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In September 2001, the French government announced that the conditions for implementing the transition to the statutory 35-hour working week are to be made more flexible for companies with fewer than 20 employees. These firms will, for two years from the introduction of the 35-hour week in January 2002, be able to use more overtime without having to grant time off in lieu.
On 28 August 2001, Prime Minister Lionel Jospin announced that the conditions for implementing the statutory 35-hour working week in companies with fewer than 20 employees ('very small firms', or très petites entreprises, TPEs), for which the deadline is 1 January 2002, would be made more flexible. This announcement generated criticism, both from most trade unions and the main employers' organisations.
On 26 September 2001, after a testing period of debate both inside and outside the government, a press release from the Minister for Employment and Solidarity, Elisabeth Guigou, announced the main lines of the decisions that had finally been taken on this issue. The government had adopted the principle of raising, for TPEs, the quota of overtime which is allowed without such work automatically giving rise to time off in lieu (and without requiring the consent of the Labour Inspectorate). The quota will be raised from the current 130 hours per worker per year to 180 hours in 2002, falling to 160 hours in 2003, with the 130-hour point not being reached until 2004.
A forthcoming decree will enshrine this principle in law. Moreover, a ministerial circular will stipulate the conditions for the possible reorganisation of the financial subsidies accorded under the 35-hour week law to TPEs which have reduced their working time while negotiating the creation of new jobs, and which are experiencing problems finding employees, or undergoing other unusual difficulties. By 2004, TPEs should have returned to compliance with normal standards.
TPEs are a sizeable and relatively important group of firms, employing 30% of the labour force, or 5.5 million people. However, they have been slow to implement the 35-hour week voluntarily or through collective bargaining, as encouraged by the legislation (see below). A few months from the deadline, only a very small proportion of them seem to have moved ahead.
The law of 13 June 1998 (the first 'Aubry' law) set statutory weekly working time at 35 hours as of 1 January 2000 for companies with more than 20 employees, and as of 1 January 2002 for smaller firms (FR9806113F). The law provided incentives for collective bargaining at sector and company level to introduce the 35-hour week before these deadlines. The law of 19 January 2000 (the second 'Aubry' law) reiterated these deadlines and organised the new conditions for the organisation of working time stemming from the 35-hour week, including new regulations on overtime (FR0001137F).
A crucial point for TPEs is that the regulations existing prior to the Aubry laws subjected overtime worked in firms with more than 10 employees to an upper limit of 130 hours per employee over a year (an average of around two hours 45 minutes per week worked). Below this limit, overtime had to be paid at a higher rate, while above this limit the employer was obliged to grant the employee time off in lieu, unless there had been a collective agreement (endorsed by the Labour Inspectorate) to change this threshold. The second Aubry law retained this overtime quota, but provided for a progressive transition period for companies with more than 20 employees. The higher rate of pay for overtime (ie hours worked above the new 35-hour working week) from the 36th to the 39th hour worked per week was provisionally reduced during the first year that the 35-hour week was applied. Furthermore, the point above which weekly hours worked counted as overtime to be included in the annual quota was set at 37 hours for 2000, and 36 hours for 2001, and will reach 35 hours only in 2002. This was equivalent to raising the statutory overtime quota to around 220 hours in 2000, and 175 hours in 2001.
The question of what was to happen to companies with fewer than 20 employees remained unresolved. Would the same measure be applied according to a similar schedule? Would a higher overtime quota be allowed? The issue was debated for over a year, both within and outside the government (FR0101117N). The Minister for the Economy and Finances, Laurent Fabius, advocated a 180-hour quota. Elizabeth Guigou, the Minister for Employment and Solidarity did not want to go that far, and suggested 150 hours. The Junior Minister for the Crafts Industry, François Patriat, sought an extension of an option already open to firms with fewer than 11 employees - the reduction of working time directly by companies, without either a sector-level agreement or the 'mandating' of an employee by a union (FR9807123F) to negotiate a working time reduction agreement - to all companies with fewer than 20 employees. The solution finally adopted was chosen by the Prime Minister.
The procedure to be adopted also remained to be decided. Should sector-level negotiations be left to set quotas on a case-by-case basis, or should a general measure be devised? If so, what form should this general measure take? Should it be regulatory? Should it be a ministerial decree - or an amendment to the legislation, since a decree cannot contravene the provisions of a law, as some jurists have stated? The issue was thus at the core of two debates; one purely on the situation of TPEs; and one on the respective roles of parliament and the social partners.
