Actance Tribune
What's NEW under French Employment Law?
N° 20 – October 9, 2023
New case law on paid leave: government clarification pending
As a reminder, under French law, an employee is entitled to 25 working days leave per year of actual work for the same employer (art. L. 3141-3 of the French Labor Code).
Under French law, an employee suffering from a non-occupational illness is therefore not entitled to any paid leave for the duration of his sick leave. Moreover, employees who are on sick leave as a result of a work-related accident or occupational disease are entitled to up to one year’s paid leave.
Nevertheless, at European level, article 7 of Directive 2003/88/EC of November 4, 2003 establishes a right to at least four weeks paid leave per year for all workers without making any distinction between workers who are on sick leave and those who have actually worked during the reference period.
European case law has clarified this point, stating that national provisions or practices cannot make the right to paid annual leave conditional on a minimum period of actual work during the reference period (Judgment of the CJEU, Grand Chamber, January 24, 2012, Dominguez, C-282/10).
However, in September 13, 2023 (Cass. Soc., September 13, 2023, n° 22-17.340 à 22-17.342), the French Supreme Court (Cour de cassation) reversed its position, in order to align with European case law ruling that employees acquire paid leave entitlements during the period in which their employment contract was suspended due to non-occupational illness.
The French Supreme Court has put an end to the distinction between sick leave of occupational origin and sick leave of non-occupational origin. Henceforth, an employee on sick leave will acquire paid leave for the entire duration of the sick leave.
As a result, the paid leave entitlements of employees who are off work due to non-work-related illness or accident should be revised in accordance with this case law, within the legal time limit.
In this context, we work with our clients to analyze situations on a case-by-case basis.
Thus, with this decision, France has brought its domestic law into line with the provisions of European law on paid leave, but a number of practical questions remain and are examined notably by the government.
Beware of URSSAF audits !
All companies may at one point in time have to deal with the URSSAF which is the French social security authority responsible for verifying the correct application of social security rules and the payment of social security contributions.
In this framework, companies may also be subject to a URSSAF audit which, when it takes place, usually covers the last 3 years the ongoing year. These controls, which can be either occasional or recurrent, can have significant financial consequences for the audited company if one or more social practices are found to be irregular (e.g. benefit in kind not subject to social security contributions, application of a favorable regime exempting a benefit or practice from social security contributions even though the conditions are not met or awarding gifts and vouchers to employees in excess of authorized amounts).
To avoid any difficulty with the URSSAF on social security matters, it is essential that companies anticipate these controls by (i) ensuring that their practices are compliant and that they are not liable for social security contributions and (ii) preparing all the required documentation upon reception of the control notice to enable the inspector to carry out the inspection. Please note that refusing to provide the necessary documents may expose the audited company to penalties.
Once the inspection is over, the URSSAF issues a letter of observations informing the audited company in particular of the documents consulted, the controlled period, the observations and readjustments found. However, audited companies have the possibility to challenge these audits, within deadlines, by providing clarifications or justifications where necessary. Oftentimes, this can lead to a settlement or even a total cancellation of the topic of readjustment.
We are very pleased to inform you that a social benefits team has joined the firm this year, strengthening our range of services. We are therefore available to assist you with preventive management of these audits as well as the best way to manage your relationship with the URSSAF!