The latest pension reform in France, adopted back in June 2023, raised the retirement age and, as a result, lengthened working life. To accompany this increase to working life, the law proposed a number of measures to encourage the employment of older employees. All of these provisions were invalidated by the Constitutional Council on formal grounds.
To correct the shortcomings of these measures, a new national interprofessional agreement of 14 November 2024 to promote the employment of experienced employees (the “Agreement”) has been proposed.
According to official data from 2023, France sits below the EU 27 average when it comes to the employment rate of people aged 55-64. It has also logged one of the lowest employment rates for those aged 65 and over. It is hoped that the Agreement, which is expected to enter into force (although it is impossible to say when), will reshape this landscape, assisting employers with unlocking the potential of their older workforce at a point when they might otherwise have their eyes on retirement.
We take a look at the Agreement in more detail and what it could mean for employers.
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Mandatory negotiations
The Agreement provides for a range of measures to promote the employment of what the agreement calls, ‘experienced employees’. The Agreement uses this terminology, rather than the phrase ‘older employees’, to highlight the potential of these employees. Its entry into force is subject first to its legislative and regulatory transposition, and then to its implementation by the French Ministry of Labour.
Under the Agreement, industry-wide negotiations will be compulsory every three years (unless a collective agreement sets a different frequency) on the employment and work of experienced employees.
Similarly, in companies with at least 300 employees, negotiations will be compulsory every three years (unless a collective agreement sets a different frequency) specifically relating to the employment, work and improvement of working conditions for experienced employees.
Negotiations at both company and industry level will have to be preceded by a diagnostic phase to help those involved identify the key areas that will fall within the scope of negotiations.
The subjects for negotiation are as follows:
- recruitment of experienced employees;
- job retention and end-of-career arrangements (including phased retirement and/or part-time work); and
- the transfer of knowledge and skills from experienced employees (e.g. mentoring, tutoring and skills sponsorship).
It is of note that even before the latest pension reform, which delayed the retirement age and lengthened working life, the employment rate of older workers was well below that of the rest of the working population in France. The aim of these periodic negotiations is to encourage a change in the way that this category of employee is viewed and to adopt measures to encourage them to remain in employment for longer.
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Mid-career and end-of-career interviews
The French Labour Code already requires all employers to organise a professional interview with each employee every two years, distinct from the annual appraisal interview. Failure to do so can attract financial penalties. The primary goals of this professional interview are to discuss career development, identify training needs, evaluate employability and reflect on future opportunities for growth.
Under the Agreement, and in the year preceding or following the employee’s 45th birthday, this interview will be reinforced to discuss, where appropriate, the adaptation or reorganisation of tasks and workstations, as well as the prevention of professional exhaustion and any desire for mobility or professional retraining.
The professional interview carried out in the two years preceding the employee’s 60th birthday will also provide an opportunity to discuss the conditions for keeping the employee in employment and the possibilities for end-of-career adjustments, such as the use of gradual retirement.
The aim of these interviews is to help employees anticipate career changes and better prepare for the end of their career. You don’t just discover that you’re an older employee, you gradually become one. It’s therefore something you have to prepare for.
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A new type of employment contract for older employees
In response to the difficulties experienced in returning to work by older jobseekers who are particularly exposed to the risk of long-term unemployment, a ‘contract for the recognition of acquired experience’ has been created on an experimental basis for a period of five years. This contract will take the form of an open-ended contract, available to jobseekers aged 60, or 57 under certain conditions, and over. It is governed by the same rules as open-ended employment contracts, but in a departure from the usual legal rules, the employer will be able to terminate this contract when the employee is eligible to retire on reaching the statutory minimum retirement age, if they are entitled to a full social security pension.
In this case, the employer will also be exempt from the specific employer’s contribution of 30% of the amount of the retirement indemnity paid to the employee.
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End-of-career part-time work
In order to encourage the extension of working life, and without prejudice to the possibility of applying the ordinary legal rules relating to part-time work, under the Agreement an employee may ask, subject to the employer’s agreement, to move to part-time work in the same or another position, until full retirement, with full or partial compensation for the resulting loss of income. Employees may also ask to use their future retirement indemnity to offset this loss of income.
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Making phased retirement easier to access and more attractive
Under current legal and regulatory provisions, the aim of the phased retirement scheme is to enable those employees that request it, to receive a proportion of their social security pension while continuing to work part-time, in order to further improve their pension entitlements. This scheme plays an important role in helping employees as they reach the end of their careers, particularly women, who currently account for over 70% of its beneficiaries.
In order to make this scheme more attractive, a number of changes have been proposed under the Agreement. In particular, employees concerned may request, subject to their employer’s agreement, that their pension contributions continue to be calculated on the basis of their full-time salary. In addition to the employer’s share of additional pension contributions, the employer may also pay all or part of the employee’s share.
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Takeaway for Employers
Many employers have found it difficult to unlock the potential of their older workforce due to the challenges of attraction and retention, training and re-skilling, and adapting the workplace to better suit this cohort of employee. The Agreement is a step in the right direction and should assist employers in France with overcoming some of these hurdles.
However, it is important that employers prepare for its expected entry into force in the coming weeks or months. This will likely involve:
- looking at careers differently and helping employees to think about their career path at a very early stage of their working life;
- considering the negotiation of agreements that propose concrete and innovative measures to support these changes;
- preparing for the new type of employment contract for experienced employees;
- updating workplace policies and procedures that may address the above issues (for example, in relation to mid/end career interviews and phased retirement); and
- considering the creation of new policies, such as procedures on part-time working at the end of a career.
While the global population and workforce might be ageing in many parts of the world, there are real opportunities for employers by embracing the ‘Silver Workforce’. A stronger talent pipeline, increased access to multi-skilled teams, better retention of experience and know how, greater diversity of skills and outlook, the list goes on. For employers in France, it is hoped that that the Agreement will help them realise these benefits. After all, age is just a number.
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