NLBC.FR: Hiring in France, The importance of industry-level collective bargaining agreements

Industry-level collective bargaining agreements (CBA) are negotiated and signed between companies’ representatives and trade unions in order to define a set of rules adapted to a specific business sector, such as construction, insurance, transport, or chemical.

They cover key topics, including minimum wages, job classification, working time, leave of absence, severance pay, notice periods and non-compete covenants.

It is therefore crucial to determine which CBA applies to your business.

1. How to determine the applicable industry-level CBA

In principle, the applicable agreement is that which governs the activity carried out by the employer.

The application of a CBA depends solely on the activity actually carried out by the company, regardless of the job performed by employees and the corporate purpose defined in its articles of association. 

The business sector code (APE code) assigned by the French National Institute for Statistics and Economic Research (INSEE) is for guidance only.

When a company carries out more than one activity, the core activity must be taken into consideration to determine the applicable CBA.

• for an industrial company, the core activity is the activity with the largest number of employees;
• for a commercial company, the core activity is the one that generates the highest turnover;
• for a company with both an industrial and a commercial activity, the activity must be considered mainly industrial if the turnover relating to the industrial activity exceeds 25% of the total turnover.

When a company carries out various distinct activities in several autonomous activity centers, i.e., places of business distinct and distant from the places where the main activity is carried out, with their own organization and management and with a high degree of management autonomy, each activity center is subject to the CBA governing its own activity.

2. The consequences of applying the wrong industry-level collective bargaining agreement

When a company applies the wrong CBA, i.e. a CBA which does not correspond its core activity, its employees are entitled to claim the application of the more favorable provisions contained in the mandatorily applicable agreement. 

From a legal perspective, the application of the wrong CBA on a voluntary basis can mean the provisions are applicable on the basis of custom or usage (“usage”) or a unilateral commitment of the employer (“engagement unilateral de l’employeur”).

To stop applying the incorrect CBA, the following steps must be followed:

• inform and consult staff representatives;
• inform each employee individually and in writing; and
• comply with a sufficient notice period (between 1 and 3 months depending on the changes to employee’s rights).

Employers should also check employment contracts to ensure that they do not contain provisions applying the wrong CBA.