ANI 11 JANUARY With financial support of the European Commission

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1 1 ANI 11 JANUARY 2013 National cross-industry agreement of 11 January 2013 for a new economic and social model to foster the competitiveness of the enterprises and the security of employment and the career paths of the employees Accord national interprofessionnel du 11 janvier 2013 «pour un nouveau modèle économique et social au service de la compétitivité des entreprises et de la sécurisation de l emploi et des parcours professionnels des salariés» Context: In France, in recent years, there have been several reforms concerning industrial relations and collective bargaining. The latest main reform stems from the legislation on securing employment enacted in June 2013, which provided a legal framework for the 11 January 2013 national cross-industry agreement on the topic by the social partners. The full name of this national cross-industry agreement is National cross-industry agreement of 11 January 2013 for a new economic and social model to foster the competitiveness of the enterprises and the security of employment and the career paths of the employees 1. Some observers have considered this agreement as French style flexsecurity 2, others as a landmark on labour market reform 3. On the employer side, the 11 January ANI agreement was signed by the three employer organisations: the Mouvement des entreprises de France (Medef, Movement of the Enterprises of France); the Confédération Générale des Petites et Moyennes Entreprises (CGPME, General Confederation of Small and Medium-sized Enterprises), and the federation representing selfemployed craft workers, the Union Professionnelle Artisanale (UPA, Craftwork Employers Association). On the employee side, the ANI was signed by three trade unions: Confédération française démocratique du travail (CFDT, French Democratic Confederation of Labour); the Confédération française des travailleurs chrétiens (CFTC, French Confederation of Christian Workers); and the the Confédération française de l'encadrement - Confédération générale des cadres (CFE-CGC, French Confederation of Management General Confederation of Professional and Managerial Staff). The Confédération Générale du Travail (CGT, General Confederation of Labour) and the Confédération Générale du Travail - Force Ouvrière (CGT- FO, General Confederation of Labour - Workers' Force, commonly called FO) refused to sign the agreement considering it gave more flexibility to employers and no increased security to employees. The agreement originated from the French government s Social Conference asking the social partners to devise a social agenda roadmap for the years to come. This ANI agreement is very broad as it encompasses supplementary health insurance; unemployment insurance; minimum hours for part-time employees; individual training accounts; mobility rules; company level 1 Our translation from the French title: accord interprofessionnel du 11 janvier 2013 «pour un nouveau modèle économique et social au service de la compétitivité des entreprises et de la sécurisation de l emploi et des parcours professionnels des salariés»

2 2 agreements to protect jobs; information and consultation rights, worker representatives at board level, etc. Overall the document includes 28 articles plus annexes 4. The January 11 national cross-industry agreement by the social partners cannot be considered as a derogatory agreement per se. It is a broad agreement at the national cross-industry level dealing with many topics and there is no consensus among French trade unions as to whether the new rules it introduces for the French labour market are more or less favourable than the ones that existed before. To understand all the implications of these new rules is legally complex and beyond the scope of this short case study. The detailed analysis of the main French trade unions can be found in their web sites 5. The Euronline summary of the clauses of the 11 January ANI agreements is provided as an Annex at the end of this case study. The general aim of the January 11 national cross-industry agreement is to foster employment, reduce precarity (or job insecurity), and create new individual and collective rights for wage earners. The agreement was transposed into law in 14 June 2014 with a few amendments introduced during parliamentary debate 6, such as, for instance, considering that breach of contract in case of an employee s refusal of internal mobility is for economic and not individual motive in order to comply with ILO convention n 158. Overall the 11 January 2013 ANI agreement induces changes in some of the rules of the French welfare system and opens the possibility to bargain at the company level in order to save jobs under new conditions. These conditions might reverse the French hierarchy of rules or favourability principle, which implied that clauses bargained at lower levels (company in relation to the sector or inter-sectorial or national law) always have to be more favourable to the employees. This is why the agreement was chosen for comparative purposes in this study since it gives the possibility to negotiate what can be considered as derogatory or opening clauses in companies facing serious temporary difficulties. The derogatory measures in regard to the Labour code concern mostly changes in the right to fire an employee for breach of contract in case of refusal of mobility or in case of refusal to accept changed working conditions (wage reduction or unpaid increase of working hours for instance) when the company is experiencing temporary economic hardship, and the right of the employer to reduce the workforce beyond 10 employees without setting up the procedure for the compulsory Plan to safeguard employment (PSE), with reduced time for the reaction of the Works councillors, and without the unions being able to attack the procedure in court, thus An example the detailed analysis of the CFDT can be found at : CGC-FO at : CGT at : CFTC at : CFE-CGC at : 6

