France: Employment-preservation agreement signed in metalworking

An innovative collective agreement on maintaining jobs and enhancing employees' skills during the economic downturn was signed in the French metalworking industry in May 2009.

On this page:
Maintaining jobs and developing skills
Training and short-time work
Employee leasing
Employment of young people
Reactions
Wider debate on employee leasing.

Maintaining jobs and developing skills

On 7 May 2009, a national agreement on maintaining and promoting employment in the metalworking industry was signed by the Uimm sectoral employers' organisation and trade unions affiliated to four of the main trade union confederations - CFDT, CFE-CGC, CFTC and FO. The metalworking affiliate of the CGT confederation refused to sign the accord.

France's metalworking and engineering industry is made up of 45,000 companies with a total of 1.8 million employees. While the metalworking sector is important in its own right, the signatories of the new agreement argue that its large scale gives it the potential to help drag the whole economy back towards economic and employment growth. The agreement therefore seeks to prevent job losses in metalworking through a variety of innovative measures. It aims to use the current period of reduced activity to develop employees' skills and qualifications, thereby enabling companies to be in the best possible position to take advantage of a future economic upturn.

According to the agreement, the current exceptionally severe economic crisis is especially affecting manufacturing, therefore "the defence of employment must be made an absolute priority, not only for employees and jobseekers, but also to allow companies to innovate and produce". The agreement, the provisions of which apply only until 30 June 2010, deals with three main issues:

• training and short-time work;
• "employee leasing"; and
• the employment of young people.

Training and short-time work

Metalworking companies are making extensive use of the state-funded short-time work benefit scheme, providing compensation for workers whose earnings are cut because their employer temporarily closes all or part of its business or reduces collective working hours because of economic difficulties or exceptional circumstances. The rate of the benefit has recently been increased to 75% of normal gross pay for the unworked hours; it was previously 60%.

The metalworking agreement provides for training to be used to help prevent recourse to short-time working and, where short-time working occurs, for the employees concerned to receive training during their unworked hours. The training involved must be aimed at improving employees' vocational skills and employability.

The "individual right to training" (droit individuel à la formation, DIF) is a statutory scheme that entitles employees to receive 20 hours of training per year from their employer. The training must occur outside working hours unless a collective agreement allows for it to be provided during working time. The metalworking accord introduces the possibility of using the DIF entitlement during working time, if both employee and employer agree, thereby allowing companies to train their employees under the scheme rather than placing them on short-time work. This move will also, it is hoped, help employees in small and medium-sized companies exercise their right to DIF.

In the metalworking industry, employers' compulsory financial contributions to continuing vocational training are collected and distributed by a body, OPCAIM, which is jointly managed by employers and unions. OPCAIM partially covers the wages of employees undergoing various approved training courses, usually those leading to vocational qualifications. To encourage training as an alternative to short-time work, the agreement calls on OPCAIM to extend these wage subsidies to other forms of training, including a new programme aimed at giving lower-skilled employees a set of "minimum industry competences", and companies' in-house training plans.

In cases where employees are placed on short-time work, the agreement encourages strongly the provision of training during these unworked hours, using a range of existing training and development measures. These include:

• statutory company training plans, which must be drawn up by employers in order to provide training to help workers adapt to change in their jobs, to keep them in employment and to develop skills;
• individual skills assessments for employees;
• the statutory "validation of acquired experience" (validation des acquis de l'expérience, VAE) scheme, whereby employees are entitled to obtain a qualification recognising the skills and knowledge acquired during their career;
• "professionalisation" is a combined work/training scheme for employees whose skills are outmoded because of technological change, along with all employees with at least 20 years' service or aged at least 45, women seeking to restart their careers after maternity leave, and people with disabilities; and
• the DIF individual right to training.

Companies are asked particularly to provide training during short-time work aimed at giving employees a vocational qualification.

Employees are entitled to receive payment from their employer for undergoing training and development outside working hours under most of the above schemes. Where this training and development occurs during hours unworked because of short-time working, the agreement calls on the public authorities to allow companies to reduce their payment to employees, so that the employees' total remuneration, taking into account their state short-time work benefit, does not exceed their normal wages.

Outside the terms of the agreement, OPCAIM has decided to allocate an additional €50 million to contribute to the remuneration of employees receiving training aimed at preventing short-time work, or during periods of short-time working.

