Décision de justice

Hierarchical minimum wages (SMH): the Conseil d’État sets the rules

Following a referral by trade unions and an employers’ organisation, the Conseil d’État handed down a decision today that clarifies the powers of professional branches with regard to minimum wages, known as “salaires minima hiérarchiques” (hierarchical minimum wages), or SMHs. It ruled that branch agreements might not only set the amount of SMHs but also define their structure (which might include certain wage supplements, such as bonuses). Whereas since 2017 these wage supplements can be modified or abolished by company agreement, employees must receive effective remuneration at least equal to the amount of the SMH specified in the branch agreement.

An ordinance of 22 September 2017 reorganised the relationship between branch agreements and company agreements. This text specifies in particular that, in certain areas, the branch agreement takes precedence over the company agreement, except when the latter “provides at least equivalent guarantees”. These subjects include hierarchical minimum wages (SMHs), i.e. the minimum wages of employees according to their level in the hierarchy. 

In May 2018, several trade union organisations and an employers’ organisation in the predominantly food retail and wholesale sector, by means of an amendment to their branch agreement, set SMHs comprising a basic salary, but also the end-of-year bonus and remuneration for break time. By an order of 5 June 2019, the Minister of Labour extended the application of this amendment to all companies in the branch, including non-members of a signatory organisation. However, it excluded certain provisions of the amendment from the scope of this extension, on the grounds that the SMHs had to relate solely to a basic salary, without wage supplements.

Trade unions and employers’ organisations in the branch concerned appealed to the Conseil d’État for the annulment of this limitation.

The SMH can be applied to the pay actually received by employees, including basic pay and certain wage supplements

The Conseil d’État recalled that, prior to the entry into force of the 2017 ordinance, branch agreement could set minimum wage amounts. Where they did not determine the structure of the minimum wage, the latter was deemed to apply to the remuneration actually received by the employees, i.e. the basic wage and the wage supplements. The Conseil d'État noted that the ordinance of 22 September 2017 failed to define the scope of the notion of hierarchical minimum wage (SMH) and that work done in Parliament did not shed any light on its meaning. It ruled that the signatories of a branch agreement still had the option of defining the structure of the SMH and having it apply to the employee’s actual remuneration, including the basic salary and certain wage supplements. 

A company agreement may freely determine employees’ bonuses, provided that employees receive effective remuneration at least equal to the amount of the SMHs 

The Conseil d’État recalled that while the branch agreement might provide for the existence of bonuses and their amount, the company agreement prevailed in that respect, except for bonuses for dangerous or unhealthy work where the branch agreement so stipulated, as specified in the 2017 ordinance.

The Conseil d’État indicated that where the branch agreement provided that the SMHs applied to employees’ actual remuneration, including basic salaries and wage supplements, a company agreement might reduce or abolish the wage supplements identified by the branch agreement, provided that employees were guaranteed actual remuneration at least equal to the amount of the SMHs set by the branch agreement.

For these reasons, the Conseil d’État annulled the order of the Minister of Labour insofar as it limited the scope of the extension of the amendment.

A first public hearing tested on this occasion

For the preliminary investigation of this case, the Conseil d’État held a public hearing, which lasted nearly three hours, as part of the experiment foreseen by the decree of 18 November 2020. The purpose of this session was twofold: to inform the panel of judges, prior to the judgment hearing and in addition to the written phase of the inquiry, about the issues at stake in the case; and to let the parties answer questions put by panel members.