Overtime
I- The basic system is not favorable to the hospitality and catering (HORECA) sector:
The law sets the legal working week at 35 hours. Beyond this, overtime rates apply as follows:
- 25% for the first 8 hours (from the 36th to the 43rd hour);
- 50% for subsequent hours (from the 44th hour onwards).
However, if a 10% overtime rate is stipulated in a collective agreement, then this rate applies, even if it is less favorable than the principle established in the labor law code.
Thus, the HORECA collective agreement allows for working hours of 35 hours, but also 39 hours per week.
The HORECA sector can pay overtime as a wage increase or grant the employee compensatory time off.
In the HORECA sector, the overtime pay rates are as follows:
• +10% for hours worked between the 36th and 39th hour;
• +20% for hours worked between the 40th and 43rd hour;
• +50% for hours worked from the 44th hour onwards (Article 5, Amendment No. 2 of February 5, 2007, to the Collective Bargaining Agreement for the Hotel, Restaurant, and Catering Industry)
Example: an hourly wage of €10 gross will result in the 36th hour being paid at €11.
If you opt for payment in the form of compensatory time off, this must be taken within the year, and the proportion is the same: e.g., hours worked from the 36th to the 39th hour entitle you to 10% time off, or 1 hour and 6 minutes.
Overtime is generally calculated on a weekly basis.
This means that any hour exceeding 35 hours per week must be paid at an increased rate or taken as time off.
Conversely, if an employee works 33 hours per week when their contract stipulates 35 hours, the hotel, restaurant, or café (HRC) cannot make up the 2 hours not worked in the first week by transferring them to the following week.
The quota of overtime hours that can be used is therefore set at:
– 360 hours per year for permanent establishments
and
– 90 hours per calendar quarter for seasonal establishments.
Hours compensated by time off in lieu are excluded from the quota.
If the HRC wishes to exceed the overtime quota, it no longer needs to request authorization from the labor inspector. It must, if one exists, consult the works council or, failing that, the employee representatives. Furthermore, any additional overtime pay beyond the standard overtime rates will entitle employees to mandatory compensatory time off, equal to:
– for hotels, restaurants, and cafes (HRCs) with fewer than 20 employees, 50% of the overtime hours worked,
– for companies with more than 20 employees: the mandatory compensatory time off is 50% within the quota and 100% of the overtime hours worked beyond the quota.
It is not possible to establish an annual fixed number of paid overtime hours and then fail to pay for hours worked outside the quota specified by the HRC. Otherwise, the HRC risks a claim from the employee.
It is also important to include overtime hours on the payslip; otherwise, there is a risk that the employee will request payment for overtime, even though the hotel, restaurant, and catering (HRC) establishment would have actually paid them in another, non-compliant form (bonuses, mileage allowances, etc.).
The HRC establishment must not exceed the maximum daily working hours: these depend on the staff category (e.g., Administrative staff off-site: 10 hours, Cook: 11 hours, Other staff: 11.5 hours, Reception staff: 12 hours) nor the weekly working hours (46 hours over any 12 consecutive weeks; the absolute maximum weekly working hours are set at 48 hours).
This system is not suitable for the HRC establishment because it does not take into account fluctuations in activity or seasonal variations, which are also inherent to the industry.
This is why more flexible systems have been developed to reduce the cost of overtime for the HRC establishment.
II- Savings for the hospitality industry (HRC) under a fixed-rate agreement:
The French Labor Law Code allows fixed-rate agreements to be concluded with both managerial and non-managerial staff, provided that these employees have autonomy in organizing their working time, taking into account their responsibilities (e.g., restaurant or hotel manager, etc.) (Article L3121-58).
In this case, working time is calculated in days per year, rather than hours per week.
The employee’s annual working time is set at 218 days (including the solidarity day) over a 12-month period.
Therefore, overtime worked under this fixed-rate agreement is not paid, as working time is calculated in days: 218 days per year.
The HRC must comply with the rules regarding paid leave, public holidays, and rest periods.
Regarding the specific activities of the hotel, restaurant, and catering (HORECA) sector, prior to the adoption of the industry-wide agreement of December 16, 2014, the Court of Cassation had invalidated the provisions of the collective agreement, which, according to the Court, were insufficient to guarantee that the employee’s workload and working hours remained reasonable (Court of Cassation, July 7, 2015).
