Law on the 35-hour week is in force

Download article in original language : FR0001137FFR.DOC

From 1 February 2000, France's statutory working week was reduced from 39 to 35 hours for all companies employing over 20 people, following the promulgation of the second "Aubry" law on 19 January 2000. Held up by the government as one of its flagship job-creation measures, the complicated new law attempts to fuse two imperatives - company modernisation (with the introduction of new forms of flexibility in working time) and appropriate protection for employees in this new context. The legislation has met with a mixed reaction from the social partners.

France's first "Aubry" law on the 35-hour working week, which was adopted in June 1998 (FR9806113F), provided for the introduction of a statutory 35-hour week from January 2000 (2002 for smaller companies) and encouraged the social partners to negotiate on this issue at company and sector level. The second Aubry law sets out more detailed legal provisions on the new working time regime (FR9906190F). Following first-reading approval by the National Assembly in October 1999 (FR9910197N) and final approval in December 1999, and after some changes made at the behest of the Constitutional Council (see below), law No. 2000-37 concerning the negotiated reduction of working time was officially promulgated on 19 January 2000. Thus, from 1 February 2000, the statutory working week has been reduced from 39 to 35 hours for all companies employing over 20 people.

In principle, reducing the statutory working week is a simple action: the weekly hours threshold at which overtime begins just has to be lowered from 39 to 35 hours. However, in a country where measures affecting industrial relations are tightly regulated, and where most of these are based on the Labour Code (Code du travail), introducing even a small amount of change into statutory working time disturbs much of the interwoven legislative and regulatory framework, which has accumulated like sediment for years, and sometimes for decades.

The reduction of the actual statutory working week has thus led to the raising of the issues of "actual work", overtime, part-time working, and the statutory minimum wage (based on an hourly rate). Although a general measure, this reduction has forced certain particular categories of employee, like managerial and professional staff, to be specifically included in the equation. Since the hours reduction has to be adapted to the diversity of the businesses to which it is applicable, it has required: first, that statutory norms and company negotiations be structured so that there is a clear link between them; and, second, given the weakness of trade unions in the workplace, that conditions be created enabling the agreements reached to be legitimised and recognised by employees and employers. Essentially, large sections of existing legislation have been given a shake-up, as have the conditions for bargaining between the social partners

The main provisions

The new law's most important measures are set out below. Some of them have been amended since the bill was passed on its first reading in the National Assembly.

Statutory length of actual working time

The new statutory working week is set at 35 hours. It will come into effect:

• on 1 February 2000 in all companies with more than 20 employees as of that date; and
• on 1 January 2002 in all companies with 20 employees or fewer.

Actual working time

The law, in defining the concept of "actual working time" (temps de travail effectif), has transposed EU Directive 93/104/EC of 23 November 1993 on certain aspects of the organisation of working time into French law (FR9804103F). "Actual working time" is defined as the "time during which the employee is at the employer's disposal and must comply with its directives without being able to go about his or her personal business". In particular, this includes:

• the time required for taking meals and breaks (where the employee is at the employer's disposal and must comply with the latter's directives without being able to go about his or her personal business);
• an obligatory 20-minute break after a six-hour period of continuous work; and
• when the wearing of working clothes is imposed by legislation or regulations, clauses in collective agreements, in-house rules or an employment contract, and the changing of clothes must take place on the company's premises or in the workplace, the time necessary for these procedures must be compensated by the employer.

These provisions will be applicable from 1 January 2001 for companies with more than 20 employees. The old definition of actual working time is repealed.

Calculation and payment of overtime

Every hour of overtime worked will be payable at a higher than normal hourly rate, or compensated for by equivalent time off, or a combination of both.

As of 1 January 2001 for companies employing more than 20 people (and as of 1 January 2003 for the rest), the system of overtime will be as follows :

• from the 36th to the 39th hour of work in a given week, there will be a 25% premium on the hourly rate. If there is an extended sector-level agreement or a company agreement on working time reduction, this is paid in the form of either wages or time off in lieu. If no such agreement exists, the 25% premium is paid in the form of time off;
• each weekly hour worked between the 40th and the 43rd hour inclusive will be compensated either by a 25% hourly pay premium or time off, or by a combination of the two. Beyond the 44th hour worked, either a 50% premium or equivalent time off, or a combination of both, will be payable.

Parliament has allowed for a 12-month transition period before the new system comes fully into effect Thus, in 2000 the hourly premium pay premium will be 10% (rather than 25%) from the 36th to the 39th hour. From the 40th to the 43rd hour inclusive, there will be a 25% pay premium (or time off in lieu, or a mixture of the two). From the 43rd hour worked onwards, this premium rises to 50%.