3 3 limiting the role of judges. Such company agreements are to be concluded for a maximum of two years and during that period the employer cannot layoff any workers. The negotiation, the position of the actors, and the Implementation and impact of the agreement Cécile Cottereau, CFDT Confederal Secretary in charge of professional securisation, and a member of the union delegation leading the ANI negotiations, confirms that the CFDT was the lead union in the negotiations. She considers that the agreement is well balanced, innovative, and that it brings a series of new rights to employees such as rechargeable rights for unemployed workers or mandatory supplementary health benefits as well as a new tool for worker representatives, the social database, and new employee representation rights at company board level. However she also thinks, as does the CFDT 7, that it is a bit too early to appraise the implementation of the agreement after just one year for some clauses and less than that for some other clauses that were to be discussed for their application at subsequent national union meetings, or sector level negotiations, and since not all the aspects that needed to be further renegotiated have been finalised. Stéphane Lardy, FO Confederal Secretary in charge of employment, unemployment and training, on the other hand, believes that the agreement does not solve labour market precarity, the original theme French government had requested the social partners to address. He pointed out that whereas the new rules increasing flexibility were immediately applied, several of the new measures dealing with social security or welfare were planned to be negotiated at a future date, and that during those subsequent negotiations further concessions were required from the unions in exchange. Thus Stéphane Lardy thinks that these kinds of overreaching negotiations should be discontinued. He also thinks that the ANI agreement brought up the issue of individual versus collective rights, i.e., in order to save a collective of work sacrifices are asked by management from individual employees and if they refuse they are fired for individual (ANI clause) or economic (Law of 14 June 2013) cause. But how far can this sacrifice of the individual for the collective go? For the CGT the ANI agreement is a threat to the Labour code in France and represents a social regression. It introduces forced mobility under the penalty of individual breach of contract if a worker refuses; denies access to a judge; introduces the employment competitivity agreements Sarkozy had tried to set up; is a form of blackmail and secures layoffs rather than employment 8. In brief, for the CGT this agreement granted the requests of the Medef for more flexibility, more power to the decentralised enterprise level, and less power to the judges over restructuring through PSE s. The Syndicat de la Magistrature (second largest trade union of magistrates in France) issued a communicate strongly disapproving the strategy of avoidance of the judges in charge of monitoring compliance with the rights of employees, and indicating that despite some advances pointed out by the signatory unions, this agreement by facilitating layoffs and dramatically reducing judicial supervision on the implementation of the labour contract and

4 4 the termination of employment, constitutes a serious setback for the rights of employees and a new source of insecurity 9. The legislation on securing employment was enacted on 14 June 2013, transforming the 11 January ANI into French national law. Since this new piece of legislation was enacted several agreements (temporary derogatory agreements at the company level in order to secure employment) were proposed by companies but only two have been signed with two automobile subcontractors: Walor on July 19, and Behr July In most cases, which did not reach signature, the securing employment negotiations through which company management demanded concessions in wages or working time in order to avoid plant closures or layoffs met with trade union opposition and strikes by the workers. The Minister of Labour, Michel Sapin, quoted the Walor agreement, signed in July 2013, as a model agreement resulting from the 14 June legislation, which transposed the ANI. The agreement was to save the company a year and included a reduction of pay and increased hours in order to avoid 26 layoffs. It was approved by 60% of the employees and signed by the CFDT 10. In fact 20 employees, including the CFDT delegate that signed the company agreement, refused the new conditions and were individually fired for economic reasons 11. A year later the plant has not relocated production from Romania (where it had opened a new plant in 2007) to France but had opened a new plant in Irapuato, Mexico, in June According to its manager, Walor intends to cover local markets in North America, as well as in East and West Europe. The Behr case entailed a high and unforeseen number of layoffs, which surprised both management and the unions. Originally meant to avoid the relocation of the plant to Germany and save 102 jobs in Alsace, actually after the employees voted in a referendum for the agreement, which