End of an era: Relief for Sarkozy as French parliament scraps the 35-hour working week

France's parliament passed a law on Wednesday that will allow companies to bypass compulsory 35-hour working week limits, effectively burying one of the flagship reforms of the former Socialist government.

President Nicolas Sarkozy has repeatedly slammed the 35-hour week as one of the biggest factors hampering France's economic competitiveness and he has chipped away at it since coming to power in 2007.

But he has shied away from scrapping it altogether, aware of its popularity among French workers and conscious as well of the boost to consumer purchasing power of overtime work, which is not subject to income tax after an earlier reform last year.

The law, which also includes measures aimed at ensuring that unions are more representative, will permit firms to set individual deals with unions over working hours and overtime.

Final approval, which follows the Senate's approval of a separate package of measures reforming small business and the retail sector, came late on Wednesday and the new measures are set to come into force at the end of August.

The 35-hour working week, introduced by former Socialist Prime Minister Lionel Jospin a decade ago, has been very popular with French workers, Europe's champion holidaymakers with 37 days of paid leave a year, compared with 27 in Germany.

Supporters say it has allowed a better balance between work and home life and deny it has held back productivity. But for the centre-right government, the rules have become a symbol of the need to reform the French economy.

"Companies will at last be able to operate a management policy based on a secure legal framework, it's a remarkable advance for the economy," Daniele Giazzi, the ruling UMP party's national secretary for enterprise, said in a statement.

Many French employees work longer than 35 hours a week but accumulate time off which they take later, creating a headache for employers that industry associations have criticised loudly.

Tens of thousands demonstrated against the plans in a day of protest called by unions last month but the turnout was only half the level unions had hoped for, underlining the extent to which workers have become resigned to the changes.

In practice, unions believe the new measures will mainly affect smaller companies, where it is likely to be easier to negotiate enterprise-level deals.

"In the big companies, no-one wants to renegotiate the 35 hours and re-open Pandora's Box," said Philippe Jaeger, president of the chemical industry section of the CFE-CGC union.

"But in the small and mid-sized firms, it will be different."

Executive staff, whose pay is calculated daily rather than hourly, are likely to be particularly affected and face losing some or all of the compensation days they currently gain for working beyond weekly work limits.

The CFE-CGC, which represents executive and management staff, published an open letter of protest in French newspapers and several hundred managerial workers demonstrated near the Senate in Paris in protest.

The law allows individual companies or sectors to set a maximum number of days an employee has to work in a year and agree the number of overtime hours, as well as how much time an employee can take off in compensation.

In theory, it could allow companies to demand staff work a maximum of 235 days a year, instead of the current maximum of 218, leaving only 52 weekends, 25 days' holiday and the May 1 Labour Day holiday as guaranteed non-working days.