The branch agreement of December 16, 2014, was adopted and stipulates that:
- The employer must maintain a monitoring document showing the number and dates of days worked, the scheduling, number, and type of rest days (weekly rest, including days taken and to be taken under the working time reduction scheme, paid leave, and public holidays). It must also indicate whether the rest period between two working days has been respected. This document must be initialed by the employee at the end of each month, and the employee must retain a copy. This document will be made available to the labor inspectorate and will allow the line manager to:
* verify compliance with the provisions of this agreement and individually alert any employee who may be exceeding the authorized number of working days during the reference period;
* monitor the employee’s work organization to ensure that the workload and working hours are reasonable. Based on the findings of this monitoring, individual meetings may be held during the year to discuss work organization and workload. In any case, each employee with a fixed-day work agreement must have an annual meeting with their line manager to discuss the employee’s workload, the length of their working days, the organization of work within the company, and the balance between their professional activity and their personal and family life (Article 2-4).
- Employees have a right to disconnect from communication tools during rest periods.
This amendment was subject to an extension order, which was issued on February 29, 2016 (Official Journal of March 8, 2016), and came into effect on April 1, 2016. Section 2.4, concerning the monitoring of working time, stipulates that the collective agreement or branch agreement specifies the concrete methods for monitoring workload (in order to meet the aforementioned legal requirements).
The provisions of Article 2.4 relating to the monitoring of working time must therefore be further defined by other collective agreements.
Regarding managers, Amendment 22 bis of October 7, 2016, concerning only autonomous managers, states that:
- The categories of employees who may be subject to an individual annual work agreement based on days worked are managers at level V of the classification grid of the national collective bargaining agreement for hotels, restaurants, and cafes (HCR) and whose average monthly salary over the year cannot be less than the monthly social security ceiling.
- The calculation of days and half-days worked is based on a self-reporting system that shows the number and date of days or half-days worked, the scheduling and type of rest days (weekly rest days, paid leave, public holidays, etc.), as well as the number of days off taken for reduced working hours and those remaining to be taken.
- The work organization of these employees must be regularly monitored by management, who will pay particular attention to any potential workload overloads. To this end, the employer will analyze the situation and take all appropriate measures to ensure compliance, in particular, with the minimum daily rest period and to avoid exceeding the number of working days, within the limits stipulated in the collective agreement. The assigned workload and the resulting length of the working day must allow each employee to take the mandatory daily rest period mentioned above; the minimum duration of this rest is legally set at 11 consecutive hours and, if necessary, according to the terms of Article 21.4 of the National Collective Bargaining Agreement for the Hotel, Restaurant, and Catering (HCR) sector. Furthermore, these managers must benefit from weekly rest according to the terms set out in Article 21.3 of said collective agreement. Therefore, it is prohibited to have the same employee work more than 6 days per week.
- In any event, every employee with a fixed-day work agreement must have an annual meeting with their line manager to discuss the employee’s workload, the length of their working days, the organization of work within the company, the balance between their professional activity and their personal and family life, as well as their compensation.
- At the employee’s request, a second meeting may be requested, and the employer cannot refuse it.
- Regarding the balance between professional activity and personal and family life, the employee’s safety and health, and in particular to ensure compliance with maximum working hours, the employer must remind the employee that company equipment provided to them, such as computers or mobile phones, should not, in principle, be used during their rest periods.
In other words, the employee has a right to disconnect during non-working public holidays, weekly rest days, and paid leave.
The employee is not obligated to work beyond the 218-day limit. However, the employee may, if they wish and with the employer’s agreement, waive up to 10 days of their rest days per year.
These additional working days are compensated at a rate of: 15% for the first 5 additional days and 25% for subsequent days. In any case, the maximum number of working days stipulated in the collective agreement must comply with the provisions of the French Labor Code relating to daily and weekly rest periods, public holidays observed by the company, and paid leave.
The employer’s obligation to monitor the employee’s workload and working hours to ensure the workload is reasonable was already established by the Cour de Cassation, so this is not a new development.
The only real contributions of the El Khomri law are:
- The waiver of some rest days by employees on a fixed-day contract is valid only for the current year and cannot be tacitly renewed;
- The conditions for taking into account, for employee compensation, absences as well as arrivals and departures during the period.
Fixed-day contracts are therefore, in principle, perfectly valid, and the hotel, restaurant, and catering (HORECA) sector is simply advised to be vigilant regarding the clauses included in these contracts.
Otherwise, the employee can seek their annulment in court. In this case, the HORECA sector will have to pay for all hours worked exceeding 35 hours per week, as well as damages for undeclared work or simply for failure to declare and pay overtime. This can represent significant sums.
For example, in our example: the employer will owe 8 hours of overtime per week, paid at a 10% premium and a 20% premium, as indicated above.
Example: If the annual work agreement is cancelled: 5 additional hours per day for 218 days per year = 1090 additional hours to be paid, which must be increased as indicated above (I).