was then signed by all the union organisations in the plant (CFTC, UNSA, CGT, CFDT et CFE-CGC) 12, 162 workers refused the new conditions (suppression of 5 working time reduction days and wage freeze until 2015), preferring to receive the package included in the firing procedure. As a result the company avoided the PSE procedure but instead of saving jobs had to replace 15% of its workforce, facing the loss of competent workers and having to hire new employees. Instead of saving 102 jobs the agreement resulted in 160 departures in the form of economic layoffs. To our knowledge no further agreements to safeguard employment stemming from the ANI have been signed so far at the company level. The agreements to safeguard employment at the company level were chosen for this case study as concrete applications of the 11 January ANI because they were derogatory under severe economic conditions (to be appreciated eventually with the help of experts) and entailed a particular articulation or hierarchy of rules from the national to the company level ;

5 5 ANNEX Landmark agreement paves the way for labour market reform By Gilbert CETTE, Université Aix-Mareille; Frédéric TURLAN, IR Share Exerpt from Eironline Extension of complementary health insurance All employees are covered by the French social security system (Sécurité sociale) but they are not reimbursed fully for all medical treatment. For this reason, employees are often covered by a complementary insurance, financed by employers and employees. This additional insurance partially, or entirely, takes care of the difference between the cost of their treatment and the amount they receive through the social security system. But companies are not obliged to offer this additional insurance. Employees without employers complementary insurance benefit should pay for this themselves, although only three quarters of all workers actually do. The new agreement stipulates that the sector level social partners will need to start negotiations by April 2013 if complementary health insurance is to be made compulsory by 1 January If these negotiations do not produce an agreement before 1 July 2014, negotiations will have to take place at company level. The new agreement also increases the period in which workers who are made unemployed remain covered by their former employer s complementary health insurance. More flexibility and more protection in a crisis Under the new agreement social partners will be permitted to negotiate and conclude a company level agreement to preserve jobs in the event of unforeseen severe economic difficulties. The agreement will also allow for the temporary adjustment of wages and working time for no longer than two years, in return for a commitment from the employer to make no redundancies. Under such an agreement, companies will be allowed to make dismissals through the current rules governing individual economic dismissals, regardless of the number of employees who refuse the new conditions in the agreement. Greater predictability and legal certainty for employers As a result of the labour reform, the social partners will be given the right to reach agreements over the procedure for collective redundancies. In the absence of such an agreement, companies will be required to send their proposed procedure to the labour administration, and their proposal will be considered valid if there are no comments from the administration within two weeks. The statutory period for individual redundancies will be shortened and an automatic scale for compensation will be introduced for those companies which engage in conciliation. Unemployment insurance based on job history Unemployed people will now have a right to receive welfare benefits based on their previous employment, immediately prior to being unemployed. If they find work again, their right to benefits ceases. The benefits received during subsequent periods of unemployment will then be based upon their last employment. Unemployed workers will therefore be less likely to accept inferior employment, conferring lower levels of benefit, should they become unemployed once more. In this way, the new agreement seeks to encourage unemployed people to accept part-time or lesser-paid employment without reducing their right to unemployment benefits. In this case, the job seeker will benefit from the rights based upon their immediately previous work but also on their employment before that. This measure will be detailed in a further negotiation of the next Convention on unemployment insurance, at the end of Reduction of labour market segmentation To encourage the recruitment of workers on permanent employment contracts, the social partners agreed to bring in rules to discourage the overuse of short-term contracts. The current employer s contribution of 4% to unemployment insurance will be increased to 7% by 1 July 2013 for short-term contracts of less than one month s duration. It will be 5.5% for contracts lasting between one and three months, and 4.5% for contracts of more than three month s duration. This type of contract is widely used in the hotel and restaurant sector, and in the entertainment business. Some short-term contracts will not be affected by this, such as those used for replacement jobs, seasonal jobs or when employees are hired on permanent contracts when their short-term contract expires. The new rules encourage employers to hire younger and older workers on permanent contracts by lowering the employer s social contribution to unemployment insurance to zero for three months, or for four months in companies with fewer than 50 employees.

