Amazon Face-Off in France Serves as Worker-Rights Test Case

(Bloomberg) -- When France ordered Amazon.com Inc. to stop deliveries of non-essential items in an attempt to protect workers, the Silicon Valley e-commerce giant responded by stopping all orders until at least Monday.

The company said the order to sell only essential food, hygiene and health items and to upgrade its health-safety procedures was too ambiguous. Critics accused Amazon of playing a game of pouty hardball. Prominent French comedian Nicolas Canteloup quipped: “We are closing five days to sulk.”

Amazon’s sales are surging, reflecting robust demand for groceries to video games and streaming movies to customers stuck at home during global lockdowns to slow the spread of Covid-19. But that’s required delivery drivers and warehouse workers to continue to report to work, and some have complained that they don’t feel safe. Amazon has fired three employees in the U.S. who criticized working conditions in its warehouses.

France, with a history of relatively strong protections for workers and powerful labor unions, has become a flash point. The country’s actions could set a precedent for governments around the world seeking to put potentially expensive restrictions on the company.

Amazon has defended itself, saying it’s already taken pains to keep workers safe. It argued the ruling was unclear. It also risked fines of 1 million euros ($1.1 million) a day if it wasn’t followed. The company is appealing.

“Despite the huge efforts we’ve poured into our fulfillment centers to preserve our workers’ safety, the court handed us an order that forces us to shut down temporarily,” Amazon France chief Frederic Duval said on RTL radio, one of several interviews he did on Thursday making the company’s case. “The labor unions action will have important consequences for people in France.”

Duval said he didn’t know when the company’s six distribution centers in the country would reopen. In an email to customers on Thursday, he said Amazon would attempt to fulfill French orders from warehouses outside of the country, a move that puts pressure on unions and the government as French employees sit idle.

The shutdown was the culmination of weeks of conflict with the government and unions. In March, French Labor Minister Muriel Penicaud said that while it was important to preserve the supply of “necessary goods,” Amazon’s worker safety standards were “insufficient.” Inspectors were sent to check on employee conditions.

Shortly before 10 p.m. on Wednesday night, Amazon sent a short email to some of its warehouses employees to warn them that the company had made the “difficult decision” to halt operations at the fulfillment centers. It told employees that they’d have to stay home, but would be given full pay, according to the message, which was seen by Bloomberg.

Amazon didn’t immediately respond to a request for comment on the memo.

It’s unclear whether Amazon will be able to rely on a state plan for compensating furloughed workers. An internal memo to employees seen by Bloomberg indicated that the company was planning to access the funds, but a spokeswoman said that it hasn’t been confirmed.

“Employees during this period must continue to receive their salary from Amazon, including temporary workers. They have committed to this but it is the law anyway,” Penicaud said in an interview on on LCI.

Amazon has 10,000 employees in France with 6,500 spread across its six warehouses, a spokeswoman for the company said in March. France is Amazon’s third-biggest market in Europe.

The company made a coherent business choice in shutting down its activities, said Edouard Nattee, a former Amazon employee who’s now chief executive officer of data analytics company Foxintelligence.

“From an operational and profitability point of view, Amazon can hardly isolate 8% of their sales -- the essential goods -- given the fact the items are dispatched randomly at its fulfillment centers,” he said.

France is also challenging from a sales perspective, where they’re struggling to gain ground on competitors, Nattee said.

“Globally, Amazon is a hit in this crisis, in Germany, the U.K. they perform tremendously. But in France it’s not as rosy, they are below their pre-confinement market share,” he said. “They’ve lost on delivery timing, their number-one competitive advantage to competition.”

Amazon’s sales have risen 11% in Germany, it’s biggest European market, 45% in the U.K. and 56% in Spain since March 2, according to a report from Foxintelligence. But in France, Amazon’s grown just 8% and hasn’t gained market share from local competitors, such as Casino Guichard-Perrachon SA-owned CDiscount or Fnac Darty SA, the report showed.

For Laurent Degousee of SUD, the labor union that lodged the lawsuit that led to the court order, “Amazon has not done nothing for employees, but they only did so under the pressure from workers, unions and the government. They piled up rules with no clear plan. This is not finished.”

©2020 Bloomberg L.P.