France: Report proposes changes to the French labour code

In September 2003, social affairs minister François Fillon commissioned Michel de Virville, the general secretary and head of human resources at Renault, to write a report on how to improve the French labour code. The report was published on 15 January 2004 and contains 50 recommendations. The most significant of these is the introduction of a new type of employment contract, designed to cover the needs of longer-term projects and aimed primarily at highly qualified people involved in research and technology. Below, we look at the main points of the report.

Introduction

The document* runs to 98 pages and comprises five chapters and a number of appendices, one of which is concerned with proposals for working time reform. As president of the commission, Mr de Virville was supported by a team of experts, including human resource managers, a company director, a university professor, lawyers, judges, a former union official and a labour inspector.

Currently, all parties who use the various tiers of employment legislation complain that they are too complex and hard to apply. The committee's brief was thus to reflect on the means for creating a clear and unambiguous regulatory framework that would reinforce the existing body of legislation and regulation so as to fulfil the dual tasks of protecting employee rights while also promoting employment and allowing enterprises to function effectively. They had to consider the needs of millions of employees and the diverse situations of thousands of companies.

However, the report also draws attention to the fact that there are a number of areas that were not covered by the committee. It is not concerned with areas that are currently under discussion by the social partners with a view to drawing up legislation: vocational training and economic restructuring. It also does not address issues such as the introduction of new technology, international exchanges of personnel and bankruptcy. The commission proposes that a permanent body be set up to deal with difficulties of applying the labour code in these areas.

The underlying aim of the 50 proposals contained in the document is to get the legislature and the social partners to cooperate in making employment law less complex and more reliable. Some of the proposals will be considered by Mr Fillon in the draft law to encourage employment and were on the agenda of tripartite discussions that took place at the end of January and the beginning of February 2004.

Project-based/outcome-oriented employment contract - contrat du projet

The proposal for the introduction of a new type of intermediate-term employment contract is perhaps the most controversial of all the recommendations. Currently, most employment contracts fall into one of two main categories: fixed length (contrat à durée déterminée - CDD) of up to 18 months; or indefinite (contrat à durée indéterminée - CDI). Mr de Virville is proposing a new type of fixed-term contract, designed to cover a particular project and that may have a duration of up to five years. This is to allow companies flexibility when they embark on projects that have no clear end date. It is envisaged that these contracts will be aimed at the employment of people with qualifications, in particular, in the areas of information technology and research. Thus, companies will be able to avoid having to hire workers on employment contracts that are on the edge of the law and that lead to confusion and uncertainty.

Mr de Virville stressed that the proposed form of contract will provide employees with certain guarantees. In the first place, this type of contract will only be available once a sectoral agreement has set out the conditions. Employment for the duration of the contract will be guaranteed in the same way as for a fixed-term contract and the length of the contract may be for more than 18 months, which is the current limit for a fixed-term contract.

Legislation will stipulate the conditions that sectoral agreements must set out, notably:

  • the minimum duration of the contract;
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  • the payment of an end-of-contract bonus;

  • a job description;
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  • details of the pay and the nature of the project; and
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  • the applicable regulations in terms of job reclassification at the end of the contract.
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    Finally, this contract will be able to be utilised as a vehicle for training and maintaining skills.

    The report anticipates that this idea will create unease among some parties but its authors maintain that: "in a situation of high unemployment and under conditions in which the employment of older people is one of the main challenges for the future, this is worth a try, as long as the necessary guarantees are in place."

    The report's concerns about this have indeed been justified. This proposal has already given rise to intense controversy, with the parliamentary opposition and the unions maintaining that its introduction will signal the end of indefinite contracts. They fear that, despite all the guarantees that are being put in place, the situation for employees will become less secure and that this will mark the first step in establishing a culture in which people are regarded as expendable. By comparison, employers' association Medef supports the plan and hopes that this type of contract will not be limited to employees with qualifications but that it will be extended to cover all categories of workers.

