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Labour Code, article L5122-1 to L5122-5 (Short-time working) Labour Code, article L. 2254-2, L. 2231-5-1 and R. 6323-3-2 (Collective performance agreement) Ordonnance n° 2020-346 of 27 March 2020
Apart from the common measure of short-time working (activité partielle or chômage partiel), the legislator has added a new scheme in 2017, the Collective performance agreement that replace three previous schemes: agreements to maintain employment (accord de maintien dans l'emploi), agreements to preserve or develop employment (accords de préservation ou de développement de l’emploi) and mobility agreements (accords de mobilité).
1. Short-time working
After the 2008-2009 financial and economic crisis, it became clear that the French system for using short-time working was too complex. So, as soon as the COVID-19 crisis hit, the public authorities learnt the lessons of the less effective French short-time working system (compared with Germany, in particular), and quickly introduced simplifications. Therefore, a decree of 25 March 2020 as simplified the process to apply for short-time working.
The scheme has been adapted many times during the COVID-19 crisis. For instance, the level or compensation have varied a lot during the COVID-19 crisis, in terms of percentage of the previous gross salary, of floor threshold expressed in euros and of threshold that depends of the minimum wage level (SMIC). In addition, two rates to compensate employers occurred during the crisis, one for companies in specific situations and another for “other companies”. And to add complexity, changes may occur in the same quarter.
In November 2023, the scheme works as follow:
Reasons to use the short-time working scheme
To cope with a drop in activity in the company, the employer may engage in short-time working in the following cases:
It can take several forms:
The employer may set up for its employees a short-time working allowance up to:
Affected employees
Before the COVID-19 crisis, the short-time working scheme mainly covered "traditional" jobs held by employees on open-ended contracts. The COVID-19 crisis forced the legislator to open up the scheme to other workers, with employee status, but under different types of contract. As a result, the scheme is now open on a permanent basis, as the measure introduced in 2020 is not for a fixed term:
The following employees do not benefit of short-time work:
Information and consultation
An information and consultation procedure is required in companies with more than 50 employees where there is a works council (CSE). In this case, the employer must consult staff representatives before implementing short-time working. The discussion will cover the reasons for using the system, the occupational categories and activities concerned, the level of and procedures for implementing reductions in working hours, the training measures envisaged and any other commitments made by the company. In other companies, the employer must inform its employees directly of the partial activity.
However, in the case of "exceptional disaster or bad weather" and "other exceptional circumstances", such as a health crisis, and where it has not been possible to convene a meeting of the works council, this opinion may be sought after the request has been made. It is up to the employer to send the opinion of the CSE within a maximum period of two months from the date of submission of the request for prior authorisation. This flexibility was introduced by the decree of 25 March 2020.
Application procedure
The procedure varies depending on the exceptional nature of the request, in case of disasters or bad weather. In the most common case, the exceptional circumstances, the employer must submit an application for authorization to engage in a short-time working to the Departmental Directorate for Employment, Labour and Solidarity (DDETS, former Direct). The employer has to apply on an Internet website within 30 days of the placing of its employees in partial employment. The application shall specify the following:
Ground for the use of short-time working Expected period of sub-activity Detailed circumstances and economic situation giving rise to the request Number of employees concerned
It must be sent with the prior opinion of the Social and Economic Committee (CSE). In the event of an accident or exceptional circumstances, the employer has two months to consult and send the CSE's opinion in support of its request for prior authorisation. The administration has a response time of 15 calendar days upon receipt of the application for authorisation. An acknowledgement of receipt of the DDETS shall specify the period after which the absence of a reply shall constitute authorisation. Once the administrative authorisation has been obtained, the employer may reduce or suspend his activity and place his employees on technical unemployment insurance. It is this authorisation that enables him to obtain reimbursement of the allowances paid to the employees.
Maximum duration of authorisation
Short-time working authorisation may be granted for a period of 3 months. It may be renewed for up to 6 months, consecutively or not, over a period of 12 consecutive months.
