Postponement of deadline for payment of social security contributions
- Companies must now pay social security contributions on the normal dates
- However, if the business is unable to pay the contributions due in September due to lack of cash or the closure of the business, a tailored solution will be proposed by URSSAF. Unpaid contributions will be addressed through an amicable procedure with a view to their inclusion in a settlement plan.
- By way of exception, deferrals of employer contributions are still allowed for:
- companies in sectors whose activities are restricted due to the measures put in place to fight the pandemic (shows, discos, festivals...);
- employers located in Mayotte or French Guiana, due to the extension of the health state of emergency in these departments.
- The company must make a prior request to URSSAF (regardless of its size, the company wishing to benefit from the deferral must first fill out an application form using www.urssaf.fr).
- In the absence of a response from URSSAF within two working days following the submission of the form, the deferral request is taken to have been accepted.
- For employers located in Mayotte or French Guiana, the deferral request may also relate to the payment of the employee’s share (la part salariale) if their cash flow does not allow them to pay it.
Reminder: as a counterpart to the benefit of deferral claimed by “large companies” during the health crisis, said companies must have taken on a commitment to responsibility not to distribute dividends in 2020. Since 1 July 2020, social security authorities (URSSAF) will start again auditing companies. It is expected that they will firstly focus on the period prior to the health crisis.
Partial activity scheme (Decree #2020-325, 25 March 2020, Ordinance #2020-770, 24 June 2020 and Decree #2020-810, 29 June 2020)
- Partial activity scheme can be requested by businesses in exceptional circumstances (article R.5122-1 of the French Labour Code).
- If an employment contract is suspended, the employee receives a compensatory indemnity from their employer. This indemnity must be at least equal to 70% of the prior gross remuneration. It can be increased by the employer. This compensation is increased to 100% of the previous net compensation if training is provided.
- The request to use the partial activity scheme and the submission of the file is made directly online via a dedicated website: https://activitepartielle.emploi.gouv.fr/aparts/
- The employer must first consult with the employee representatives (CSE or staff delegates). In the absence of an IRP (employee representative body), the business must directly inform its employees about the implementation of the partial activity scheme.
- The applicable regulation states that the administrative authority normally has a maximum 15 day period to process the request (article R. 5122-4 of the French Labour Code).
- In order not to prejudice businesses, Decree #2020-325, 25 March 2020 provides that the employer may send its request within 30 days of the placement of employees in the partial activity scheme when the request is justified due to exceptional circumstances.
- Ordinance #2020-770 of 24 June 2020, supplemented by Decree #2020-810 of 29 June 2020, stipulates that the rate of the common law allowance reimbursed to employers between 1 June and 30 September 2020 is 60% of employees' pay, up to a limit of 4.5 times the minimum wage.
- This hourly rate cannot be less than 8.03 euros.
- This minimum is not applicable in the cases mentioned in the third paragraph of article R. 5122-18 of the French Labour Code (100% compensation in case of training).
- It should be noted that this payment is limited to 1,607 hours per year and per employee, regardless of the professional branch (la branche professionnelle).
Social security contributions
- The partial activity allowance paid to employees (from March until a date to be fixed by decree but no later than 31 December 2020) is considered replacement income and therefore is not subject to social security contributions. It does remain subject to the CSG and the CRDS at a combined rate of 6.7% after a deduction of 1.75%.
- If the remuneration is maintained above the threshold of 70% of gross salary, this social scheme also applies to the additional compensation paid by the employer, pursuant to a collective agreement or a unilateral decision.
- The sanctions applicable for failure to comply with the partial activity scheme provisions are cumulative:
- Full reimbursement of the allowances received as part of the partial activity scheme;
- Prohibition on receiving public aid for employment or vocational training for a maximum of 5 years;
- 2 years imprisonment and a €30,000 fine pursuant to article 441-6 of the French Penal Code.
