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coronavirus, COVID-19

Mar 27, 2020

France’s Supportive Measures for Businesses and Employees

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FRANCE’S SUPPORTIVE MEASURES FOR BUSINESSES AND EMPLOYEES

The French government has set out a package of social and economic measures to support businesses and employees through the period of disruption caused by COVID-19. The purpose of this memo is to provide you with an overview of the key measures relating to employment.

This memo focuses, in particular, on:

  • The new “partial activity” mechanism providing for a state-funded indemnity in case of reduction or suspension of work;
  • The postponement of the payment date of statutory profit sharing plans (“intéressement” and “participation”);
  • Obliging employees to take paid vacation and increasing maximum working time in certain key sectors.

“Partial Activity” Indemnity for Payment of Compensation to Employees

Companies that encounter major difficulties in maintaining their activity, or which are forced to stop their activity, and are reducing or suspending employee working hours accordingly, may be eligible for a state-funded indemnity for compensation paid to affected employees, as described below, pursuant to an executive order (decree n° 2020-325 of March 25, 2020).

  • What is the amount of the indemnity?

Affected employees will receive compensation, paid by the employer, at the usual date for salary payment, equal to 70% of their gross compensation (approximately 84% of the net compensation).

The employer will then be eligible, according to the French Ministry of Labour, for a reimbursement of 100% of the gross compensation paid, up to a limit of 4.5 times the minimum wage (SMIC) (€6,927). The minimum wage is €10.15 per hour or a gross monthly amount of €1,539.42 for 35 hours per week (prior to the adoption of the current emergency measure, the reimbursement was capped at the minimum wage amount). Please note that payment and reimbursement amounts specified by the Ministry of Labour are not clearly indicated in the enacting executive order. We are seeking clarification.

  • When can the partial activity regime be applied?

An employer should be eligible to benefit from the “partial activity” regime under “exceptional circumstances,” which we believe should include situations in which:

  • its activity has been closed by the government in the context of COVID-19; or
  • it encounters a drop in its activity and/or it suffers from supply difficulties; or
  • it is unable to implement preventive measures necessary to protect the health of employees (work from home, distancing, etc.).

Specific conditions have not been detailed in the applicable executive decree, but guidelines published on the website of the French labour ministry indicate that companies, in the context of the COVID-19 pandemic, can consider that they are faced with “exceptional circumstances” within the meaning of the applicable law (Article R.5122-1 of the French labour code). However, please note that eligibility is not automatic. We are aware of cases in recent days in which eligibility has been denied by the administration.

  • Which employees are eligible for the “partial activity” regime?

Employees may be paid under this regime if they suffer a loss of pay caused by either:

  • a temporary closure of all or a part of the company; or
  • a reduction in their usual working hours below the legal working time.

This measure is open to all employees, irrespective of:

  • the duration of their employment (no seniority condition); or
  • the duration of their employment agreement (fixed or indefinite-term contract; part-time, apprentice); or
  • their working time basis (hourly, daily, etc.).

In particular, pursuant to the new measures, employees whose working time is calculated on the basis of a number of days are eligible for the “partial activity” regime whether the activity is closed or is reduced (in proportion to the reduction).

  • What is the procedure to be followed?

Employers must report the suspension or the reduction of the activity of their employees and apply for the “partial activity” regime within 30 days at the following website: activitepartielle.emploi.gouv.fr/aparts/.

The employer must explain the reasons for the application, the detailed circumstances and the economic situation, the number of employees implicated by these measures, the number of anticipated unemployment hours and the anticipated period of unemployment (which may be until June 30, 2020 in the first request).

Upon receipt of an application, the administration has 48 hours (as opposed to 15 days under the previous system) to notify the employer of its decision to accept or refuse. In the absence of a response within 48 hours, the application is deemed to be accepted by default. The relief is granted retroactively as of the date of the suspension or the reduction of the activity.

The employer must obtain an opinion of the work’s council. It is not necessary, however, to provide the works council’s opinion with the application. The employer will have to send the works council’s opinion to the administration within two months of the date of application.

The “partial activity” regime is available for a maximum period of 12 months (as compared to six months under the pre-emergency regulations).

The compensation will be reimbursed by the French administration (“l’Agence de service et de paiement”) to the employer within an average of 12 days.

Profit Sharing (“intéressement” and “participation”)

Pursuant to the French labour code, amounts due under statutory profit-sharing agreements (“intéressement” or “participation”) must be paid to the employee or transferred to an employee savings plan before June 1 of each year.

An executive order published on March 26, 2020 postpones this deadline to December 31, 2020 for the amounts due in 2020 (Ordonnance 2020-322 dated March 25, 2020).

Measures Relating to Paid Vacation Time and Maximum Working Time

  • Obliging employees to take paid vacation

Collective agreements may authorize the employer to oblige employees, without their individual agreement and subject to one day of prior notice, to take paid vacations and acquired “rest days.”

The total number of vacation days that the employer can oblige employees to take is six days, and the total, including “rest days,” acquired under various other regimes may not exceed ten days (Ordonnance° 2020-323 dated March 25, 2020).

The enacting order also has provisions that allow the employer to cancel or modify vacation time once activity resumes.

  • Increasing maximum working time for certain activities

For companies engaged in activities deemed particularly necessary for the security of the nation and for the continuity of economic and social life, maximum working hours can be increased to a maximum of 12 hours per day, 12 hours per night and 60 hours per week.

A decree is expected to set forth a list of the relevant activities and/or the list of the companies.

We hope that this information will be useful to you and we would be pleased to discuss further.

Authors and Contributors

Françoise Even

Counsel

Compensation, Governance & ERISA

+33 1 53 89 71 81

+33 1 53 89 71 81

Paris

Barbara C. Streichenberger-Michel

Associate

Compensation, Governance & ERISA

+33 1 53 89 70 23

+33 1 53 89 70 23

Paris

Sami Toutounji

Partner

Compensation, Governance & ERISA

+33 1 53 89 70 62

+33 1 53 89 70 62

Paris