For firms employing fewer than 20 people, the current overtime scheme will continue to operate until 1 January 2002 (that is, a 25% premium from the 40th to the 47th hour worked inclusive, and a 50% premium for further hours worked).

Variation in weekly hours

Until the new law was passed, there were three instruments allowing for variations in working hours around an average (modulation). The new law simplifies these measures by retaining only one of them, which must be implemented by an company-level agreement or an extended sector-level agreement. Enabling working time to be calculated over all or part of a 12-month period, the law limits the average working week within that period to 35 hours. The relevant agreement cannot provide that the statutory maximum weekly hours limit (48 hours, except where there is an exemption from this rule and then subject to the absolute maximum of 60), or the daily maximum (10 hours except for exemptions) be exceeded. Forms of individual variation can also be implemented.

Successive shiftworking

Until the new law was passed on 19 January 2000, the use of successive shiftworking (travail posté en équipes successives) was permitted only where companies had continuous operations, or where allowed by a decree or extended sector-level agreement. Now, such shiftworking can also be put in place by a company- or establishment-level agreement alone. Overtime will be counted from the moment the hours exceed a 35-hour average calculated over the period of the shiftworking cycle. Companies operating round the clock will receive working time reduction subsidies (see below) if the average working week does not exceed 33 hours 36 minutes.

Working time for managerial and professional staff

In the new law, three groups of managerial and professional staff (cadres) are identified (FR9909105F):

• senior management. This group is excluded from the application of almost all the Labour Code's provisions on working time, including maximum hours, the rules concerning daily and weekly rest periods, and bank holidays. However, they do have paid holidays and the mandatory maternity leave;
• managerial and professional staff working within team to the employer's collective work timetable. This group is included in all the regulations governing working time, just like other employees - ie the statutory 35-hour week, overtime, night work, time off, holidays and supervision of working time; and
• other managerial and professional staff. For this group, a collective agreement can provide for two types of individual packages covering a 12-month period - either (a) one based on the number of hours worked, if the employee works to a timetable calculated in hours, or (b) one calculated in days for those managerial and professional staff who enjoy a great deal of autonomy in their work, and whose working time cannot be calculated in hours (up to a limit of 217 days per year).

It should be noted that at the bill's second reading in the National Assembly, and after a trade union-led demonstration against the provisions on working time for managerial and professional staff (FR9911118N), a new provision was introduced in which an agreement instituting the scheme whereby working time is calculated in days became exempt from the law, and can thus be challenged by one or more trade unions.

Part-time working

In French legislation, part-time workers used to be defined as those whose weekly working time was at least 20% lower than the statutory amount or that fixed by a sector-level agreement. This definition has now been brought into line with EU Directive 97/81/EC of 15 December 1997 on part-time work. Henceforth, part-timers are all employees whose working time is less than the statutory 35 hours or, if this is lower, the duration fixed by a sector-level agreement or company working time schedule.

The new law introduces three other major innovations:

• unless stated otherwise in an extended sector-level agreement, there can only be one break in a part-time worker's daily hours, which cannot last longer than two hours;
• a new system of varying part-timers' working hours has been instituted. An company-level agreement or an extended sector-level agreement can vary the number of hours worked per week or month over the whole or part of a 12-month period. The system of annualised part-time hours provided for under the old legislation - ie alternating between periods of work and time off of several months - has been abolished. This option is now applicable only to casual work, dealt with by specific provisions in the new law; and
• the existing 30% reduction in employers' social security contributions in return for taking on part-time staff has been abolished. From 1 February 2001 onwards, this reduction is no longer applicable for new part-time contracts. However, this reduction will still be applicable to contracts signed before that deadline.

Training and the reduction of working time

The law stipulates the conditions under which training can and cannot be counted as actual working hours, making a distinction between two types of training:

• the duty to retrain employees. The new law codifies the principle that "the employer is obliged to ensure that employees are retrained to perform the tasks required as part of their changing job roles". The consequence of this principle is that "any training undergone by an employee in pursuit of this objective constitutes actual working hours"; and
• staff skills development. Three criteria must be satisfied for training to be carried out partially outside actual working time - (a) it must be provided for by a sector-level or company agreement (b) it must be carried out on the employees' initiative or with their written endorsement, and (c) it must be aimed at developing the skills of the employee, thus excluding training to adapt, maintain or refresh the skills currently required in the employee's job.

