The validity of annual flat-rate agreements in days

Update on the latest developments in case law which has invalidated in several sectors this derogation from the legal working hours.

Reminder of the conditions for using annual flat-rate agreements

The law authorizes the conclusion of individual fixed-rate agreements, in hours or days, for the year when (French Labor Code, Art. L 3121-39):
– it is provided for by a company or establishment collective agreement or, failing that, by a sectoral agreement;
– this prior collective agreement determines the categories of employees eligible to enter into an individual fixed-rate agreement, as well as the annual working time from which the fixed rate is established, and sets out the main characteristics of these agreements.
In addition, the following are required:
– the employee's agreement and a written document (French Labor Code, Art. L 3121-40);
– an individual meeting must be held each year with each employee who has entered into a fixed-rate agreement in days for the year, covering the employee's workload, the organization of work within the company, the balance between professional activity and personal and family life, as well as the employee's remuneration (French Labor Code, Art. L 3121-46).

The ruling issued by the Court of Cassation on June 29, 2011

It was through a landmark ruling of June 29, 2011, that the Court of Cassation initiated a review of the validity of individual fixed-day work agreements (Cass. soc. June 29, 2011, No. 09-71107 FS-PBRI).
The Court held that:
– the right to health and rest is among the constitutional requirements;
– it follows from the aforementioned articles of the European Union Directives that Member States may only derogate from provisions relating to working time in compliance with the general principles of protecting the safety and health of workers;
– any fixed-day work agreement must be provided for by a collective agreement whose stipulations guarantee compliance with maximum working hours as well as daily and weekly rest periods.

Based on these principles, themselves derived from constitutional and European standards, the Court of Cassation exercised a dual control by examining:
– whether the provisions of the collective agreement in question were in themselves capable of ensuring the protection of the safety and health of the employee;
– whether the employer had complied with the obligations imposed by this collective agreement.

Otherwise, the annual fixed-rate agreement becomes "null and void." This results in the application of the statutory working hours and therefore, potentially, the payment of overtime worked over the past 5 years (3 years with the entry into force of Law No. 2013-504 of June 14, 2013, and subject to transitional provisions). The burden of proof for these overtime hours rests with the employee (French Supreme Court, Social Chamber, June 5, 2013, No. 12-14729).

It should be noted that the Court of Cassation now distinguishes between the sanction in cases where the contractual provisions are invalid, in which case the sanction is the nullity of the individual fixed-rate agreement, and cases where these contractual provisions are valid but not applied or incorrectly applied by the employer, in which case the fixed-rate agreement is simply rendered ineffective (Cass. soc. 24 April 2013, No. 11-28398).
The difference is this: any fixed-rate agreement concluded on the basis of invalid contractual provisions is null and void until at least a company agreement has been concluded upon which to base new fixed-rate agreements. A fixed-rate agreement based on valid contractual provisions is, conversely, rendered ineffective to the extent that the employer fails to comply with the imposed obligations.

The collective agreements examined

It is therefore on a case-by-case basis that the Court of Cassation validates or invalidates the contractual provisions authorizing the use of individual fixed-rate agreements.
Thus, the provisions of Article 14 of the agreement of July 28, 1998, on the organization of work in the metalworking industry (Cass. soc. June 29, 2011, cited above).
Conversely, the following provisions were invalidated:
– Article 12 of the framework agreement of February 8, 1999, on the organization and duration of work in the chemical industry (Cass. soc. January 31, 2012, No. 10-19807 FS – PBR);
– the agreement on the reduction of working hours in wholesale trade (Cass. soc. September 26, 2012, No. 11-14540 FS-PB).
– Article 4 of the agreement of June 22, 1999, concerning working hours, adopted pursuant to the national collective bargaining agreement known as " Syntec " of December 15, 1987 (French Supreme Court, Social Chamber, April 24, 2013, No. 11-28398 FS-PB).
In these last three "sectors," any fixed-rate agreement based solely on the provisions in question must be considered null and void.

The remedies

In the event of a flaw affecting the provisions of the collective agreement itself, and unless a new agreement is reached at the industry level, it is recommended to rectify the situation by concluding a company agreement that complies with the requirements established by case law regarding workers' rights to health and rest.
The employer should also implement a system for monitoring working time to identify the manager's workload and work distribution, as well as their working hours, and to demonstrate, particularly in the event of a dispute, that this monitoring was properly carried out.