How to Determine the Applicable Collective Bargaining Agreement for Your Company

Every private sector company is, in principle, covered by a branch collective agreement. This text sets the rules regarding minimum wages, working hours, leave, insurance, and contract termination. However, identifying the correct collective agreement remains a complex task for many executives and HR leaders.

The mistake of applying the wrong collective agreement is not trivial: applying the incorrect one exposes the employer to salary back pay, reclassification of benefits, and in severe cases, labor court rulings accompanied by damages. The payslip must mandatorily state the applicable collective agreement (Article R.3243-1 of the French Labour Code), making any error immediately visible to the employee and regulatory bodies.

In this article, DAIRIA Avocats guides you step by step to accurately determine which collective agreement applies to your company, considering both simple situations and more complex cases involving multiple activities or restructuring.

The Foundational Principle: The Company’s Main Activity

French law adopts an objective criterion to determine the applicable collective agreement: the main activity actually carried out by the company. This principle is established by Article L.2261-2 of the French Labour Code, which states that the applicable collective agreement is that which corresponds to the employer’s main activity.

This does not refer to the corporate purpose registered at the commercial registry, nor to the APE code assigned by INSEE. The Court of Cassation has repeatedly reminded that the APE code is only a simple presumption, which can be overturned by proof of the actually exercised activity (Cass. soc., November 10, 2010, No. 09-42.255). In practice, the judge looks for the activity employing the greatest number of employees or generating the highest revenue.

How to Concretely Identify the Main Activity?

For industrial and commercial enterprises, two criteria are traditionally used:

• Revenue Criterion: The activity generating the most significant portion of revenue is considered the main activity. This criterion is favored for commercial enterprises.
• Staffing Criterion: The activity employing the greatest number of employees is considered the main activity. This criterion is favored for industrial and mixed enterprises.

Case law grants judges a certain margin of discretion to choose the most relevant criterion based on the situation. In a ruling dated April 23, 2003 (Cass. soc., No. 01-41.196), the Court of Cassation confirmed that the trial judge has sovereign discretion to determine the main activity, provided they justify their decision.

The Territorial and Professional Scope of the Agreement

Once the main activity is identified, it is necessary to check whether the company falls within the scope of application of the corresponding collective agreement. Each agreement precisely defines its scope of application according to three dimensions:

The Professional Scope

The agreement lists the covered activities, generally referencing the NAF/APE codes. For instance, the national collective agreement for technical design offices (SYNTEC, IDCC 1486) targets companies whose main activity falls under NAF codes 62.01Z, 62.02A, 62.09Z, 70.22Z, etc. If your company’s main activity corresponds to one of these codes, you are within the professional scope of this agreement.

The Territorial Scope

Most collective agreements have a national scope. However, some regional or departmental agreements persist, particularly in sectors like construction, agriculture, or metallurgy (before the 2024 overhaul). It is essential to verify that the company’s location is indeed covered.

Extension by Ministerial Order

When a collective agreement is extended by decree from the Minister of Labor (Article L.2261-15 of the Labour Code), it applies to all companies within its scope, including those not members of one of the signing employer organizations. In the absence of extension, only companies that are members of a signatory organization are bound.

In practice, the vast majority of branch agreements are extended, which simplifies determination: if your main activity falls within the professional and territorial scope of an extended agreement, it applies by right.

Special Cases: Companies with Multiple Activities

The challenge increases when a company engages in multiple activities governed by different collective agreements. Three situations must be distinguished.

Accessory Activities Related to the Main Activity

When a secondary activity is a natural extension of the main activity, the entire company is covered by the agreement for the main activity. For example, a furniture manufacturing company with a sales showroom falls under the furniture industry agreement, as sales are ancillary to manufacturing.

Autonomous Activities Conducted in Distinct Establishments

When a company operates clearly differentiated activities in separate establishments, each establishment may be governed by a different collective agreement. The Court of Cassation allows for plural agreements provided that the establishments have genuine management autonomy and that the activities are indeed distinct (Cass. soc., November 18, 1998, No. 96-42.997).

For an establishment to be regarded as distinct in a collective context, it generally needs to:

• Have its own management or significant management autonomy;
• Employ personnel specifically assigned to the concerned activity;
• Have a geographically separate location (this criterion is not systematic but common).

Mixed Activities Without Distinct Establishment

This is the most challenging scenario. When a company carries out, at the same location, activities governed by different agreements without one being clearly ancillary, the agreement for the main activity must be applied according to the previously discussed criteria (revenue or staffing). The Court of Cassation categorically rejects the distributive application of multiple agreements within a single establishment (Cass. soc., January 26, 2000, No. 97-45.476).

Special Situations to Be Aware Of

Employer Groupings

Employer groupings (Articles L.1253-1 and following of the Labour Code) pose a specific question. When a grouping gathers companies subject to different agreements, the law stipulates that the grouping must apply the collective agreement of the activity branch to which its member companies belong or, failing that, one of its choosing, provided the employees receive at least equivalent benefits. In practice, the grouping must determine a reference agreement, often the one applicable to the majority of its members.