It is therefore essential to carefully structure and draft this work agreement because:
- it only applies to certain employees: those who are autonomous in organizing their working time,
- it must be meticulously drafted with all mandatory clauses.
This risk can be costly for hotels, restaurants, and cafes (HORECA) if work agreements are not well-targeted and well-drafted.
It is therefore inadvisable to use online templates for work agreements because, most of the time, they will be unsuitable for the specific situation and present a high risk of being cancelled.
Negotiations between professional organizations, particularly the UMIH (Union of Hotel and Restaurant Industries), and public authorities have led to the development of an alternative method for organizing working time: the annualization of working time.
III – The annualization system offers flexibility and cost reduction for hotels, restaurants, and cafes (HORECA):
An annualization clause allows for the scheduling of working hours for all employees concerned over a one-year period.
Working time is therefore calculated in hours over the year (reference working time: 1607 hours), and not per week (35 or 39 hours).
Thus:
- If an employee works 33 hours in a week or 143 hours in a month, this shortfall for the HORECA can be offset by overtime worked by the employee during the week (e.g., 40 hours of work, i.e., 5 overtime hours) or the following month (173 hours).
In our example, the 2 fewer hours will be compensated by 2 overtime hours the following week, and the remaining 3 hours will be compensated by the 32 hours per week worked in the third week.
This compensation can be spread over a one-year period, meaning that no overtime pay will be due up to 1,607 hours per year.
If the employee works more than 1,607 hours annually, the company must pay them overtime at a slightly different rate for the third bracket, specifically between:
– 1,607 hours and 1,790 hours (corresponding on average to the 36th, 37th, 38th, and 39th hours): these are paid at a 10% premium;
– 1,791 hours and 1,928 hours: these are paid at a 20% premium (corresponding on average to the 40th, 41st, and 42nd hours);
– 1,929 hours and 1,973 hours: these are paid at a 25% premium (corresponding on average to the 43rd hour).
– From 1,974 hours onwards: hours are paid at a 50% premium (corresponding on average to the 44th hour and beyond).
This system is advantageous for permanent hotels, restaurants, and cafes (HORECA), meaning those that operate year-round.
It is also very advantageous for seasonal establishments: they are authorized to use annualized working time, prorated to the period chosen by the HORECA, which may correspond to the establishment’s opening period during the season, but could be shorter.
For comparison between the statutory and annualized systems:
1-1) Under the statutory system (case no. I):
If the season lasts 4 months: the employee (Level III, step 2) works 1607 hours x 4 months / 12 months (47 weeks) = 535.40 hours over the period. Overtime pay is legally required for hours worked beyond 35 hours per week.
Base salary: €1,600 for the first 35 hours (not overtime): €10.56 (minimum hourly rate stipulated in the collective agreement) x 35 (hours/week) x 4.33 weeks in the month = €1,600.37 gross for 35 hours/week, or €10.56/hour.
Overtime rates:
- 10% overtime: 10.56 x 110% = €11.62
- 20% overtime: 10.56 x 120% = €12.67
- 50% overtime: 10.56 x 150% = €15.84
Number of hours per week x 18 weeks (May 22 to September 22, 2017):
For hours 36 to 39: 11.62 x 4 hours = €46.48
For hours 40 to 43: 12.67 x 4 hours = €50.68
For hours 44 to 47: 15.84 x 4 hours = €63.36
If the employee works 46 hours per week, they therefore work 828 hours over a 4-month period: the 11 additional hours per week will cost the company €144.68 per week, totaling €2,505.86 over 4 months + 10% paid leave (€250.59) = €2,756.45 gross, payable in addition to the base salary (minimum €1,600 gross) + €160 in paid leave, for a total cost to the company of €4,516.45 gross, or €6,413 including employer contributions.
1-2) The annualized system over the year or the reference period:
With the annualized system, there will be no cost for overtime hours if the employee makes up the 11 additional hours worked in another week during the period.
If an employee works more than 1607 hours in a year, or pro rata to the reference period (in our example: 535.40 hours), the hotel, restaurant, or café (HRC) will then have to pay overtime even if the employee works 46 hours per week over a 12-week period.
The annualized working time system is therefore more flexible for the HRC but must be carefully managed from the outset when drafting employment contracts. It is also possible to implement annualized working time through an addendum to the contract, provided certain legal conditions are met.
The HRC therefore has an interest in choosing the best solution in terms of working time and costs, and in consulting a lawyer specializing in the HRC sector to achieve significant savings and avoid the risk of being found liable in the Labor Court/ Conseil des Prud’hommes.