6 6 Individual training accounts One of the agreement s aims is to enhance the employability of both employed and unemployed people through professional training. The key measure is the creation of an individual training account. This individual account will be introduced within six months of the implementation of the agreement but will be conditional on an agreement on funding between the social partners, regions and the government. According to the agreement, this account is: universal, giving every person the opportunity to have a personal training account from his or her entry into the labour market until retirement; individual, as each person, whether employed or unemployed, may have an account; continuous, as each person will keep an account throughout their professional life. Each year, an employee has the right to 20 hours of professional training, which will appear on an individual training account. Rights which already exist under the framework of the Individual Right to Training will be transferred into the new individual account. The account will be capped at 120 hours. This limit will work as an incentive to the employee to use the account at least once every six years. Employees keep their account if they change employers, but cannot turn the right to training into a financial allowance. In addition, each individual who leaves the national education system without receiving any diploma or other qualification may acquire an individual training account financially supported by public authorities. Period of secure voluntary mobility In companies with 300 or more employees, an employee may be granted a period of secure voluntary mobility to try out a job in another company. At the end of the agreed mobility period, the employee may return to their previous job, or a similar position, and keep the same pay package as was previously in place. If the employee does not go back, they will be deemed to have resigned (without notice) and the employer is exempt from all obligations arising from a redundancy. Framework for part-time employment As of 1 January 2014, the minimum duration of activity of part-time employees will be set at 24 hours per week. Exceptions are for employees of private home employers, employees under 26 years of age who are pursuing studies, and those making a written and reasoned request for a shorter duration. Hours worked beyond the weekly or monthly working time stipulated in the employment contract must be paid at the agreed rate of remuneration plus ten per cent, until the amount of overtime reaches one tenth of the weekly or monthly working time. Beyond this, overtime hours are paid at the agreed rate of remuneration plus 25%. Sectors which employ at least a third of their workforce under part-time employment contracts must open negotiations within three months after the implementation of the agreement to agree a framework for part-time employment. Negotiations will include topics such as exceptions to the weekly working time limit, the distribution of working time in a week, the number and length of rest periods per working day, the notice period necessary before a schedule change, and overtime pay beyond the 10% agreed increase. Information and consultation Social partners want to increase employees information on companies strategic choices and to reinforce the existing forwardlooking employment and skills management provisions (GPEC). All companies will have to set up a separate database of social and economic information with a three-year forecast. The database will include such items as investments, capital stock and debt, remuneration of employees, and management or sub-contracting. The database will also provide support for in-depth consultation on different strategy options and their impact on activities, employment, professions at risk, subcontracting, and temporary work. After discussion, employees representatives will submit suggestions on options and possible alternative proposals. The employer will be required to respond in writing. Employees representatives within the board of directors In order to ensure that employees views on company strategy are represented in decision-making, employees representatives will be entitled to attend meetings of the board of directors where strategy is decided. Companies with at least 10,000 employees worldwide or 5,000 in France have 26 months to guarantee two seats on the board to employees representatives (if the board has more than 12 members), or one seat (if the board has less than 13 members). Employees representatives will have the same rights as other board members and will be allowed to participate in any vote.