Article

L5312-1, L5421-1 to L.5421-4, L5422-1 to L5422-2-2, L5422-9 L5425-1 to L5425-2

Description

The law entrusts public employment services (Pôle emploi) with the following two missions:

• Insuring employees in case of unemployment: public employment services calculate unemployment allowances and pay benefits on behalf of the unemployment insurance scheme (Unédic) and the government;
• Facilitating the return of job seekers into employment: public employment services provide job seekers as well as companies with services like collection of job offers, assistance in recruitment, assistance for job search and career guidance.

Unemployment benefits

For new jobseekers, the compensation rules have changed since 1 February 2023. The length of time unemployed people receive compensation will depend on the economic climate. The current unemployment insurance rules have been extended until 31 December 2023. By the end of the year, the social partners must conclude an agreement (unemployment insurance agreement) that will determine how the unemployment insurance scheme will operate from 1 January 2024. If no agreement is reached, the government will extend or adapt the current arrangements by decree.

Main features

Employees eligible for unemployment insurance

In order to receive back-to-work allowance (ARE), a private-sector employee must be involuntarily unemployed. The termination of the employment contract must be the result of one of the following situations: * Redundancy for personal or economic reasons or, in the case of the civil service, dismissal. * Termination by mutual agreement allows the employer and the employee on a permanent employment contract (CDI: Contrat de travail à durée indéterminée) to mutually agree on the terms of termination of the employment contract between them. * Non-renewal of a fixed-term contract (CDD) * Resignation considered legitimate (for example, to follow the person with whom you are living as a couple).

Duration of affiliation

To be entitled to ARE, a jobseeker must have worked for at least 6 months (i.e. 130 days or 910 hours) in the 24 months prior to the end of their employment contract. This minimum period of work is known as the qualifying period. In the event of loss of employment, jobseekers are entitled to resume their initial entitlements until they are exhausted. This option only applies if the jobseeker has returned to work before exhausting his or her rights. Jobseekers thus benefit from so-called "rechargeable" rights. They must have worked for 6 months (i.e. 130 days or 910 hours) in the last 24 months to benefit from new rights with a new duration of compensation.

Amount of the allowance

The gross daily amount of the ARE comprises : * a fixed part equal to €12.95 *and a variable part equal to 40.4% of the daily reference salary used to calculate the allowance. This sum cannot be less than 57% and cannot be more than 75% of the SJR. The net amount of the ARE cannot be less than €31.59.

Degressivity of the allowance

If the daily allowance is higher than an average gross daily previous salary of €159.68 (i.e. an average gross monthly salary of €4,857.81), a reduction of 30% is applied from the 7th month of payment. After degressivity, the allowance cannot be less than €91.02 gross per day (i.e. approximately €2,730 gross for a 30-day month).

Changes since 1 February 2023

The law of 21 December 2022 on emergency measures relating to the operation of the labour market with a view to full employment authorises the government to extend the current unemployment insurance rules until 31 December 2023 and to prescribe new rules for compensating the unemployed in line with the state of the labour market. The implementing decree of 26 January 2023 on the unemployment insurance scheme sets out the new rules for compensating jobseekers.

Duration of compensation can be adjusted according to the state of the labour market

For new jobseekers whose employment contract ends on or after 1 February 2023, the duration of unemployment benefit depends on the labour market. If it is favourable, the duration of benefit will be shortened by 25%. A coefficient equal to 0.75 is applied to the initial benefit period. If the economic situation worsens, the current benefit period will be maintained. New rules on the duration of unemployment benefit depending on the labour market situation: * If the overall unemployment rate is below 9% and has not risen by +0.8 points over a quarter, the duration of compensation will be reduced by 25% with a minimum duration of 6 months (182 days); * If the unemployment rate is higher than 9% or has risen by more than 0.8% over a quarter, the current rules on the duration of compensation will apply (depending on the salaried activity and age of the jobseeker).

In the event of a favourable labour market situation: * A jobseeker under 53 who has 730 days of compensation will be notified of an entitlement of 548 days after applying the coefficient of 0.75. * A jobseeker aged 53-54 who has 913 days of benefit will be notified of an entitlement of 685 days after application of the 0.75 coefficient (with the possibility of an extension of up to 137 days in the event of training). * A jobseeker aged 55 or over with 1,095 days will be notified of an entitlement of 822 days after application of the 0.75 coefficient.

Abandonment of post and refusal to accept a permanent contract (CDI)

The law of 21 December 2022 on emergency measures relating to the operation of the labour market with a view to full employment provides for the abolition of access to unemployment benefit in the event of : - abandonment of post without a legitimate reason (medical reasons, right to strike, etc.). An employee who does not return to work by the end of the period specified in the employer's formal notice will be deemed to have resigned. Dismissal for abandonment of post will no longer give entitlement to unemployment benefit; - refusal of open-ended contracts (CDI) for employees on short contracts. An employee at the end of a fixed-term contract (CDD) or temporary contract who refuses an open-ended contract twice within the space of a year, in the same job, at the same place of work and with at least equivalent pay, will no longer receive unemployment benefit.

