NAO 2024: Everything to Know About Salary Increases

During negotiations, the HR Director frequently faces various significant challenges, including:

• Pressure from employees: this is often the most challenging aspect for an HR Director. High expectations regarding salary increases can exert strong pressure to obtain satisfactory results while respecting the company's annual budget.
• Budget constraints: as mentioned earlier, your company must work with a limited budget, which can make it difficult to provide significant salary increases. The HR Director must find balance between employee demands and the company's financial capacity.
• Company expectations: taking into account your company's objectives and priorities regarding compensation is also a real challenge. You must ensure that proposed salary increases are consistent with overall strategy and contribute to achieving your objectives.
• Managing claims: the HR Director must be able to effectively manage claims from employees and union representatives, demonstrating diplomacy and seeking balanced solutions that address the needs of all stakeholders.
• Internal communication: transparent and effective communication with your employees throughout the negotiation process is essential. Clear explanations of the challenges and constraints your company faces must not be overlooked.

The HR Director must also be aware that salary agreements must now account for new salary dynamics, such as sector minimum wages which experience, through revaluation effects, different evolution depending on sectors, thus impacting overall NAO negotiations.

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To conduct effective salary negotiations during NAOs, here are some tips to share:

• Careful preparation: beforehand, it is recommended to conduct thorough analysis of your company's situation, economic and financial data, and employee requests. By preparing for different scenarios and anticipating possible arguments from your employees, you minimize misunderstandings and potential internal conflicts.
• Clear objective setting: you can define specific objectives for salary negotiations, considering budget constraints and employee expectations. It is recommended to set realistic and achievable objectives.
• Transparent communication: by maintaining open and transparent communication with all employees throughout the negotiation process, this helps avoid misunderstandings. Clearly explain the challenges and constraints you face while listening to their concerns.
• Managing expectations: manage employee expectations realistically by explaining limitations regarding financial capacity. It is crucial to provide explanations for decisions made and seek alternative solutions when feasible.

Don't overlook incorporating one-time bonuses, such as profit-sharing bonuses, or profit-sharing schemes, which can offset limited salary increases. This can serve as an additional motivation tool for employees and strengthen their engagement within the company.

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It is essential to comply with the French Labor Code and the legal obligations governing pay negotiations during the NAO (France’s mandatory annual negotiations). In particular, this means avoiding any discriminatory practice and guaranteeing fairness and transparency in the negotiations. Let’s look at the 4 key aspects in this area:

• Respecting workplace equality: you must make sure that the salary increases and benefits offered during the NAO respect the principle of workplace equality among all your employees, regardless of their gender, origin, age or state of health.
• Prohibition of discrimination: under the Labor Code, any direct or indirect discrimination in pay is prohibited. The HR director must therefore ensure that the decisions made during the NAO are not based on discriminatory criteria.
• Transparency and justification of decisions: the decisions made during the NAO must be transparent and justified. You must be able to explain the criteria used to determine salary increases and benefits, and demonstrate that they are objective and non-discriminatory.
• Compliance with collective agreements: the HR director must also ensure that the salary increases and benefits offered during the NAO comply with the provisions of the collective bargaining agreements applicable in the company.

It is essential to keep in mind that the legal framework is evolving, particularly with regard to negotiation methods and the role of union representatives. Make sure you stay informed of potential legal changes in the years ahead.

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1. Legal period

In France, the frequency and timing of the NAO depend on:

• Company size:
  • Companies with 50 or more employees: An annual negotiation is mandatory.
  • Companies with 11 to 49 employees: The NAO is required only if there is a union delegate.
• The collective bargaining agreement: Some collective agreements set specific periods for the NAO.

In general, they are often scheduled at the start of the year (January to March), as they can include discussions on:

• Salary increases.
• Working conditions.
• The economic priorities for the current year.

2. Advance preparation

• Allow a reasonable lead time to prepare the documents (economic overview, social reports).
• Inform employee representatives in advance, at least 15 days before the first meeting.
• Hold one or more preliminary meetings with the social partners to set a timetable.

3. Internal company factors

• Alignment with the year’s projected budgets.
• Take into account the periods when key employees or decision-makers are available (avoid vacation periods or periods of heavy operational activity).

4. Recommended period

• Start of the year: January to March, so that the agreed measures can be implemented quickly.
• End of the year: If your company prepares its budget at the end of the year, an NAO in November or December makes it possible to build the outcome of the negotiations into the following year’s budgets.

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