Business Transfer and Change of Activity

In the case of a business transfer (Article L.1224-1 of the Labour Code), the acquirer may be bound by a different agreement than that of the seller. In this event, Article L.2261-14 of the Labour Code provides a mechanism for questioning the seller’s agreement, with a survival period of 15 months (3 months of notice + 12 months of survival) during which transferred employees retain the benefits of the old agreement, unless a replacement agreement is concluded.

Similarly, when a company changes its main activity, the applicable agreement may change. The employer must then inform employee representatives and employees, and the transition follows the same questioning mechanism.

Absence of an Applicable Collective Agreement

It is rare that no collective agreement covers the activity of a company. In this case, the employer only applies the Labour Code and may voluntarily decide to apply a convention of its choice, provided it does so in a comprehensive and permanent manner. The voluntary application of a convention binds the employer as if they were legally bound.

Mandatory Mention on the Payslip

Article R.3243-1 of the Labour Code stipulates that the payslip must mention the title of the applicable collective agreement or, failing that, reference to the Labour Code for provisions regarding paid leave and notice periods. This mention constitutes a presumption of application that the employee may invoke to their advantage.

The Court of Cassation considers that the mention of a collective agreement on the payslip constitutes an employer’s commitment to apply this agreement unless they can demonstrate it was an error (Cass. soc., November 15, 2007, No. 06-44.008). Conversely, the absence of a mention or the erroneous mention does not prevent the employee from claiming the application of the actually applicable convention.

Thus, it is crucial to regularly verify that the convention mentioned on the payslips accurately corresponds to the reality of the activity carried out. Periodic conventional audits are recommended, notably in cases of activity diversification, merger, or internal reorganization.

Practical Tools to Identify Your Collective Agreement

Several resources are available to determine the applicable collective agreement:

• Légifrance website (legifrance.gouv.fr): it lists all collective agreements in force, classified by IDCC number (identifier for collective agreements). You can search for your agreement by activity or NAF code.
• The APE/NAF Code: assigned by INSEE upon registration, it serves as a useful but not decisive indicator. You can find it on your Kbis excerpt or your notice of situation in the SIRENE directory.
• DREETS services (formerly DIRECCTE): labor inspection can inform you about the applicable agreement for your activity.
• Your accountant or labor law attorney: in case of uncertainty, particularly for multiple activities, professional advice is essential to secure your choice.

Points of Caution for Employers

Determining the applicable collective agreement is not a one-time exercise. Several situations should alert you and prompt a reassessment of your conventional status:

• Change of activity or diversification: if the distribution of your revenue or staffing changes significantly, the main activity might shift.
• Merger, split, partial transfer of assets: these operations frequently lead to a change in applicable agreements, questioning the old convention.
• Creation of a distinct establishment: check if the new establishment falls under the same convention as the headquarters.
• URSSAF control or labor inspection: regulatory bodies systematically check the coherence between the activity carried out and the convention applied.

In case of doubt, DAIRIA Avocats supports you in conducting a comprehensive conventional audit, ensuring compliance with your social obligations and anticipating litigation risks.

FAQ

Does the APE code automatically determine the applicable collective agreement?

No. The APE code (Activité Principale Exercée) assigned by INSEE is only a simple presumption. The Court of Cassation has confirmed repeatedly that it is the actual activity exercised that determines the applicable agreement, not the APE code (Cass. soc., November 10, 2010, No. 09-42.255). If your actual activity does not correspond to your APE code, the actual activity takes precedence. You can also request a modification of your APE code from INSEE.

What happens if my company applies the wrong collective agreement?

Applying an incorrect collective agreement exposes the employer to several risks. Employees may claim the benefits of the more favorable provisions of the actually applicable agreement, particularly regarding minimum wages, bonuses, leave, or notice. Salary back pay can be demanded for a period of up to three years (prescription under Article L.3245-1 of the Labour Code). URSSAF may also proceed with a revision of contributions if the bases differ between the two agreements.

Can an employer freely choose to apply a more favorable collective agreement?

An employer may voluntarily decide to apply a collective agreement other than the one to which they are legally bound, provided that this application is comprehensive (all provisions of the chosen convention) and does not deprive employees of the benefits of the legally applicable agreement. However, voluntary application creates a commitment that will be difficult to reverse. The Court of Cassation holds that an employer who voluntarily applies a convention is obliged to fully comply with it.

How can I tell if my collective agreement is extended?

You can check if your agreement is extended on the Légifrance website, in the fact sheet of each collective agreement. The extension is pronounced by decree of the Minister of Labor (Article L.2261-15 of the Labour Code) and published in the Official Journal. An extended convention applies to all companies within its scope, including those not members of the signing employer organizations. Almost all major branch agreements are now extended.

What should I do if there is a disagreement with an employee regarding the applicable convention?

In the event of a dispute, it is the labor court that decides the issue of the applicable agreement. The judge relies on the actual activity exercised by the company, analyzing documents provided by the parties (statutes, Kbis, contracts, revenue distribution, organizational chart, etc.). It is advisable to create a solid file documenting your main activity before any litigation. DAIRIA Avocats can assist you in this process.