employers' and employees' contributions and covering unemployed people under conditions to be defined by the social partners.
The supplementary insurance-based scheme would, the employers suggest, cover workers who have lost their jobs involuntarily or as a result of the proposed "separation by mutual agreement" arrangement. The employers' and employees' contributions would be set at a level sufficient to pay the desired unemployment benefits (see below) but without increasing companies' overall costs.
Under the proposed supplementary scheme, the contribution and employment history required for entitlement to benefits, and the duration of benefits, would vary for different groups of unemployed people. This would reflect aims such as: encouraging unemployed people to return to work; keeping older people in employment longer; helping young people who face problems finding stable jobs; and rewarding unemployed people who undergo intensive jobseeking programmes.
Benefits under the supplementary scheme would be set as a proportion of the unemployed person's previous pay (up to a ceiling). It would be independent of the amount of benefit received under the basic state scheme, but the two benefits combined could not provide an income above a certain proportion (yet to be determined) of previous pay.
Getting unemployed people back to work
According to the employers' note, measures to assist and support unemployed people should be reformed in order to: speed up their return to employment; respond better to employers' recruitment needs; and help control expenditure on unemployment benefits. The measures should be adapted to individual situations and be open to all jobseekers.
The proposed reform should use all available resources provided by the public employment services, the unemployment insurance system and private agencies. It should allow jobseekers, following an evaluation of their situation and skills, to seek work more effectively, with the assistance and support of a "referee", on the basis of a personalised return-to-work plan. This plan would be drawn up by the jobseeker and the referee, taking into account the local labour market situation.
The employers' organisations propose that there should be specific training measures for unemployed people with a low level of qualifications or whose qualifications are no longer suited to employers' needs.
In return for increased public effort and expenditure in supporting jobseekers, the employers' note calls for stricter monitoring of the effectiveness of their efforts to find work. Further, there should be a clearer definition of the "valid offers of employment" that jobseekers are obliged to accept, before they lose benefit entitlement. Such offers should, it is suggested, be defined with reference to the jobseeker's experience, training (and training offered in the potential new job), former pay and place of residence, and how long they have been unemployed.
This article is based on material provided by Christophe Boulay, EER correspondent for France.
European Employment Review 406 (EER 406) contents