    Making the labour code more accessible

    The report states that access to the body of employment law needs to be simplified, and that there is currently no single practical instrument that draws all the various strands together, whether their origin is in national, community or international law. Furthermore, the labour code is subject to misinterpretation and difficult to understand, and needs to be rendered more readable and accessible. To achieve this, the commission proposes:

  • a reorganisation of the code, to include the eradication of obsolete articles. The last time this task was undertaken was 30 years ago;
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  • measures to ensure that the provisions of new laws can be easily integrated into the labour code; and
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  • the creation of a single resource that will provide access to the entire range of the law, including the labour code, collective agreements and case law.
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    Making the labour code more coherent and transparent

    Mr de Virville notes that over the years, the accumulation of case law resulting from the work of the tribunals and the body of collective agreements has created a system that is muddled and opaque. The commission maintains that better organisation of the entire area is essential and it makes several recommendations. They include the following:

  • to speed up the process of clarification through case law; at present this can take between five and 10 years. The report draws attention to the fact that the court of cassation has still not passed any judgments on key issues raised by the second
    • loi Aubry on working time reduction that was adopted in December 1999;

  • to give judges the power to decide whether to change the law retrospectively or not and thus avoid the potential destabilising effects of judgments. This is already the case with regard to rulings of the European court of justice; and
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  • to involve the social partners in the work of the tribunals. Among other things, it recommends setting up bipartite committees to assist in the interpretation of collective agreements concluded at various levels. Above all, it stresses the key role of concertation talks and social dialogue.
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    Improving the efficiency of the labour code

    The majority of recommendations emanate from the section of the report entitled: Un code de travail plus efficace et plus sûr pour les salariés comme pour les entreprises (A more efficient and reliable labour code for employees and companies). In this area, the committee had been set the dual assignments of considering how to promote employment and improve the means for social dialogue within companies.

    With regard to the first task, the report observes that the entire system of employment contracts needs to be clarified. As noted above, its key recommendation in this area is the introduction of a new type of contract. Apart from this, it proposes that all contracts should be formalised in writing and contain certain information. Other proposals include the following:

  • to establish an alternative framework that would allow employees to receive unemployment benefit when there has been a mutual agreement to terminate the contract. Currently, unless employees have been dismissed, there is a delay before they are entitled to receive this benefit. The benefit could be funded by an additional employer contribution to the Assedic unemployment fund;

  • to clarify the regulation of indefinite contracts by means such as setting out the rights and duties of employers and employees;
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  • to clarify the regulation of temporary contracts;
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  • to re-examine the provisions surrounding the use of fixed-term contracts; and
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  • to clarify what is deemed to be dependent employment and independent employment notably by recourse to these types of contracts; and to set out when recourse to a subcontractor is illegal.
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    As regards the second area under consideration in this section of the report, that of improving the situation for social dialogue within companies, the commission's recommendations include the following:

  • to simplify the existing structures for employee representation in small and medium-sized companies of between 50 and 250 employees. It suggests that all employee representatives - including the works council, union delegates and non-union employee representatives - could be drawn together into a single company committee (
    • conseil d'entreprise). This process would have to be initiated by a company agreement and the company committee would be entitled to conclude collective agreements under certain conditions;

  • to encourage bargaining in groups or in economic and social units, bringing together several companies. In large companies, the existence of European works councils (EWCs) means that group works councils play a less important role, and the committee suggests that it could be possible to disband these intermediate level structures by means of the company accord that established the EWC or by a decision of the EWC, providing that the EWC would take over the remit of the national body;

  • to improve the opportunities for employee representation. For example, electronic voting procedures could be introduced; this would require a change to the labour code since it now stipulates that elections must be held by secret postal ballot. Additionally, representatives' mandates should be increased from two to four years; and
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  • to improve the functioning of the works council (
    • comité d'entreprise), in particular, in relation to its remit and the exchange of financial information to which it is entitled. Similar information should be given to employee representatives at small companies without works councils in order to encourage social dialogue.

    Other recommendations with regard to the operation of the works council include precisely setting out in a collective agreement the means by which information should be released to the works council and the content of such information; introducing new procedures for establishing the agenda for works council meetings; and concluding a collective agreement on combining the monies destined for works council administration with the budget for social and cultural activities.