** Commitments towards employees**
The employer must propose employment and vocational training commitments in its application for authorisation. The procedure varies depending on whether the authorisation is requested for the first time, less than or more than 3 months after a previous period of partial activity. For a first application, the employer undertakes to keep the employees in employment for the duration of the partial activity. They must also comply with the conditions for authorising partial activity.
Employee compensation
The employer must pay the employee compensation corresponding to 60% of his gross salary per hour unemployed person, or approximately 72% hourly net salary. This allowance may not be less than €9.12 or more than €31.10 per hour not worked (amount in force in November 2023).The employer must indicate on the employee's pay slip the number of hours compensated, the rates applied and the amounts paid.
A collective agreement or unilateral decision by the employer may provide for additional compensation.
** Short-time working allowance paid by the State to the employer**
Before the COVID-19 crisis, the employer received a lump-sum allowance to compensate for the payment of wages to workers placed on short-time working. To make access to short-time working more attractive, the government decided that the allowance would be set in proportion to wages and therefore expressed as a percentage of the employee's gross pay. Thus, at the start of the crisis, employers were reimbursed up to 70% of gross hourly pay, ranging from a floor corresponding to the net hourly minimum wage (SMIC) to a ceiling corresponding to a gross salary of 4.5 SMIC. At the same time, the compensation paid to employees was increased to 100% of gross hourly pay. As a result, the remaining cost to the employer is zero. Recourse to short-time working therefore cost the employer nothing. Following the first lockdown, the compensation and allowance parameters for ordinary short-time working were progressively lowered in the run-up to the end of the crisis, except for sectors subject to health restrictions or protected sectors.
In November 2023, the scheme was the following:
In the general case, if the employer has obtained administrative authorisation, it may submit a request for compensation, which enables it to obtain monthly reimbursement of the remuneration paid to the employees concerned. The employer may receive the Short-time working allowance up to a maximum of 1,000 hours per year per employee. The allowance is set at 36% of gross hourly pay. It amounts to : * €8.21 minimum * €18.66 maximum.
** Social security contribution**
Short-time working allowances are replacement income and as such, even before the health crisis, are exempt from all social security contributions based on earned income. However, short-time working allowances are subject to two kind of social contribution (but that are closer to taxes) : Contribution sociale généralisée (CSG) on replacement income at a rate of 6.2% and to Contribution au remboursement de la dette sociale (CRDS ) at a rate of 0.5%. These contributions are based on the short-working allowance after application of the deduction for professional expenses (1.75%). This social security regime has been extended to additional indemnities paid by the employer, over and above statutory indemnities, up to a limit of 3.15 Smic. Payments in excess of this amount are subject to the social security contributions applicable to earned income.
2. Collective performance agreement
Collective performance agreements may be concluded in order to meet the needs associated with the operation of the company or with a view to preserving or developing employment. These agreements may include stipulations aimed at : * adjust working hours and the way in which they are organised and distributed; * adjust remuneration, in compliance with the hierarchical minimum wages defined by the branch agreement; * determine the conditions for professional or geographical mobility within the company.
The special feature of the collective performance agreement lies in its relationship with the employment contract. The clauses of the agreement replace contrary and incompatible clauses in the employment contract, with the employee's agreement. If the employee opposes the application of the agreement, he or she may be dismissed on a sui generis basis (i.e. based on the refusal of the agreement); he or she will then benefit from an exceptional top-up to his or her personal training account.
Implementation
In companies where there is at least one trade union delegate: negotiations with a view to concluding a collective performance agreement may only take place with this trade union delegate (or with the trade union delegates). In this case, the agreement must be concluded in accordance with the procedures set out in article L. 2232-12 of the Labour Code (signed by the trade union organisations that received more than 50% of the votes cast in the last professional elections for representative trade union organisations or 30% and validated by referendum). In companies with at least 50 employees and a social and economic committee (CSE), this committee may appoint a chartered accountant to provide the trade unions with any useful analysis in preparation for negotiations on the collective performance agreement. The costs of this appraisal will be borne by the committee, from its operating budget, up to a maximum of 20%, and by the employer, up to a maximum of 80%.
In the absence of any trade union delegates or a CSE: a collective performance agreement may be negotiated and concluded using other methods (by all employees, by employees mandated by a trade union organisation, etc.).