Job search support

Within the framework of their public service mission, public employment services are committed to help job seekers back into work and to support companies with recruitment activities. Defined in the labour code, the public employment services' main goals are the following:

• To identify trends in the labour market;
• To develop expertise in the evolution of the labour market and related qualifications;
• To collect and match job offers with job seekers;
• To assist and advise companies in their recruitment activities;
• To actively participate in fighting recruitment discrimination and campaigning for equality;
• To provide information, guidance and support to job seekers;
• To provide training and career counselling, regardless of their employment status;
• To facilitate geographic and professional mobility and social and professional integration.
• To register job seekers in up-to-date lists and monitor their search for employment.

Return-to-work incentive measures

Once registered, job seekers agree with public employment services on an individualised return-to-work programme (Projet personnalisé d’accès à l’emploi) and show progress in finding a new position.

According to the Unemployment insurance agreement, return-to-work incentive measures include the following:

• 'Reloadable entitlements': Job seekers with an unemployment allowance are allowed to take on a job or more and perform a total of 150 hours or more of work without losing the previously acquired entitlements. This means that the job seeker can add new earnings from a short period of employment to the entitlements that had not been used when employment was resumed. Therefore, each new work period increases the duration of coverage for unemployment insurance beneficiaries, if it is within 28 or 36 months of the last employment.
• Earning while receiving an unemployment allowance: It is possible to earn a salary while receiving an unemployment allowance, and therefore to cumulate a salary with the unemployment allowance, under the condition that the sum of the two does not exceed the average gross salary earned prior to the registration as a job seeker.

In the case of earning while receiving an unemployment allowance, the actual amount of allowance received corresponds to the calculation for the entitlement as described above minus 70% of the gross monthly salary earned from the new employment.

Commentary

In France, unemployment insurance plays a major role as a social and economic buffer for redundant employees. Indeed, it offers them a replacement income, thus maintaining their purchasing power and supporting consumer spending.

Originally, the unemployment insurance scheme was negotiated with an agreement between the social partners at national level (including the three employer organisations: MEDEF, CPME and U2P) and it was financed through social contributions paid on salaries by both employers and employees. These features have been recently questioned and subsequently changed. In fact, the governance of the unemployment insurance has changed to give the government a new and prominent role to run the scheme. Nowadays, the government has more legal possibilities to monitor the financial trajectory of the unemployment insurance scheme and therefore to guide the negotiation process of unemployment insurance agreements. For instance, the social partners were intended to agree on a new unemployment agreement at the beginning of 2019 per the negotiation framework provided by the government (labour code, article L. 5422-20-1). When the negotiations failed in February 2019, the government initiated reforms for the unemployment insurance scheme.

The main lines of the reform were presented on 18 June 2019 by the Prime Minister and then transcribed in Decree 2019-797 of 26 July 2019. This text plans to implement the measures between November 2019 and March 2021: 

• A bonus-malus system (from 1 January 2021) for employers to disincentivise the abusive use of precarious contracts (especially, short-term fixed-term contracts):
  • The system adjusts the employer component of social contributions to the unemployment insurance scheme, according to the frequency of use of these contracts. In other words, companies that frequently use these contracts would suffer a financial penalty. The measure targets seven economic sectors, including accommodation and food service activities, where precarious contracts is more frequent.
• A regressive unemployment allowance for high salaries:
  • Employees earning a gross monthly salary of €4,500 or more should expect a decrease in their unemployment allowances. The measure reduces unemployment allowances starting from €2,261 by 30% after six months of compensation. The measure is expected to target the top 10% of the wage distribution. Employees with 57 years of age or more are exempted from this measure, as they face more difficulties in finding a job.
• A minimum duration of employment in order to benefit from the unemployment insurance scheme:
  • Employees should have worked for four months over the 28 months prior to registration or for six months over the 24 months prior.
• A new calculation for the daily wage of reference: the latter is determined by the income over the total number of days from the first day of employment (including those as unemployed). The aim is to counteract the adverse effects of split jobs, which allow a job seeker to temporarily earn more on an unemployed status than in work.

The changes cover redundant employees losing their job from 1 November 2019. In this context, the government announced as well the creation of 1,000 new jobs for public employment services over three years in order to set up new job search support measures.

The scheme should ended in December 2022 but has been extended to 31 December 2023 by decree of January 2023 (see source). A new scheme should enter into force on 1 January 2024, through a new social partners agreement or by decree if social partners failed to reach an agreement.

Additional metadata

Cost covered by

Companies National government

Involved actors other than national government

Employer organisation Public employment service Trade union

Involvement (others)

None

Thresholds

Affected employees: No, applicable in all circumstances
Company size: No, applicable in all circumstances
Additional information: No, applicable in all circumstances

Sources

• Code du travail, article L. 5312-1
• Labour code, articles L5422-1 to L5422-2-2
• UNEDIC, Conventions d'assurance chômage
• UNEDIC, Convention d'assurance chômage 2017 / Agrément
• Loi 2008-126 du 13 février 2008 relative à la réforme de l'organisation du service public de l'emploi
• Loi 2018-771 of 5 September 2018
• Article L. 5422-20 to L. 5422-24 labour code
• J.L. Dayan (2019), Assurance chômage : ajustement économique ou nouveaux droits sociaux ?, METIS july 2019
• Decree of 26 July 2019 reforming unemployment insurance regime
• Décret n° 2023-33 du 26 janvier 2023 relatif au régime d'assurance chômage
• Unédic (2021), Circulaire n°2021-13 du 19 octobre 2021 relative à la réglementation d'assurance chômage applicable au 1er octobre 2021