Partial activity scheme – extended beneficiaries (Ordinance #2023-346, 27 March 2020, Decree #2020-435, 16 April 2020 and Law #2020-734, 17 June 2020)
The Ordinance will remain in force until a date to be fixed by decree, but no later than 31 December 2020. The Ordinance clarifies certain details about and extends the scope of the partial activity scheme.
- Protected employees (‘salariés protégés’)
- Partial activity scheme compulsory for any protected employee, irrespective of the employer’s wishes, if it affects all the employees of the business, establishment, office or workshop to which the person concerned is assigned or attached
- Employees working a fixed number of days (‘forfait jour’) and employees not subject to statutory or agreed working hours
- Number of hours taken into account for the partial activity compensation and the partial activity allowance determined by converting a number of days or half days into hours
- Employees of foreign companies with no fixed place of business in France
- Partial activity scheme applicable to foreign companies with no place of business in France and which employ at least one employee working in the country who is covered by the French social security and unemployment insurance system
- Part-time employees
- Principle: the hourly rate under the partial activity scheme paid to part-time employees must not be less than the hourly rate of the SMIC
- Exception: if the part-time employee's hourly rate is less than the SMIC hourly rate, then the hourly rate paid to the employee under the partial activity scheme is equal to the their actual hourly rate
- Apprenticeship and professional training contracts
- Partial hourly working allowance equal to the percentage of the SMIC applicable to them.
- Employees in training
- Terms of compensation for employees in training, during a period of partial activity, aligned with the ordinary terms of compensation for employees during a period of partial activity
- Hourly allowance paid to be equal to 80% of net pay, the terms and conditions of which are to be determined by decree
- Employees subject to the equivalence regime (professions and jobs involving period of inactivity)
- -For the calculation of the compensation and the partial allowance, the paid equivalent hours are taken into account
- The duration considered to be equivalent is used instead of the legal working hours.
- Confirmation that the benefit of partial activity scheme is available for certain specific employees/business (ski resort staff, employee of public enterprises, employees working at the home of their private employer)
- Impact of partial activity scheme on rest days, paid leave and retirement rights has been specified by Law #2020-734 with an aim to avoid adverse consequences for the employees
- Law #2020-734 (and Decree #2020-926, 28 July 2020) introduced a specific regime of reduced activity for the maintenance of employment, ‘l’Arme’, also known as long-term partial activity or ‘APLD’
- This scheme can be adopted, from 1 July 2020, by companies facing a lasting reduction in activity which is not likely however to threaten their future
- The ‘ARME’ is intended to apply for a limited period of time, and the collective agreement or the unilateral document must be transmitted to DIRECCTE for validation or approval on or before 30 June 2022.
Partial activity – Adjustment of the rates
- Ordinance #2020-770, 24 June 2020 provides for the adjustment of the hourly rate of the partial activity allowance in 3 different situations:
- Business sectors which are covered by the rate of allowance under standard conditions, as modified since 1 June (i.e. 85% of the amount of the allowance paid by the employer to the employee, or 60% of the gross salary instead of 70%);
- Sectors identified as having been particularly affected by the Covid-19 crisis will continue to benefit from a 100% reimbursement of employee compensation (i.e. tourism, hotels, restaurants, sports, culture, air transport, events, as well as companies in related sectors which have suffered a very sharp drop in activity or sales);
- Employers whose main activity is in other sectors where customers are present at their business premises and which is interrupted as a result of the spread of the Covid-19 crisis, excluding voluntary closures (the companies in the targeted sectors will be determined in a decree to be issued shortly).
- Decree #2020-810 of 29 June 2020 on the temporary adjustment of the hourly rate of the partial activity allowance
- The decree sets the hourly rates of the partial activity allowance according to the 3 situations addressed by Decree #2020-770, 24 June 2020 and the relevant business sectors:
- the sectors subject to standard conditions receive an increase in the hourly rate of the partial activity allowance to 60% of hourly remuneration (i.e. 85% paid by the State and Unédic);
- the sectors particularly affected continue to benefit from an hourly rate of 70% of the allowance;
- the sectors related to the sectors particularly affected also continue to benefit from an hourly rate of the allowance at 70% of hourly remuneration, provided there has been a reduction in their turnover of at least 80%.