    The committee also examined two further areas as follows:

  • working time.
    •  In this area, the committee notes that reorganising the labour code could endanger countless sectoral agreements that have been concluded according to the existing system and it advises against starting again from scratch on this issue. Instead, the document proposes a range of technical measures that would allow some of the main problems to be resolved. It refers to the need to make sure that bargaining on issues such as annualisation of working time is fully utilised to respond to many different situations and requirements. In addition, many existing rules need to be updated to take the economic reality into account, such as derogations to weekly rest times; and

  • penal sanctions.
    •  In this area, the committee considers that the sanctions contained in the labour code are too numerous and too complicated and that this prevents them from functioning efficiently. The report suggests a thorough revision of the sanctions and better coordination with the penal code, as well as making a priority of prevention and simplifying emergency procedures.

    Bargaining as the means to modernising employment law

    The committee notes that the economic environment is changing rapidly and that the labour code has to keep up with the changes. It maintains that the expansion of collective bargaining in particular, at sectoral level, will play a key role in better adapting norms to the needs of employers and the workforce.

    To date, collective bargaining has played a secondary role in the creation of norms in employment law, with the primary roles going to the legislature and the government. The committee acknowledges that the above-mentioned draft Bill on vocational training and social dialogue will partially address some of these problems, but it also makes a number of recommendations. They include the following:

  • to organise a "bargaining pact" between the legislator and the social partners. The legislator fixes the essential principals and, within that framework, any agreement reached by the social partners will be applied. These principles would be gradually introduced into different areas, resulting in a new balance between legislation and negotiation in which the process of collective bargaining will acquire a more important role;
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  • to insert a clause in the labour code that would guarantee that collective agreements will be protected from the imposition of changes for a period of two years after the coming into force of new legislation; and
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  • to provide negotiators with bargaining skills if they have not had any previous experience. This would apply essentially to those from small and medium-sized enterprises. This type of training would be organised by the social partners.
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    Reactions

    As noted above, the most controversial proposal is for the introduction of a new, intermediate-length fixed-term employment contract. Despite assurances from Mr de Virville that the new contract would not lead to a reduction in the use of the indefinite contract, union leaders are critical.

    Bernard Thibault, the chair of the CGT union federation, claims that it would increase the incidence of precarious employment and contribute to social insecurity. Jean-Luc Cazettes, the leader of the CFE-CGC union federation, expressed his union's "total hostility" to the proposal. The CFTC voiced its opinion of the "mercenary" attitude of companies, while François Chérèque, of the CFDT, was slightly less hostile. He said that his union would only accept a new type of contract if it came about as a result of discussions between the social partners and not if it were imposed by legislation.

    However, in an interview with the specialist daily publication Liaisons sociales, Mr de Virville stressed that the proposed instrument was "less a new form of temporary contract" than a way of organising a reality that already exists in a sectorally bargained framework. He underlined that it would be targeted at people with qualifications for whom the current forms of contract are inappropriate, since they are contracted to work on a project that is likely to run for several years. As things stand, companies are increasingly contracting out projects to deal with a fluctuating supply of qualified workers.

    For its part, employers' association Medef has welcomed the proposal, having been calling for something like this for many years and, as noted above, would like the possibility of extending the coverage to all categories of employees, not just to those with qualifications.

    * "Pour un code de travail plus efficace", available on the web at: www.travail.gouv.fr/pdf.


    The key recommendations of the report

  • A new, intermediate-length fixed-term employment contract (
    • contrat de projet) should be introduced that would be designed to cover the needs of business for specialist staff to work on projects that do not have a clear end date.

  • The labour code should be made more accessible by reorganising it and deleting all the obsolete text.
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  • A single resource should be created that would provide access to the entire range of employment law, including the labour code, collective agreements and case law.
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  • The progress of case law should be speeded up.

  • All contracts should be formalised in writing and the information provided on them should be clarified.

  • Where there has been a mutual agreement to terminate a contract, procedures will be introduced that will allow the worker to claim unemployment benefit immediately.
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  • The opportunities for employee representation at the workplace should be improved.
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  • The role played by collective bargaining in determining legislation should be strengthened.
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  • A range of technical adjustments relating to working time should be implemented.
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  • Penal sanctions for abuses of the labour code should be revised and simplified and prevention measures should be given priority.

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