Employee leasing

French employment law allows for an arrangement known as "employee leasing" (prêt de main d'oeuvre). This means that a company may place a number of its employees at the disposal of another company. This is permitted if the company lending out the employees does not make a profit, and charges the user company only for the employees' wages and social security costs, plus any additional payments made to the employees as a result of the leasing arrangement.

The metalworking agreement aims to promote the use of employee leasing on the grounds that, when a company is undergoing difficulties, lending out some of its workforce can help prevent short-time working and redundancies. Time spent working for another company may enhance employees' vocational experience and improve their employability. The company that leases out its employees keeps its employees in the longer term, recalling them when activity picks up, and the user company has access to skilled and immediately available workers.

To encourage its wider use in metalworking, the agreement lays down a number of rules and procedures for employee leasing, as follows.

• Employee leasing must be based on a contract between the leasing company and the user company. The leasing company places the employees concerned under the authority of the user company, but their employment contracts with the leasing company remain in place. While the user company directs the work of the employees, it has no employment contract with them and disciplinary powers remain with their employer, the leasing company.
• The leasing contract must specify:
  • the planned duration of the leasing;
  • the identity and qualifications of the leased employees;
  • the work to be carried out for the user company;
  • the place(s) where the work is to be carried out;
  • the working time arrangements applying in the user company;
  • the specific characteristics of the workplace and any particular health and safety risks involved;
  • the details of any personal protective equipment that the employees must use; and
  • the amount of the wages, social security contributions and other payments to employees, for which the leasing company will charge the user company.
• An employee leased to a user company continues, during the period of leasing, to be covered by the collective agreements applicable to the leasing company, and by all existing individual rights and advantages. Being leased cannot negatively affect the employee's career development or access to training.
• The works council (or, where there is none, other employee representatives) of the leasing company must be informed and consulted in advance if any employees are to be leased out. If the leased employees are to work in jobs with particular health and safety risks, the leasing company must also inform its health and safety committee. The works council and health and safety committee of the user company must also be informed and consulted prior to the arrival of leased employees.
• A leasing company and a leased employee may agree that the arrangement will be subject to a trial period. Such a trial period is obligatory if the leasing involves a change to an essential provision of the employment contract. If either the employee or employer decided to end the leasing arrangement during the trial period, the employee returns to his or her previous job, and this cannot result in disciplinary action or dismissal (except in cases where the employee seriously breaches the employment contract).
• Employee leasing does not, in itself, amend the terms of the employment contract. However, if it does imply a change to an essential provision of the contract, this must be agreed expressly by the employee in advance, and refusal to be leased cannot result in disciplinary action or dismissal.
• In cases where leasing does not imply the amendment of an essential provision of the employment contract, the leasing employer must provide the employee with a written statement, containing most of the information in the leasing contract (see above), plus:
  • the name and address of the user company;
  • the details of how the leasing company will reimburse the employee for any costs involved in travelling to work at the user company;
  • a statement that the employee's employment contract with the leasing company remains intact throughout the period of leasing, and that all normal remuneration will be paid under the usual conditions;
  • a statement that the employee will continue, during the period of leasing, to be covered by the collective agreements applicable to the leasing company, and by all existing individual rights and advantages;
  • a statement that the employee's length of service and paid leave entitlements will continue to accrue with the leasing company;
  • a statement that the employee will, during the leasing period, have the same access as the user company's employees to all collective services in that company, such as canteen and transport facilities; and
  • a confirmation that, at the end of the period of leasing, the employee will return to his or her job in the leasing company.
• In cases where leasing involves the amendment of an essential provision of the employment contract, this must be expressly agreed in advance by the employee, in the form of an addendum to the contract. As well as the changes to the contract terms, the addendum must contain the information listed in the previous point. The employer must inform the employee, in writing, of the proposed leasing and changes to the contract. The employee then has eight days to agree or refuse, and refusal cannot lead to any disciplinary measure or dismissal. If the employee fails to respond within eight days, this is taken as a refusal.
• During the period of leasing, leased employees are counted as user company employees for the purposes of representation. For example, they may vote in elections for works council and other employee representatives. If either the leasing company or user company is not covered by the sectoral collective agreement for metalworking, the other company must ensure that the leasing contract includes provisions allowing the leased employee to benefit from the agreement's provisions.
• All health and safety legislation and rules applying to the user company apply in full to the leased employees.