- The decree lists the particularly affected sectors/activities (i.e. 45 in total) as well as those related to them (i.e. 41 in total).
- Ordinance #2020-460, 22 April 2020 contains important further information on the partial activity scheme:
- Article 5 provides that income from the partial activity scheme and the employer’s supplementary allowance are subject to social security contributions when the cumulative amount is higher than 70% of 4.5 times the monthly minimum wage.
- Article 7 provides that overtime hours (over statutory working- time) are deemed non-compensable if they are provided under a collective bargaining agreement or an employment contract entered into before the entry into force of the Ordinance.
- Article 8 adjusts the conditions under which, pursuant to a collective bargaining agreement or, failing that, the Social and Economic Committee’s favourable opinion, the partial activity scheme may be implemented at either (1) an individual level or
- (2) based on non-uniform distribution of the unworked/performed hours at an establishment, service or workshop level.
- Ordinance #2020-420, 15 April 2020 provides certain clarifications to the previous texts adopted in response to the COVID-19 crisis (applicable to partial activity between 12 March 2020 and 31 December 2020)
- The Ordinance clarifies the provisions regarding the partial activity scheme for certain groups and categories of employees such as apprentices and beneficiaries of professionalization contracts receiving remuneration at least equal to the minimum wage and senior executives.
- Decree #2020-435, 16 April 2020 and Decree #2020-522, 5 May 2020 on emergency measures for partial activity
- The first decree clarifies the methods for calculating the indemnity and the partial activity allowance paid to employees whose working hours are counted in days, setting the rules for converting working days or half-days into hours and for those who are not subject to legal or contractual provisions relating to working hours
- The second decree specifies the methods for calculating the indemnity and the partial activity allowance, in particular for flight personnel.
- The rules applicable to civil aviation flight crews, freelance journalists, ushers' representatives, home workers paid on a piecework basis, artists, technicians and workers in the performing and recorded arts, models as well as senior executives and employees hired by an umbrella company (under a portage salarial arrangement) under a permanent contract are also specified by those decrees.
Emergency measures relating to paid leave, working hours and rest days (Ordinance #2020-323, 25 March 2020)
The provisions set out below cannot be extended beyond 31 December 2020 and cannot exceed 10 days in total.
- In-house company agreement or branch level collective bargaining agreement may set out the conditions under which the employer can require the taking of paid leave, or modify the dates of leave already scheduled, with a limit of up to 6 working days, and respecting a notice period of one clear day.
- This also applies to paid leave days accrued before the start of the period during which they will be taken.
- The agreement may authorize the employer to divide the leave without the employee's consent.
“RTT” (Reduced Working Time)
- By way of exception to an agreement or collective agreement which institutes a scheme for reduced working time, the employer may impose or modify the RTT held by the employee, including those of his or her choice, subject to one clear day's notice.
Rest days of staff working under the ‘forfait jour’ system (fixed number of days)
- The employer may modify or impose, subject to a notice period of one clear day, rest days (or half rest days) to employees working on a fixed-day (forfait jour) basis, as an exception to the collective bargaining agreement relevant to the company, establishment or branch.
CET (Time Savings Account)
- Possibility of imposing the taking of days earned on the time savings account.
Companies operating in sectors essential to the stability of the economy and national security
- Provisions will cease to be effective on 31 December 2020
- ‘Essential’ sectors will be specified by decree
- Working hours: derogation from public policy rules
- Maximum daily working time increased to 12 hours (vs. 10 hours)
- Maximum working time for night work increased to 12 hours with compensatory time-off (vs. 8 hours)
- Daily rest period reduced to 9 hours with the possibility of compensatory time-off for overtime worked (vs. 11 hours)
- Increase in working hours to 60 hours per week (vs. 48 hours)
- Increase in weekly working time calculated over a period of 12 consecutive weeks to 48 hours (vs. 44 hours)
- Increase in weekly night working hours calculated over a period of 12 consecutive weeks to 44 hours (vs. 40 hours)
- The employer must inform the CSE (Social and Economic Committee) and the DIRECCTE without delay
- Sunday rest
- Possible to derogate from the Sunday rest rule by allocating the weekly rest in shifts
- Applicable to companies who provide services necessary for the performance of the principal activity of those in sectors essential to the stability of the economy and national security
- Provisions applicable in the departments of Moselle, Bas- Rhin and Haut-Rhin.
