Covid-19 in France – Job Retention Scheme
Tuesday 05 May 2020
A Covid-19 government funded job retention scheme is in place to enable employers to keep employees on the payroll.
The use of public funds to support furloughed employees in businesses facing serious financial difficulty has been in place in France for many years.
The scheme is officially called ‘activité partielle' (although it is equally titled ‘chomage partielle’ or ‘chomage technique’).
It is a device that allows a business owner to either temporarily close all or part of the business, or to reduce the working hours of employees.
During this period, the employer pays employees a sum in proportion to their wage/salary and the State compensates the employer with an allowance, thereby avoiding redundancies.
In the current crisis, the scheme has been expanded and made more generous, with an accelerated approval process in place.
To date, over a million businesses have made an application for assistance, covering over eleven million employees.
Employers who can apply for support must be in one of the following categories:
- The company has been obliged to close by administrative order;
- The company is facing a decline in activity and/or supply difficulties;
- It is impossible for the company to put in place the necessary preventive measures for the protection of employee health - teleworking, barrier gestures, etc.
However, companies who are merely suffering a decline in sales are not, per se, eligible.
The scope of the scheme has been widely drawn, with the following groups of employees eligible:
- Full or part-time employees;
- Fixed or limited duration contract;
- Temporary workers (saissoniers), including those who work in ski stations;
- Employees who are not subject to legal working hours, such as sales representatives and freelancers;
- Domestic assistants and childcare assistants (see below);
- Employees of foreign companies with no office in France;
- Apprentices engaged under a contrat d’apprentissage/professionnalisation.
Employees who can work normally from home (télétravail) are not eligible for the scheme. Nevertheless, where they are on short-time working it is possible to make an application for those hours not worked, although it is inevitable that such applications will be closely scrutinised and subject to later review by the authorities. The Minister of the Economy, Agnès Pannier-Runacher, has stated that: "There will be checks, and if they show that short-time working is being misused and that people are combining short-time working with teleworking, it will be very bad for the companies concerned."
Likewise, the scheme is not available to the self-employed, for whom a separate scheme of assistance has been set up. You can read about the support available at Hardship Grants for Small Business Owners.
Level of Employee Indemnity
Strictly speaking, the sum paid to the employee is not a wage/salary, but is an indemnity paid for time away from work.
The level of the indemnity must be at least 70% of the employee’s gross hourly wage, for each furlough period.
It is exempt from social security contributions meaning that in practice 70% of their remuneration corresponds to 84% of their gross wage/salary.
Nevertheless, the social charges CSG and CRDS at the rate of 6.7% are payable by the employee on 98.25% of the indemnity. The payments are also liable for income tax in the normal manner.
The employer only compensates the unemployed hours within the legal limit of 35 hours per week. Overtime or additional unemployed hours are not compensated.
All full-time employees must receive at least the minimum working wage (SMIC). This means the indemnity cannot be less than €8.04 (net) per hour, excepting apprentices.
Employees who undertake professional training are entitled to 100% of their previous net remuneration. Professional training costs under government approved schemes will be fully funded by the State. Application for training can be made through Pôle Emploi, the government employment agency.
The payment must be made to the employee on the date when they are normally paid.
Domestic and Childcare Assistants
The enhanced scheme authorises indemnity payments to domestic and childcare assistants.
The rules provide that private employers do not require formal authorisation to furlough their employees.
The indemnity to their employees is at the rate of 80% of their wage/salary, which is fully reimburseable, although an employer can top-up the 80% level of indemnity at their own expense.
The indemnity will be reimbursed by URSSAF via 'CESU' or 'Pajemploi', to whom the employer must provide a declaration on oath from their employee, certifying that the hours have not been worked.
When the application has been made, the authorities will advise the employer of the amount of indemnity paid to their employee.
The payments are not eligible for the normal tax credit.
The employment contract of the employee is merely suspended during the time they are in receipt of the indemnity.
The employee cannot be asked to work during unpaid hours/days and there are heavy fines payable (and potentially a prison sentence) for any employer who demands an employee to turn up for work. Clearly, where only the working hours of the employee have been reduced, monitoring and enforcement of this restriction will be difficult to accomplish.
Nevertheless, an employee is free to find other work during the lay-off, provided the work does not conflict with their contract of employment.
In return for the compensation paid to the employee, the employer receives State aid equal to 70% of the gross pay of their employee, meaning in practice they receive 100% of the compensation paid to employees.
However, the level of State support is limited to a maximum 4.5 times the minimum working wage (equivalent to €6,927 gross monthly). Any sum in excess of this amount paid to the employee has to be borne by the employer.
Duration of Scheme
Although ordinarily only available to a business for a maximum of six months, during the current crisis is it available for up to 12 months.
The application is considered by the prefecture (Direction régionale des entreprises, de la concurrence, de la consommation, du travail et de l’emploi - 'Direccte') of the department where the business is located.
In order to make an application the employer needs to go on-line at Activité Partielle.
Application can be made, in the first instance, for the period up to 30th June 2020. POSTSCRIPT: The scheme has been extended to 30th Dec 2020, although with some reduction in the generosity of the scheme for those businesses not affected by a shutdown.
A decision on the application should be made within 48 hours, with no response within this period implying approval.
A business can furlough employees prior to the application being made and they have 30 days within which to make the application.
The government have stated that reimbursements to the employer will be paid within a maximum of 12 days.
In order to dissuade employers making fraudulent claims, the government have stated that when the crisis is over checks will be undertaken on a random sample of claims.
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