It should be noted that apart from allowing TPEs to switch to the 35-hour week two years after other companies, the second Aubry law had already granted them many exemptions from the regulations surrounding working time. TPEs may access the financial incentives - reductions in employers' social security contributions - provided as a trade-off for implementing the 35-hour week, as long as they enter into a much less exacting form of collective bargaining on working time reductions than applies in larger firms. This measure aims to compensate for the very low trade union presence characteristic of smaller companies. TPEs with fewer than 10 employees also benefited from further exemptions.
Reaction to the decision on introducing the 35-hour week in TPEs was not unanimous, either among trade unions or employers' organisations.
On the employers' side, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) stated that the government was responding to some of its demands by making the changeover to the 35-hour week more flexible for TPEs. However it deemed it 'unacceptable' for companies with more than 20 employees 'to be excluded from this amendment to the Aubry law'. MEDEF was especially critical of the non-negotiated procedure selected by the government to implement this more flexible version , which again prevented the social partners from deciding the rules. The General Confederation of Small and Medium-sized Enterprises (Confédération Générale des Petites et Moyennes Entreprises, CGPME) felt that the measures were inadequate, and called for a minimum annual overtime quota of 200 hours, or even simply the postponement of the 35-hour week for TPEs. Only the Craftwork Employers' Association (Union Professionnelle des Artisans, UPA) which represents TPEs, considered that matters were moving in the right direction, and criticised the MEDEF for its 'unrealistic' approach.
Most of the unions demonstrated their displeasure. The French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) is deeply concerned that the objective of an actual 35-hour week in TPEs has, in its view, been abandoned. However, it did not oppose a rise in the overtime quota, on the condition that this was negotiated at sector level. The General Confederation of Labour (Confédération générale du travail, CGT) condemned what it called the de facto authorisation granted to employers not to reduce actual working time, while at the same time taking advantage of the reductions in employers' social security contributions linked to the changeover to the 35-hour week. It claimed that an injustice has been done to employees of TPEs, who will thus have not only the lowest wages, but also the longest working hours, and much lower social security benefits. The French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC) also levelled criticism at this perceived infringement of the principle of equality among employees. The General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) and the French Confederation of Professional and Managerial Staff-General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement-Confédération générale des cadres, CFE-CGC) had approved the principle of making the implementation of the 35-hour week in TPEs more flexible, and stressed that in any case, the 35-hour week in smaller firms was going to create only a very small number of new jobs. CGT-FO called for two conditions to be imposed on the quota however: that it should be calculated on a quarterly basis; and that overtime should be used for a 'justifiable' reason.
It is very hard to deny the scope of the inequalities that even a temporary relaxation of the application of the reduction of working time in TPEs will produce.
An important characteristic of the French industrial relations system is the broad gap that separates smaller private sector companies from the larger ones, not just in terms of working time but more generally in terms of working conditions, pay and social security benefits and collective representation. Industrial relations in TPEs are less formalised and less codified, and therefore frequently more subject to an employer's whims.
Martine Aubry, the former Minister for Employment, has rightly pointed out that actual working time is now much longer in large companies than it was before the 35-hour week was introduced. The shock caused by the 35-hour week can only be greater for TPEs. Moreover, the fact that the changeovers both to the 35-hour week and to the euro single currency were due to occur at the same time at the beginning of 2002, would definitely have posed management difficulties for TPEs, many of which do not have the resources necessary to cope with them. However, the fact remains that the precise issue of employees' rights and welfare in TPEs cannot continually be sidelined.
Is collective bargaining a means of dealing with this issues? It is hard to deny that the world of small and medium-sized enterprises (SMEs) is a 'desert' for the trade union movement. This is indeed why the 'mandating' system (whereby unions nominate employees to bargain on their behalf in companies without union representatives) was set up as early as 1995, in order to facilitate collective bargaining. It was hoped that the emergence of genuine employee-side negotiators would thus be nurtured in SMEs, among staff who are usually without union representation and non-unionised. From this perspective, mandating has not produced the expected results. Once negotiations are over, everything appears to return to its prior state. In any case, mandating has not overcome the problem of union representation being so thin on the ground in this type of firm.
The risks of negotiations between two parties when one of them, the staff representatives, has neither real legitimacy nor enough clout actually to influence the outcome cannot be ignored. There is a strong probability that the will of the most powerful partner, in this case the employers, would simply be endorsed in this type of arrangement. The government did not want to run this risk in the case of the 35-hour week in TPEs. (François Michon, IRES)