However, the agreements signed after the first 35-hour week law, adopted in June 1998, and which ignore this distinction by including certain training aimed at employee adaptation outside working hours, remain applicable (in line with a ruling of the Constitutional Council on 13 January 1999).

Reduction of social security contributions

A new measure on the reduction of employers' social security contributions has been implemented to encourage the transition to the 35-hour week through the channel of collective agreements and to limit the expense incurred by companies reducing statutory working time.

This measure will benefit those companies which apply collective agreements setting working time at a maximum of 35 hours per week and which, within that framework, commit themselves to creating or not shedding jobs. The reduction is not applicable to firms which adopt the 35-hour week by a unilateral decision on the employer's part. Unlike its predecessor in the first Aubry law, this reduction is not contingent on there being constant monitoring of working hours, or a minimal level by which they are reduced, nor does it depend on a certain percentage of jobs being created or maintained.

Increased legitimacy of agreements

An agreement to reduce the working week to 35 hours will be considered valid if it is signed in the usual conditions. However, in order to be eligible for the reduction in social security contributions described above, it must meet new conditions which are aimed at increasing the legitimacy of such agreements (FR9909104F):

• "majority"validation (for all companies). A relevant company agreement must be signed by the representative trade union or trade unions present in the company, which received the majority of the votes cast in the last employee representative elections (of works council members or, where there is none, workforce delegate s);
• employee consultation. If no "majority" agreement has been signed in a company, consultation with the workforce may be arranged at the request of one or more of the unions which have signed a "minority" agreement. This agreement makes the firm eligible for the reduction in social security contributions if approved by the majority of those voting in the consultation exercise. The same is true if the final draft of the agreement, before it is signed, has been submitted to staff consultation under the aegis of one or more "signatory" unions and approved by the majority of those employees who voted. This consultation process must take place during working hours. The form in which the vote is organised and takes place are to be agreed upon by the employer and the unions; and
• signature by a"mandated"employee (in any company with no trade union delegate or workforce delegate performing the function of a union delegate). A relevant company agreement may be signed by an employee expressly "mandated" to do so by a nationally representative trade union (FR9807123F). An agreement signed by a mandated employee must then be approved by a majority of those employees voting in a ballot. The form in which the vote is organised and takes place are to be agreed upon by the employer and the mandated employee.

Amount of reduction of social security contributions

The new law's scheme to reduce employers' social security contributions combines a permanent subsidy with the reform of employers' contributions. The two mechanisms are merged in a single reduction which takes the form of a single scale of exemption. It should be noted that in normal circumstances, the employer's social security contributions stand at around 30.3% of gross pay.

Those companies eligible for the reduction (all those reducing working time under the necessary conditions, except those firms with a monopoly position in their industry), will be paid a subsidy per employee per year, within the following range:

• an annual FRF 21,500 for an employee paid the statutory minimum wage (SMIC), which currently stands at FRF 82,584 per year. This subsidy accounts for 26% of gross pay, and the remaining employers' contributions represent 4.5% of gross pay;
• an annual FRF 4,400 for an employee paid 1.7 times the SMIC (FRF 136,308 per year), which equals 4% of gross pay. The remaining employers' contributions represents 27% of gross pay; and
• a flat-rate annual exemption of FRF 4,000 for employees paid equal to or over 1.8 times the SMIC.

Minimum wage and guaranteed monthly pay

The hourly wage of employees paid the SMIC will not change now that the law is in force. To avoid those receiving the minimum wage merely being paid 35 times the hourly rate of the SMIC, the second Aubry law provides that companies pay a "top-up wage differential" (complément différentiel de salaire) guaranteeing that 35 hours' work by SMIC recipients will now be paid as much as 39 hours previously. State subsidies, in the form of a reduction in social security contributions, are planned in order to enable companies to compensate for their extra expenditure.

If working time in a company is reduced below 35 hours, guaranteed monthly pay for employees who receive the SMIC is reduced "in due proportion to" the reduction of working time below 35 hours. Thus, unless otherwise stated in a company agreement, such employees loses part of their pay if fewer than 35 hours are to be worked.

Part-time workers employed by companies where working time has been reduced to below 39 hours, and whose own working hours have also been cut, also benefit proportionately from the monthly top-up, whether or not they have chosen to maintain (or increase) the number of hours worked.

The deadline for the monthly pay guarantee has been set for 1 July 2005 at the latest. From then on, the hourly rate of the SMIC brought up to the statutory working week (of 35 hours) should (due to inflation and incremental increases) have bridged the gap between itself and the guaranteed monthly pay.

