This report covers a new French law containing measures that deal with assignees and French old age and complementary pension plans and bonuses.
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A new French law contains disparate provisions dealing with business and economic “transformation.” However, it also contains some interesting provisions designed – in the eyes of the country’s legislators – to make France a more attractive business, investment, and employment destination, in line with France’s overall Brexit strategy.
The new law is called Plan d'Action pour la Croissance et la Transformation des Entreprises (“PACTE” – in English, “Action Plan for Business Growth and Transformation”).1 It was published in the Official Journal (Journal Officiel) on 23 May 2019, after nearly a year going through the various parliamentary stages.
Article 77 of the Law provides that employees who are sent from abroad to occupy a job in France may be exempted from paying into the French old age and complementary pension plans.
The new measure may mean lower French social security costs for certain categories of employees (those transferring to a French local contract or coming from countries with which France does not have a social security agreement).
Employers are advised to seek guidance on whether the exemption makes sense for their employees and what types of insurance products would be acceptable for purposes of this provision.
The French old age and complementary pension plans are components of the French compulsory social security system. Individuals contribute in France when they are not covered under a bilateral social security agreement or under EU Regulation 883/2004 that allows them to remain in their home country social security system.
The main features are described below:
Other measures include allowing employers to claw back bonuses from “risk takers” working within the financial services sector by making it clear that article L. 1331-2 of the French Labor Code relating to the prohibition of fines and pecuniary penalties does not apply to variable remuneration which is reduced or paid back to the employer by reason of the conduct or behavior of the employee concerned.
In addition, such bonuses are now excluded from the basis used in calculating severance pay and the compensation that could be awarded by a judge in the event of dismissal without a real and serious cause or no cause, given their uncertain nature.
The above measures are designed to make France a more attractive place by removing provisions that made terminating contracts more expensive in France than in other jurisdictions.
The information contained in this newsletter was submitted by KPMG Avocats in France.
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