How to Determine Which Collective Agreement Applies to Your Business?

Every private sector business is, in principle, covered by a branch collective agreement. This document sets the rules concerning minimum wages, working hours, leave, benefits, and contract termination. Yet, identifying the correct collective agreement remains a challenging task for many executives and HR managers.

The risk of applying the wrong agreement is significant: using an incorrect collective agreement can expose the employer to back pay claims, reclassification of benefits, and in severe cases, labor tribunal rulings with damages. The pay slip must mandatory indicate the applicable collective agreement (Article R.3243-1 of the French Labour Code), which makes any error immediately visible to the employee and regulatory bodies.

In this article, DAIRIA Law guides you step-by-step to accurately determine which collective agreement applies to your business, considering both simple situations as well as more complex cases involving multiple activities or restructuring.

The Foundational Principle: The Main Activity of the Business

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

This refers neither to the corporate purpose registered in the commercial registry nor to the APE code assigned by INSEE. The Court of Cassation has repeatedly stated that the APE code is merely a presumption that can be overturned by proof of the actually practiced activity (Cass. soc., November 10, 2010, n°09-42.255). In practice, judges seek to determine which activity employs the largest number of employees or generates the highest revenue.

How to Identify the Main Activity?

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

• Revenue Criterion: The activity that generates the largest proportion of revenue is considered the main activity. This criterion is preferred for commercial enterprises.
• Employee Criterion: The activity employing the largest number of employees is deemed the main activity. This criterion is favored for industrial and mixed enterprises.

Case law allows judges a certain latitude to choose the most relevant criterion depending on the situation. In a decision from April 23, 2003 (Cass. soc., n°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 Scope of Application of the Collective Agreement

Once the main activity is identified, it is important to confirm that the business falls within the scope of application of the corresponding collective agreement. Each collective agreement precisely defines its scope according to three dimensions:

1. Professional Scope

The agreement lists the covered activities, generally referring to NAF/APE codes. For example, the national collective agreement for technical study 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, it enters the professional scope of this agreement.

2. Territorial Scope

Most collective agreements have a national scope. However, some regional or departmental agreements still exist, particularly in sectors such as construction, agriculture, or metallurgy (before the 2024 overhaul). It is essential to verify that the location of the business is covered.

3. Extension by Ministerial Order

When a collective agreement is extended by a ministerial order (Article L.2261-15 of the French Labour Code), it applies to all companies within its scope, including those that are not members of one of the signatory employers’ organizations. In the absence of an extension, only companies that are members of a signatory organization are bound.

In practice, the vast majority of branch collective 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 difficulty increases when a company engages in multiple activities covered by different collective agreements. Three situations must be distinguished:

1. Accessory Activities Related to the Main Activity

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

2. Autonomous Activities Conducted in Distinct Establishments

When a company carries out distinctly different activities in separate establishments, each establishment may fall under a different collective agreement. The Court of Cassation allows this plurality of agreements as long as the establishments have real managerial autonomy and the activities are genuinely distinct (Cass. soc., November 18, 1998, n°96-42.997).

For an establishment to be regarded as distinct in the conventional sense, it typically must have:

• A separate management or substantial operational autonomy;
• Staff specifically assigned to the relevant activity;
• A geographically separate location (a criterion that is not systematic but often observed).

3. Mixed Activities Without Distinct Establishments

This is the most complex case. When a company operates, in the same location, activities falling under different agreements without any being clearly accessory, the collective agreement of the main activity must be applied according to the previously mentioned criteria (revenue or employee count). The Court of Cassation categorically rejects the distributive application of multiple agreements within the same establishment (Cass. soc., January 26, 2000, n°97-45.476).

Special Situations to Be Aware Of

1. Employer Groups

Employer groups (Articles L.1253-1 and following of the French Labour Code) pose a specific question. When the group comprises companies falling under different agreements, the law provides that the group must apply the collective agreement of the branch activity to which its member companies belong or, failing that, one of its choosing, as long as employees receive benefits that are at least equivalent. In practice, the group must determine a reference agreement, often that applicable to the majority of its members.