Other social measures
Mandatory and voluntary profit-sharing schemes (Ordinance #2020-322, 25 March 2020 and Decree #2020-434, 16 April 2020)
- Notwithstanding the provisions of the French Labor Code governing the payment of sums due in respect of mandatory and voluntary profit-sharing schemes and the contractual stipulations applicable in the company, the deadline for payment to beneficiaries or allocation to an employee savings plan or a blocked current account, of sums allocated in 2020 under a mandatory and voluntary profit-sharing scheme, is postponed from 1 June 2020 to 31 December 2020.
Professional training (Ordinance #2020-387, 1 April 2020 and Decree #2020-435, 16 April 2020)
- Extended deadline to comply with professional training obligations until 31 December 2020
- Term of apprenticeship contracts and professional training agreement extended due to the impossibility for the closing of the apprenticeship and professional training bodies
- When realized during the health crisis, overtime hours will be exempted from income tax and social security contributions up to an increased amount of €7,500 (instead of €5,000)
Exceptional bonus paid in 2020 to civil servants
- Will be exempted from income tax and social security contributions
Liability of the legal representative of the companies vis-à-vis the employees (Law #2020-546, 11 May 2020)
- Specific reference to the health crisis has been introduced in law but does not result in a waiver or as a mitigating factor of the safety obligations of the employer vis-à-vis the employees.
The 3rd Amended Finance Bill (enacted on 23 July 2020) provides for a number of social measures. In particular social security authorities are allowed to close before 31 December 2020 under specific proceedings any audit not settled before 23 March 2020 by the sending of a letter of comments (‘letter d’observations’).
Holding of general assembly meetings, boards of directors and supervisory boards (Ordinance #2020-321, 25 March 2020 – Decree #2020-925, 29 July 2020)
- Applicable to all legal persons and entities without legal personality under private law
- Applicable to general assembly meetings that cannot be held in person for COVID-19-related health reasons.
- Applicable retroactively from 12 March until 30 November 2020 (Decree #2020-925, 29 July 2020).
- The Ordinance specifies that a decree shall specify, as necessary, the conditions for the application of this order
General assembly meetings
- Adjustment of rules in respect of convening and information
- Listed companies: a general assembly meeting is not invalid merely because it cannot be convened by postal notice due to circumstances beyond the company’s control
- All entities: a member may request that a document or other information is provided by email prior to the holding of a meeting provided that the member supplies its email address for receipt of the document or information.
- Specific situation: formalities for convening sent before the Ordinance
- Information of the members of the general assembly by any means that ensures they are effectively informed, at least three working days before the date of the meeting
- No need to renew the convening formalities - Specific conditions for listed companies
- Adjustment of the rules in respect of participation and proceedings
- The body responsible for convening a general assembly meeting may decide that the meeting will be held without the members and other persons entitled to attend, being physically present, but instead by telephone or by audiovisual conference.
- Members to be informed by any means that ensures they are effectively informed of the date and time of the general assembly meeting as well as the conditions under which they will be able to exercise the rights attached to their membership or the right to attend.
- Calculation of quorum and majorities: despite any provision of the articles of association or founding documentation, it may be decided that the members of the general assembly meeting who participate by means of telephone or audiovisual conference (allowing them to be identified) are taken to be present.
- The technology must allow at least the transmission of the voice of the participants and satisfy technical characteristics permitting the continuous and simultaneous transmission of the proceedings.
- Specific conditions for public limited companies and meetings of bondholders
- Despite any provision of the articles of association or founding documentation, possibility of written consultation where permitted by law
- These provisions apply irrespective of the subject matter of the decision on which the general assembly meeting is called upon to rule.
