Focus of the labor law executive orders : the consecration of the company wide agreement (“accord d’entreprise)

The five executive orders issued to “strengthen the social dialogue” adopted on September 22, 2017, are currently in the process ratification by parliament. Among these, and spearheading the entire project of labor law reform, is executive Order no. 2017-1385 which brings profound changes to the right to collective bargaining. The stated aim of the government is to facilitate the negotiation of norms adhering as closely as possible to the reality “on the ground,” in particular so as to allow companies to react more efficiently to fluctuations in the economy.

The representatives’ November 28th adoption of a legislative bill ratifying the executive orders on first reading provides an excellent occasion to take stock of the principal measures of the reform of collective bargaining currently underway.

The new articulation of contractual norms

Order no. 2017-1385 places company-wide collective bargaining front and center. As of January 1st, 2018, therefore, sector-specific collective bargaining agreements will prevail over those concluded at the company, establishment or group level only in a limited number of areas (notably: minimum wages per hierarchical category, professional classification, measures governing fixed-term and temporary employment contracts, professional equality between men and women), unless the company-wide agreement stipulates “at least equivalent” rights for employees.

Nevertheless, in four specific areas (prevention of the effects of exposure to occupational hazards, employment and job-preservation for persons with disabilities, size of the company as of which union delegates may be appointed, their number and the valorization of their union history, bonuses for dangerous and insalubrious work), the Order provides that the sector-specific agreements may proscribe company-wide agreements from derogating from them in any way that proves to be less favorable to employees unless the company-wide agreement stipulates “at least equivalent” rights.

As concerns matters not explicitly listed in the text, the company-wide agreement is free to derogate from the provisions of the sector-specific agreement, including in ways less favorable to the employee, within the limits of statutory provisions of public order.

Facilitating the conclusion of collective agreements for small and mid-sized companies

In order to afford small companies a chance to participate to a greater extent in the development of collective norms and to enjoy the new flexibility introduced by the reforms, the executive order frees up possibilities for negotiation in companies lacking union delegates.

In companies employing 11 to 20 people lacking a Social and Economic Council, it will thus no longer be necessary to have recourse to union-mandated employees (“madatement syndical”) in order to conclude an agreement. The employer will be authorized to propose an agreement project directly to its employees, who, in order to approve it, will have to ratify it by a two-thirds’ majority.

Similarly, in companies of 11 to 49 employees lacking union delegates, it will no longer be mandatory to have recourse in priority to union-mandated employees: the agreement will be allowed to be concluded with either one or several union-mandated employees before being approved by a majority of the employees, or one or several members of the staff delegation with a seat on the Social and Economic Council and representing more than 50% of the votes cast during the most recent elections.

Company-wide agreements will be required to have “majority” status as of May 1st, 2018

By making norms concluded at the company level the driving force of labor law reform, the executive order also aims to bolster the legitimacy of such agreements.

Let us recall that these common-law agreements are currently required to be concluded by one or several unions having garnered at least 30% of the first-round votes cast in favor of representative trade unions and not to be contested by majority unions. The so-called “El Khomri” law had aimed to subject all agreements to a “majority” as of September 1st 2019, along the lines of agreements concerning working time, rest days, paid leave and the content of job-preservation plans.

Order no. 2007-1385 advances this date by more than a year. As of May 1st, 2018, all company-wide agreements will be required to be signed by unions having obtained more than 50% of the votes cast in favor of representative trade unions in the first round of elections, failing which, the agreements concluded by unions having garnered more than 30% of the votes cast in favor of representative unions may nevertheless be approved by way of an employee referendum.

The possibilities for flexibility introduced by the executive order at the company level will therefore, directly or indirectly, have to be approved by a majority of employees in order to be implemented.