Employment of young people

The agreement aims to promote the access to jobs in metalworking for young people, despite the current economic crisis, in preparation for a future upturn. This is to be achieved through the use of various types of contract that combine work with training, notably apprenticeships and "professionalisation" contracts. During 2007 and 2008, the total number of young people on such work/training contracts in metalworking companies was around 35,000. The agreement aims to maintain this level, in spite of the poor economic and employment climate. A joint working party will draw up detailed proposals for achieving this goal.

The accord also contains a range of measures aimed at:

• giving incentives to employers to use more work/training contracts;
• improving access to such contracts for young people;
• adapting apprenticeships to the specific situation in companies where activity is reduced because of the economic crisis, for example by sending apprentices to other companies for part of their training;
• enhancing arrangements for "tutoring" apprentices in companies;
• encouraging and assisting young people to take up training in other geographical areas; and
• making it easier for training and employment experience to be provided by groups of companies, rather than individual employers.

Reactions

Jean-François Pilliard, a senior official at Uimm, said that the key goal of the agreement was to maintain employment, and that the accord "gives companies better weapons to tackle this difficult period while preparing for the future". He highlighted the fact that the agreement regulates employee leasing and makes it more secure for employees, thereby making it possible for this arrangement, which is currently relatively uncommon (see below under Wider debate on employee leasing), to be used more widely. According to Pilliard, some companies are putting their employees on short-time work, while others - notably small firms - face skill shortages. Employee leasing can "respond to the needs of both, while developing employees' skills".

On the union side, the CFDT-affiliated metalworkers' federation said that it had signed the agreement because it will help to avoid redundancies and will contribute to bringing more young people into jobs in the industry. Similarly, the CFTC stressed the importance of the youth employment measures and the new guarantees for employees involved in leasing. By contrast, the CGT, which was the only one of the five main union organisations that did not sign up, argued that the deal "totally removes responsibility from companies and leaves employees and the general public to bear the effects of the economic and social crisis". With specific regard to employee leasing, the CGT objects to the fact that the arrangement is not always voluntary for the employees involved, and does not require a company-level collective agreement in order to be introduced.

Wider debate on employee leasing

The metalworking agreement has contributed to a growing interest in employee leasing. Several companies have recently started to use this arrangement as the economic downturn has continued.

For example, Inoplast, an automotive parts manufacturer (part of the Plastic Omnium group), has signed a leasing contract with Irisbus, a bus constructor (owned by the Italy-based Fiat Iveco). Both companies have plants in the Ardèche area of south-east France, and the Inoplast factory, faced with falling orders since autumn 2008, has cut production and placed employees on short-time work. Irisbus, by contrast, has recently won an order for 100 new buses from RATP, the Paris public transport authority. Under the contract, from May 2009, 80 employees who were on short-time work at Inoplast have been leased to Irisbus. After three weeks of training, financed using the DIF scheme, the employees (who volunteered to be leased) started a three-month stint of work at Irisbus in June. The arrangement has allowed the level of short-time work at Inoplast to be reduced.

Other examples include the leasing of employees from a Continental Automotive electronics plant in Toulouse to a Thales Alenia Space aerospace factory.

In this context, parliament is currently examining a Bill, supported by the Government, on "facilitating the maintenance and creation of jobs". It includes provisions aimed at encouraging employee leasing, in order to prevent redundancies, by clarifying the rules. The Bill's sponsors want to create more legal certainty in this area, which is currently dealt with only in broad terms by law, and alleviate employers' fears that engaging in leasing may expose them to legal penalties or litigation. Employee leasing has something of a negative image, because of a number of cases of abuse of the practice, especially in the IT services sector, whereby workers have been illegally leased out for profit.

Critics argue that employee leasing may prevent redundancies in only a limited and temporary way. For example, the Rhodia chemicals group, which is leasing up to 200 employees during 2009, has recently announced 130 job losses. Similarly, at Soitec, a silicon products manufacturer, the leasing of 50 employees to the CEA atomic energy agency has not prevented a 10% cut in the 860-strong workforce.

This article is based on material provided by Christophe Boulay, European Employment Review correspondent for France.

European Employment Review 426 (EER 426) contents