Actance Tribune
What's NEW under French Employment Law?
N° 8 – September 12, 2022
Measures to strengthen the purchasing power of employees
In the current economic context, characterized by high inflation, the French Government has implemented many measures this summer to protect the purchasing power of the population.
Here is a focus on three main measures:
“Prime de partage de la valeur”(PPV)
The law of August 16, 2022 on emergency measures to protect purchasing power introduced the value-sharing bonus (hereafter called “PPV »).
This bonus replaces the Exceptional Purchasing Power Bonus (PEPA), also known as the « Macron Bonus », which was introduced in 2019 and renewed in 2020 and 2021.
This bonus is, under certain thresholds, exempt from social contributions (see the figure below) and income tax (until December 31, 2023, for employees who receive a salary up to 3 times the minimum wage).
Contrary to normal salary, this is therefore a very interesting measure for employers and employees.
Overtime
Employees working for more than 35 hours a week earn overtime hours.
Under French employment law, overtime is normally paid at a rate of 125% of normal pay for the first eight hours (i.e., from 35 to 43 hours), and 150% beyond that (i.e., over 43 hours a week). A Collective Bargaining Agreement may determinate another rate with a 10% minimum rate.
As of October 1, 2022, any overtime worked by employees will be eligible for a flat-rate deduction of employers’ contributions. This provision will only apply to companies employing between 20 and 249 employees. The amount of this deduction will soon be set by decree.
Rest days (RTT days)
The amended Finance law for 2022 provides, since August 18, 2022, for the possibility for employees, regardless of the size of the company, to give up all or part of their acquired RTT days, at their request and in agreement with the employer, in return for a salary increase.
This law allows all employees who have RTT days because they work more than 35 hours per week (and no longer only executives who work on a working time arrangement in days per year) to benefit from a buy-back of their RTT days and the exemptions attached.
This applies to days or half-days of rest earned in respect of periods after January 1, 2022 and until December 31, 2025.
As a counterpart, these days give rise to an increase in salary at least equal to the rate of increase for the first hour of overtime applicable in the company.
The salary increased by the buy-back of RTT days is subject to social and tax exemptions up to a limit of 7.500 €.
Unemployment insurance
In France, employees who are dismissed can benefit from an unemployment insurance during a certain period of time (see the figure below).
To benefit from the unemployment insurance, the jobseeker must met several requirements, in particular:
- Not to have reached the age and number of quarters to be qualified for retirement,
- Have worked at least 6 months over the previous 24 months / over the previous 36 months for jobseekers who have at least 53 years,
- Be involuntarily unemployed : however, jobseekers who have resigned from their job for legitimate reasons can benefit from the unemployment insurance. Furthermore, since November 1, 2019, employees who resign with a reconversion project can also benefit from this system,
- Be engaged in an ongoing search for employment with the French unemployment body “Pôle Emploi”.
If they met these conditions, jobseekers benefit from the return-to-work allowance, calculated on the basis of a daily reference salary based on the salary perceived by the jobseeker during the 24 months (36 months for jobseekers aged 53 and over) prior to the end of his/her employment contract.
Jobseekers under the age of 57 who perceived a return-to-work allowance exceeding a certain threshold receive a degressive allowance as from the 7th month of compensation.
A reform of the unemployment rules has been underway since 2019, and new changes have been established for 2021 and 2022 (the reduction of the allowance for high wage earners, the minimum duration of work to be eligible for unemployment insurance, etc.)
The previous rules are normally applicable until November 1, 2022. Nevertheless, the preliminary draft of the law on the first emergency measures to conform and improve the functioning of the labor market provides for the temporary extension of the unemployment insurance rules after November 1, 2022.
The Government has also already announced the forthcoming opening of a consultation with the social partners to reform the unemployment insurance rules.