Censure by the Constitutional Council

On matters brought before it by the parliamentary opposition, the Constitutional Council (Conseil constitutionnel) found that four provisions of the new law did not comply with the constitution. The Council's censure related to the following points.

• Compliance with agreements. The Constitutional Council censured the legislative measure granting a grace period of "one year" to the clauses of agreements reached as part of the implementation of the provisions in the first Aubry law, and which ran counter to the provisions of the second law, in order to comply with the new legislation. The Council ruled that the "effect of its censure will be to keep the agreements reached in application of the law of 13 June 1998 in force until they expire. Their clauses will prevail where they come into conflict with the provisions of the second law". The clauses in question, referred to by the Council in its ruling, relate to "the system of overtime, annualisation of working time, working time for managerial and professional staff, vocational training and pay compensation". The Council's ruling has left room for interpretation of this censure. For example, the relevant agreement in the metalworking industry, signed in July 1998 by the UIMM employers' association (FR9808129F), contains clauses with no basis in law, even prior to the second Aubry law - such as counting working time in days (in the case of non-managerial staff), or an increase in permissible annual overtime from 94 to 180 hours, with the option of raising this quota by 25 hours per year per employee for two years. However, provisions regarding the annualisation of working time (1,645 hours in the UIMM agreement) can be applied, in that the Council has overruled the 1,600 hours per year model that the new law refers to for annualisation. UIMM has decided to undertake a new round of negotiations with the unions to review its 1998 sectoral agreement on the 35-hour week.
• The payment of overtime. The law had instituted a 10% tax on overtime. Under the final overtime system, companies which had not reduced their working hours would have had to pay 10% of pay for the first four hours of overtime worked into a fund for financing the reduction of working time, and a 15% premium to the employees. Firms that had concluded agreements on the reduction of working time would have paid a 25% premium to the employees. In the Council's opinion, "this differential treatment, revolving around circumstances beyond the employee's control and independent from their individual behaviour, is deemed contrary to the principle of equality". The main consequence of this ruling is that one source of funding of the transition to the 35-hour week, estimated at FRF 7 billion by 2000, has been closed down. Moreover, although this censure will have a negative effect on the state's budget, it will have no impact on companies (overtime will still cost them 25% more than normal hours) and will be a boon for employees whose working time has not been reduced, as they will receive a premium of 25% rather than 15% for overtime.
• SMIC for part-timers. The second law had provided that part-timers whose working time had not been reduced would not benefit from the "top-up wage differential". The Council censured this measure, because it found it discriminatory. The Council found that if those full-timers on the SMIC, and whose working time was under 39 hours, were going to benefit from a de facto increase in their hourly rate, then the same should apply to part-timers whose working time was already less than 35 hours.
• The"Michelin"amendment. The National Assembly introduced an amendment into the second law after the announcement of job cuts by the French tyre manufacturing company, Michelin (FR9910113F), whereby employers must have concluded, or be in the process of concluding, an agreement to reduce the level of weekly working time to 35 hours or below, or to reduce annual working time to 1,600 hours, before they could inform trade union representatives of their intention to make redundancies and draw up a social plan. The Council criticised the legal haziness of this amendment and pointed out that the Labour Code states that any redundancy plan must contain provisions "such as measures for the reduction and reorganisation of working time".

Reactions from employers and unions

The main trade union organisations found themselves in agreement over their reaction to the second Aubry law, and have even carried out joint action on certain issues such as the conditions for the application of the reduction of working time to managerial and professional staff, the funding of the 35-hour week by switching funds from the budgets of social protection bodies jointly managed by employers and unions (FR0001134F), and the application of measures relating to the SMIC to part-time workers whose hours are not being reduced.

The unions are, however, divided over the fundamental question of the legitimacy of agreements, and the new rules on this topic. The CGT confederation feels that this amounts to support for a challenge to the current criteria for unions to be granted representative status. CFDT would like the topic to be discussed but feels that the issue of representative status cannot be dealt with without prior consultation, and UNSA is favourable to the opening of this debate. However, CGT-FO, CFTC and CFE-CGC are opposed to debate because they do not want the rules on representative status to be amended (FR9909104F).

