Fact Sheets: Labour Laws and the Informal Economy

1. French Law re: Temporary and Short-Term Workers: Precarity Premium

From: F. Carré, "Nonstandard Work Arrangements in France and the United States." Forthcoming 2002 in S. Houseman and M. Osawa, eds. Non-standard Work Arrangements in Japan, Europe, and the United States. Upjohn Institute for Employment Research.

Explanation: CDDs are Fixed Term contracts (Contrat à Durée Indéterminée) The lump sum payment at end of temp and CDD assignment is the precarity premium ("prime de précarité de l'emploi.") See text and first footnote. The amount has varied over time, the footnote is on policy as of April 2001.

Excerpt: Several key regulations remain which set the situation for short-term and temporary work in France apart from that in the US. First, the regulations mandated parity of wages and benefits between workers in NSWAs and those in regular employment in similar positions, equivalent skills, and beyond probation. Laws, collective bargaining agreements, and policies (pay, benefits) which apply to regular workers apply to workers on short term, temp, and PT contracts. Additionally, workers in CDDs and temp contracts receive notice of the exact duration of their contract and a lump sum payment at the end of it ("precarity premium"). Second, the operations of temp supply companies are regulated closely. Since 1972, temp supply companies must purchase a form of insurance which guarantees payment of back wages and social benefits to workers in case of bankruptcy. The Ministry of Labor also publishes a list of dangerous activities where temp assignments are illegal. Marginal temp supply companies have been weeded out by the inability to sustain higher costs or by penalties (Puel 1989). It is illegal to use workers on temp contracts (as well as CDDs) in a strike situation. Also, the government compelled industry-wide collective bargaining for the THS industry as a whole as an alternative to regulation. Since 1985, all temp workers are covered by sectoral collective bargaining agreements that have defined principles for industry-wide seniority, and established peer-representation structures to administer benefits such as sick pay, or supplementary retirement benefits, or the extension of some job-related benefits beyond the duration of a temp assignment. In the 1980s, these provisions made temp contracts relatively more expensive than CDDs. The latter were more likely to be used for a large volume of short term workers while temp contracts were used for limited and very short term needs. Since 1990, legislation has brought terms of employment under the two types of contract nearly on a par. For example, the lump sum payment is set at 10 percent of total compensation for temps and 6 percent for CDDs. The agency mark up that makes temp contracts costlier per hour is often reduced by large firms able to negotiate a significant volume discount with temp companies (Ramaux 1993). While the average factor is estimated to be 2.2 in 1993 for the whole temp industry (i.e. for an hourly pay of 100, the temp cost is 220), some large `employers were able to negotiate it down to 2.05 or lower (Ramaux 1993, p. 95) Mandated parity of wages and benefits does not wholly eliminate cost incentives because nonstandard workers for example may be in different jobs than regular workers, do not benefit from seniority based wage premiums and other aspects of non wage compensation (seniority based profit sharing, productivity premium).. Additionally, employers may tamper with the notion of "equivalent skills" or by assigning nonstandard workers to a job while requiring tasks be performed at a higher level of skill (Ramaux 1993). Nevertheless, mandated parity greatly diminishes the incentive to differentiate worker pay levels and access to benefits, a sharp contrast to the US situation.

2. Canadian Law re Homeworkers: 10% Premium to Cover Non-Wage Costs

The Ontario Employment Standards Act. In Canada, each province has its own labour legislation. Federal law covers federal employees. In Ontario, those workers who fall under the definition of homeworkers are supposed to receive a premium of 10 percent of the general minimum wage, to compensate for incidental costs arising from working at home. This means that while the general minimum wage is $6.85, homeworkers are entitled to $7.54 an hour.

A recent study discusses this legislation: Women and Homework: The Canadian Legislative Framework" by Stephanie Bernstein, Katerine Lippel and Lucie Lamarche which was published by Status of Women Canada in March 2001. It is be available for downloading on their website:
http://www.swc-cfc.gc.ca

Or you can order it from the website since it is rather long.