14 July 2016

By Professor Sylvaine Laulom, Director of Institut d'études du travail de Lyon, the University Lumière Lyon 2

Finally, the long road towards the ‘El Khomri’ Law, named after the French Minister of Labour and officially called the ‘Labour Act’ (‘Loi Travail’), is coming to an end. A draft was accepted by the National Assembly after its second reading on July 6, following the use, for the second time, of Article 49.3 of the Constitution. It will now proceed to the Senate. At that stage, the Act should be accepted by the Parliament by the end of July. It will likely be referred to the Constitutional Council. By the end of summer, the Act is likely to have been adopted.

Since the first presentation of the draft legislation in February 2016, this highly contested Bill has generated mass street demonstrations; a new social movement in the form of Nuit Debout, (‘Up All Night’ or ‘Standing Night’) that began in February 2016; important strikes in the energy sector, which have involved blocking oil refineries; strikes in transport; garbage strikes; strikes in Universities and in other sectors. The French newspaper, Le Monde, wrote on July 7 that this battle has only produced losers, with the trade unions landscape looking now like a field of ruins, and the political left on the edge of imploding. How did we come this far?

Without any consultation with trade unions, a first draft bill was published by the government in February 2016 and was welcomed by the Medef, the employers’ main organisation, but met with opposition from all French employee unions and generated a wave of protests that continue to this day. For a few weeks, the French government succeeded in generating something that is almost impossible to obtain: the unity of the French trade unions against the draft bill. After a few weeks of petition and demonstration, the Prime Minister, Manuel Valls, decided to postpone the presentation of the draft to the Council of Ministers in order to organise consultations with some trade unions and to obtain the agreement of at least some of them. After these consultations, the first proposal was amended and presented to the Council of Ministers. This draft obtains the approval of one trade union, the CFDT, which believed that important progress had been made for the protection of workers. In contrast, the Medef started to criticise the proposal saying it was too protective for the workers and not to the benefit of companies. The other trade unions and part of the left-wing parties, including part of the socialist party, continued to oppose the Bill. The debates began in the National Assembly in April 2016 after other modifications.

In the National Assembly, the government faced the opposition of the left wing of the Socialist party and decided to use a constitutional provision: article 49-3 of the French Constitution, which allows the government to pass a Bill into law without a vote, unless a majority of deputies pass a motion of non-confidence, thus forcing the prime minister to resign. Adopted on first reading by the National Assembly in May, the draft bill was debated in the Senate in June 2016. In the Senate, the majority of senators are right-wing and they decided to amend the bill in a more liberal way to answer to some of Medef’s criticisms. After the vote in the Senate, the text returned to the National Assembly, where the Prime Minister decided to use article 49-3 of the French Constitution once more.

From the leak of the draft legislation - elaborated without any consultation with trade unions - to the use of the controversial article 49-3 of the Constitution, the communication of the government on the Bill has been a disaster and this could partly explain the strikes and the contestation. But what is at stake is, of course, the content of the law.

Before the launch of the proposal, the simplification of the Labour Code was presented as a major justification for reform. However, very quickly, the issue of simplification was pushed aside with debates about the supposed rigidities of the Labour market, showing that conversations about the simplification of labour law mask ongoing developments relating to simpler obligation for employers, meaning a re-balancing of their power vis-à-vis employees.

The central purpose of the Bill is the entire rewriting of the part of the Labour code dedicated to working time. It implies a ‘new’ articulation of collective norms, and this rewriting is supposed to be generalised in a new Labour Code to be adopted maybe by the end of 2017. However, the Bill also embraces heterogeneous provisions, from occupational medicine to personal account of activity, through redundancy, as the government took the opportunity to answer to various claims coming from different and sometimes contradictory interests. The result is an omnibus and incoherent Bill of a rare complexity.

First, the Bill offers a new regulation of working time with a priority given to collective agreements at an enterprise level. This decentralisation of collective bargaining (Article 2 of the Bill) is at the heart of the debates and of the contestations. It proposes a ‘new’ articulation of norms, a fundamental change in the construction of labour law in which company-wide collective bargaining could prevail over industry-wide collective agreements (which is still an important level of collective bargaining in France), and over the law, even in cases where these decentralised agreements result in less protection for employees. In fact, what is really new, is that the exception (the possibility for collective agreement at company level to deviate from the law or from the sectoral level) is becoming the rule.

Since 1982, collective agreements can be less favourable than the law when the law authorises derogation (working time being the core field of derogatory bargaining). Since 2004, collective agreements at company level can deviate from collective agreements at industry-wide level, except in some areas like minimum wages, so long as this is not prohibited by industry-wide collective agreements. It appears that most industry-wide agreements contain ‘closure clauses’ prohibiting such in peius deviation. The adoption of the Labour Act will constitute the next step towards giving enterprise level agreements priority.