On the second Aubry law in general, the unions have contrasting viewpoints and each emphasises its own priorities:

• for CFDT, the law provides "major support for achieving generalised working time reductions, thus creating employment. In particular, it provides the time and the funds necessary for negotiations to produce balanced compromises for all categories of employee, for unemployed people and for businesses. The law, along with extended sector-level agreements, will enable the diversity of the situations encountered to be dealt with";
• CGT believes that the law does not fully satisfy its expectations and that "certain provisions are even dangerous." This union thus wants to see the reduction of working hours applied to all employees, including managerial and professional staff, in both the public and private sectors. It is concerned by the consequences of working time flexibility and annualisation;
• CGT-FO has been against the thinking behind the law from the outset, stating that it potentially threatens stable wage levels and working conditions. One of the aspects of the law it criticises most is the government's desire to amend the conditions for concluding company agreements so that they are granted "increased legitimacy";
• CFE-CGC, a nationally "representative" union for managerial staff, technicians and supervisors, has focused its criticisms on the reduction of working time for managerial and professional staff, particularly the "schemes" in which working time is calculated in days rather than hours over a year. CFE-CGC considers that these "schemes" will allow employers "to demand 12- or 15-hour days, if not more", and has decided to pursue the matter before the European Court of Justice in an attempt to have this provision abolished;
• CFTC has "engaged constructively" with the debate on the reduction of working time, but feels that "the new law gives no guarantee of balanced negotiations at company level". Moreover, it stresses that there is a need for coordination between working time and free time, especially that set aside for family life; and
• UNSA has stated that, "despite obvious flaws, the law on the reduction of working time constitutes a step forward for employees, and on a broader level, for employment." This union has emphasised the need to apply the 35-hour week to the civil service.

The MEDEF employers' confederation has always been opposed to the 35-hour week legislation, which since 1997 has been the principal bone of contention between employers and government. Indeed it was in the wake of the national conference on employment, pay and working time (FR9710169F) in October 1997 that the former CNPF became MEDEF, changed its structure and redefined its objectives (FR9811140F). For the entire period during which the debate on the 35-hour week has been going on, MEDEF has been castigating the state for encroaching on the prerogatives of the social partners (FR9912122F).

Commentary

The second law on the 35-hour week can be understood in more than one way. This is due not only to its technical nature but also because its interpretation, which will basically depend on the conditions under which it is implemented, is to say the least, ambiguous: it can be read in either of two ways and on two different levels. Regarding the future of industrial relations and employee protection:

1. for some employees, the law puts in place mechanisms which give greater protection than in the past - as for part-time working or the possibility in some cases of counting time for activities directly related to the employee's occupation as actual working time;
2. the law is part of the trend towards injecting flexibility into working time and work organisation witnessed in the other European countries - by allowing individualised forms of working time and the implementation of shiftwork by company agreement alone, while granting companies which change their work organisation the benefit of a considerable reduction in social security contributions. In the current climate, the low levels of union presence in companies is not favourable for employees when such reorganisations of work take place.

Regarding the objectives of the Act themselves:

1. the law was first introduced as a job-creating measure. However, the assessments regularly published by the Ministry of Employment and Solidarity do not enable the jobs created thanks to state intervention as part of this legislation to be distinguished from those that would have been created even without it. The national statistical institute, INSEE (Institut national de la statistique et des études économiques), has observed that state assistance in creating employment in the for-profit sector (in particular the lowering of social security contributions as part of the reduction of working time) seems to have had a greater impact in 1999 than in 1998, accounting for 0.6% of the employment in competitive sectors, or around 80,000 jobs, compared with 0.3% in 1998. However, these provisional results concern the "experimental" and "incentive" period of the legislation. The effects of the huge four-hour reduction in the statutory working week for companies employing more than 20 people, which came into force on 1 February, it will take time to estimate; and
2. time will also be required in order to assess whether the basic effects of the law will be job creation or rather helping businesses and the economy to modernise, as part of an implicit "social pact".

The Constitutional Council's censure, although it did not strike at the foundations of the second law in the form in which it had been passed by parliament, has forced people to take a fresh look at the law generated by collective agreements and the relationship between statutes and bargaining. The Council stipulates that in some fields, law stemming from the conclusion of collective agreements prevails, which is a novelty opening up a large grey area, and raising questions relevant not only to specialists in labour law but also protagonists in, and observers of, industrial relations.

The new law involves a certain amount of "reshuffling of the pack" in terms of industrial relations: first, by setting out strict regulations for the first time on the circumstances in which an agreement on the reduction of working time (combined with state funding) will be recognised as "legitimate"; and second, because of its consequences for the relationships between employers and unions. The year 2000 is likely to see debates about the overhaul of French industrial relations.

Lastly, the whole area of the reduction of working time to 35 hours in the civil service has still not been explored since the "Roché report" was published in early 1999 (FR9903166F). This will be one of the government's objectives in 2000. An initial negotiation meeting between the civil service minister and civil service unions was planned for early February (FR0001126N) (Alexandre Bilous, IRES).