2. Transfer of Business and Change of Activity

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

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

3. Absence of Applicable Collective Agreement

It can occur, albeit infrequently, that no collective agreement covers a company’s activity. In this case, the employer applies only the Labour Code and may voluntarily decide to apply a collective agreement of its choice, provided that this is done comprehensively and durably. Voluntary application of a collective agreement commits the employer as if they were legally bound.

Mandatory Mention on the Pay Slip

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

The Court of Cassation holds that indicating a collective agreement on the pay slip constitutes a commitment by the employer to apply that agreement unless they demonstrate that it was an error (Cass. soc., November 15, 2007, n°06-44.008). Conversely, the absence of mention or the erroneous mention does not prevent the employee from claiming the application of the actually applicable agreement.

It is therefore crucial to regularly verify that the agreement mentioned on the pay slips accurately reflects the reality of the activity performed. A periodic conventional audit is recommended, particularly in cases of activity diversification, merger, or internal reorganization.

Practical Tools to Identify Your Collective Agreement

Several resources are available to determine the applicable agreement:

• Légifrance website (legifrance.gouv.fr): it lists all currently applicable collective agreements, classified by IDCC number (Collective Agreements Identifier). 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 index. You will find it on your Kbis extract or your situation notice in the SIRENE directory.
• The services of DREETS (formerly DIRECCTE): labor inspection can inform you about the applicable agreement for your activity.
• Your accountant or social law attorney: in cases of doubt, especially for multiple activities, professional advice is essential to secure your choice.

Points to Watch For as an Employer

Determining the applicable collective agreement is not a one-time task. Several situations should alert you and lead you to reassess your conventional situation:

• Change of activity or diversification: if the distribution of your revenue or employees evolves significantly, the main activity may shift.
• Merger, spin-off, partial asset contribution: these operations frequently lead to a change in the applicable agreement, triggering questioning of the previous agreement.
• Creation of a distinct establishment: ensure that the new establishment falls under the same agreement as the headquarters.
• URSSAF checks or labor inspection: regulatory bodies systematically verify the consistency between the activity performed and the applied agreement.

In case of any doubt, DAIRIA Law can assist you in conducting a thorough conventional audit, ensuring compliance with your social obligations and anticipating potential legal risks.

FAQ

Does the APE code automatically determine the applicable collective agreement?

No. The APE code (Activité Principale Exercée) assigned by INSEE is merely a simple presumption. The Court of Cassation has confirmed repeatedly that it is the actual activity performed that determines the applicable agreement, not the APE code (Cass. soc., November 10, 2010, n°09-42.255). If your actual activity does not correspond to your APE code, it is the actual activity that prevails. 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 concerning minimum wages, bonuses, leave, or notice periods. Back pay may be required for a period of up to three years (prescription according to Article L.3245-1 of the French Labour Code). URSSAF may also conduct an adjustment 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 they are legally bound to, provided this application is comprehensive (all provisions of the chosen agreement) and does not deprive employees of the benefits of the legally applicable agreement. However, voluntary application creates a commitment that can be difficult to reverse. The Court of Cassation holds that the employer who voluntarily applies an agreement is bound to respect it in full.

How can I know if my collective agreement is extended?

You can verify if your collective agreement is extended on the Légifrance website, in the fact sheet for each collective agreement. The extension is pronounced by ministerial order (Article L.2261-15 of the French Labour Code) and published in the Official Journal. An extended agreement applies to all companies within its scope, including those that are not members of the signatory employers’ organizations. Almost all major branch collective agreements are now extended.

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

In case of a dispute, it is the labor court that decides the issue of the applicable agreement. The judge relies on the actual activity carried out by the company, analyzing the documents produced by the parties (statutes, Kbis, contracts, revenue distribution, organization chart, etc.). It is advisable to compile a solid file documenting your main activity before any litigation arises. DAIRIA Law can assist you in this endeavor.