Therefore, article 2 sets forth a new architecture of French Labour Law and distinguishes three types of rules:

1. Rules that must be enforced as they stand, regardless of the contents of the applicable company-wide bargaining agreement (‘public order provisions’ or ‘dispositions d’ordre public’)
2. Rules that may be modified by a company-wide bargaining agreement (‘scope of collective bargaining’, ‘champ de la négociation collective’)
3. Rules applicable when there is no collective agreement (‘auxiliary’ or ‘default provisions’, ‘dispositions supplétives’)

For example, the ‘legal’ working time and the regime of overtime do not fundamentally change in the Labour Act. The ‘legal’ working time is still defined as 35 hours a week and it is the legal standard limit, after which further working time is to be considered overtime (it is not and has never been a maximum of weekly working hours). Now, the public order provision states that overtime should be paid at an extra-rate. The provision on the scope of collective bargaining states that this extra-rate is defined by a collective agreement at company level or, failing that, at industry-wide level and it cannot be below 10%. The auxiliary provision states that if there is no collective agreement, the extra-rate should be of 25% an hour for each of the first eight hours of overtime and 50% for each hour after.

The result of this law, then, will be an extraordinary new complexity of the Labour Code, as this ternary structure will be adopted for every rule on working time even, for example, where no derogation is possible. For example, the actual article L 3142-1 of the Labour Code provides that every worker has the right to paid leave for family events (4 days’ marriage leave, for example). But it also dictates that collective agreements at any level can grant more days’ leave. This right has not changed. However, under the Labour Act, three articles of the Labour code will now be dedicated to this right. The public order provision will state that every worker has a right to some leave when he/she gets married. The provision on the scope of collective bargaining will provide that paid leave is defined by collective agreements and cannot be less than four days. And the auxiliary provision will state that in the absence of a collective agreement, the worker has the right to four days’ leave.

Another important innovation in the Labour Act is a modification of the rule to conclude collective agreements. The Labour Act provides that collective agreements must be made by majority agreement, i.e. approved by trade unions representing at least 50% of the recorded vote (currently, only 30% is needed but trade unions representing 50% of the recorded vote can oppose a minority agreement and specific agreements like the employment continuity agreement need to be sign by a majority of trade unions). This is the continuity of the previous reforms in order to give more legitimacy to agreements which can weaken workers’ rights. Here again, the broadening of the scope of collective agreements is associated with stricter conditions to conclude collective agreements. However, article 10 of the bill, which is another very contested article, also provides that if the agreement is concluded by trade unions only representing 30% of the recorded vote, the trade unions can ask for a referendum, and if 50% of the workers agree the agreement will come into force.

The Bill also includes various provisions on different topics from economic dismissal to occupational health through discrimination, company regulations on the neutrality principle towards religion, vocational training, the personal account of activity, some new rules to combat the illicit posting of workers, and the adaptation of Labour Law to digitalisation with a new right for workers to disconnect, without any coherence. Here, the government has taken the opportunity to answer to different claims, but mainly to employers’ claims.

The Labour Act demonstrates the endorsement by the French government of European dogma and rhetoric where the regulation of the Labour Market is blamed for the employment crisis and for the level of unemployment. It is not in itself a ‘revolution’, in fact it is in line with previous reforms. But it certainly adds new complexities. Another factor of complexity, also present in this Act, is the combination of general reforms with specific ones where the government does not hesitate to return to work as many time as necessary to achieve (or not) a certain result. The results are an increasing trend towards more flexible working conditions, with these new flexibilities often not combined with any new securities for workers. At best, an attempt is made to improve security with regard to career paths and training, but very often without real success, and these new protections remain mainly virtual. The reforms also show an apparent widespread support for collective bargaining. However, social partners have been excluded from the drafting of the Labour Act and when the decentralisation of collective bargaining is supported it is with the assumption that this will produce outcomes in favour of the employer. Indeed, if this decentralisation does not occur because trade unions do not wish to conclude collective agreements that fall below the standards of a sectoral agreement or the law, other reforms could be adopted permitting unilateral regulation by the employer.

The Labour Act is not going to put an end to the reform of Labour Law. A general rewriting of the Labour code is expected. However, the process is very uncertain. In less than one year, the presidential election will take place and the right-wing party is expected to win. Nobody knows if the newly elected President and the new Parliament will endorse this recodification of Labour Law. One thing is almost certain: the right-wing party has already announced its will to reform Labour Law as, according to the Republican Party, the El Khomri Law does not go far enough to weaken the supposed rigidities of the Labour Code.