Professional administrative, supervisory and management bodies
- Despite any provision of the articles of association or procedural rules, members of these bodies be taken to be present at the meetings of these bodies if they participate by means of telephone or by audiovisual conference such that they can be identified and their effective participation is guaranteed.
- The technology must allow at least the transmission of the voice of the participants and satisfy technical characteristics permitting the continuous and simultaneous transmission of the proceedings
- Despite any provision of the articles of association or procedural rules, the decisions of these bodies may be taken through written consultation of members under conditions which ensure the collegiality of the proceedings
- These provisions apply irrespective of the subject matter of the decision on which the body is called upon to rule.
Measures relating to the closing and approval of accounts (Ordinance #2020-318, 25 March 2020)
Applicable to all legal persons and entities without legal personality under private law.
- Extension by 3 months of the time limit for the management board to present to the supervisory board the annual financial statements and, if applicable, the consolidated financial statements, the related management report and the report referred to in Article L. 225-68 of the French Commercial Code
- Extension applicable to entities whose FY ends between 31 December 2019 and the ending date of a one month-period as from the end of the state of health emergency (which occurred on 10 July 2020)
- Exception: This extension does not apply to entities that have appointed a statutory auditor if the latter issued its report on the accounts before 12 March 2020
- Extension by 3 months of the time limits imposed by the legal provisions or the articles of association of an entity to approve the accounts and the documents attached to them, where applicable, or to convene the general assembly meeting needed to approve them
- Exception: This extension does not apply to entities that have appointed a statutory auditor if the latter issued its report on the accounts before 12 March.2020
- Extension applicable to entities whose FY ends between 30 September 2019 and the ending date of a one month-period as from the end of the state of health emergency
- Extension by 3 months of the deadline imposed on private law entities benefiting from a public subsidy) to produce the financial report mentioned in the 6th paragraph of Section 10 of Law #2000-321, 12 April 2000
- Provision applicable to financial records relating to financial years ending between 30 September 2019 and the ending date of a one month-period as from the end of the state of health emergency
- Extension by 2 months, counted from the end of the FY, of the time limit given to the liquidator to prepare the annual accounts and the related report
- Extension applicable to entities whose FY ends between 31 December 2019 and the ending date of a one month-period as from the end of the state of health emergency.
Measures related to restructuring and insolvency procedures (Ordinance #2020-341, 27 March 2020 as amended by Ordinance # 2020-596, 20 May 2020)
Ordinance applicable to ongoing procedures.
- Declaration of insolvency
- During the whole period of health emergency state until 23 August 2020 is assessed on the basis of the financial situation of the debtor at the date of 12 March 2020
- Officers of the bankruptcy proceedings can ask for the declaration to be postponed
- Requests of payment of wages before the AGS (public body guarantying the payment of wages to employees of insolvent companies)
- Statements of wages to be paid submitted in a 10-day or a 3- month period depending on the nature of the amounts to be paid
- Possibility to manage information process to staff representatives after submission of the request Conciliation procedure
- Conciliation procedure
- Can be extended for a period up to 5 months after the end of the health emergency state
- Safeguard plan and restructuring plans
- Until 23 August 2020,
- Duration can be extended by a 5 month-period at the request of the judge (extended period of up to one year at the request of the public prosecutor)
- Upon request of the parties, possibility for the President of the Commercial court to postpone all the deadlines applicable to the various bodies to the procedures by a 5 month-period
- Within a 6-month period as from 23 August, at the request of the judge or the public prosecutor, duration of the plans can be extended by the Commercial Court by a period up to one year.
- Until 31 December 2020, safeguard plan and restructuring plans can be extended by a a period up to 2 years at the request of the judge or the public prosecutor resulting in a duration up to 12 years in total
- Procedural deadlines are amended to facilitate restructuring and insolvency procedures
- Flexibility has also been introduced until 31 December 2020 to facilitate restructuring plans which include disposal of assets/business with a view to reduce the dismissal of employees