Duration and content of the agreement
Regardless of how the collective performance agreement is negotiated, it is up to the negotiating parties to determine the duration of the agreement. In the absence of details in the agreement, this duration is set at 5 years.
Like any collective agreement, the collective performance agreement must include a preamble. The objectives of the agreement are specified in the preamble. These objectives must be linked to the purpose of the agreement (to meet the needs of the company's operations, preserve or develop employment).
Collective performance agreements are concluded in order to meet the needs linked to the operation of the company or with a view to preserving or developing employment. To this end, they may :
Employee refusal to apply the agreement
Refusal to apply the agreement will result in the employee's dismissal. An employee who is dismissed is entitled to the statutory redundancy payment or, if this is more favourable, to the payment provided for in the collective agreement. If the employer waives the notice period, the employee will also be entitled to compensation in lieu of notice. Finally, if the employee still has any untaken paid leave, the employer will have to pay an indemnity in lieu of paid leave. The employee may register with the public employment service (Pôle emploi) and be supported as a jobseeker following dismissal. They will receive unemployment insurance benefits in accordance with the terms of the unemployment insurance agreement.
Top-up of the personal training account
Employees made redundant because they refuse to accept a change to their employment contract resulting from the application of a collective performance agreement will have their personal training account (CPF) topped up by a minimum amount of €3,000. The collective performance agreement may provide for a higher amount.
Short-time working
Following Law n°2013-504 of June 2013 on job security, the partial unemployment scheme has been reformed (and renamed into partial activity). This reform is supposed to simplify the previous scheme that was considered too complex: different levels of compensation were cumulated throughout different reforms. This new scheme is also supposed to provide better compensation for workers and advantageous support for companies. As soon as the COVID-19 crisis hit, the public authorities learnt the lessons of the less effective French short-time working system during the financial crisis (compared with Germany, in particular), and quickly introduced additional simplifications. Therefore, a decree of 25 March 2020 as simplified the process to apply for short-time working.
The DARES (direction of research, studies and statistics of the Ministry of Labour) publishes every three months data about the number of hours and expenses spent on partial activity, as well as the number of employees involved.
In the 2nd quarter of 2023, 73,000 employees would be in partial activity on average each month, after 106,000 in the 1st quarter of 2023, a decrease of 31% (data not adjusted for seasonal variations). In full-time equivalent (FTE) terms, an average of 13,000 employees would be placed in partial activity each month in the 2nd quarter of 2023, down 39% on the previous quarter (DARES 2023).
Research carried out on over 36,000 French companies (with at least 50 employees) using partial activity between 1996 and 2004 has shown that participation in the scheme does not reduce layoffs when companies face an economic downturn. This is especially so in cases of long duration of partial activity (Calavrezo et al, 2009). In addition, the uptake of partial activity tends to be an early indicator of dismissal that will follow. These results do not necessarily suggest that partial activity is an inefficient job security policy instrument. It may be the case that short-time working and layoffs play a complementary role to each other in addressing temporary economic difficulties.
Employees’ entitlements to unemployment benefits and future pension entitlements are not negatively affected in situations where they have been placed under the partial activity scheme. A good level of consensus between the social partners has facilitated the implementation of urgent measures in response to the global recession. Finally, the scheme provides affected employees with the right to training days provided by different employers.
In March 2015, according to an assessment of the Ministry of Labour launched two years after this instrument was implemented, only 9 companies had signed agreements to maintain employment. While it helps to avoid dismissals, it is deemed to be a cumbersome and constraining scheme. Social partners have launched an assessment and have suggested some legal changes in June 2015 to increase the number of such agreements. The changes have been introduced in the Labour Code by the law 2015-990 of 6 August2015 for growth, activity and equal economic equality (Loi Macron). Since, an agreement can be signed for 5 years instead of 2 year, a period considered too short to allow a company to restore its competitiveness, and some adaptations have been made to facilitate the dismissal process of employees refusing the content of such agreement. It has to be noted, however, as mentioned by Dares (DARES 2015, Des négociations collectives plus orientées vers l’emploi en 2013, Dares Analyses n°94, December 2015) that even if the number of agreements to maintain employment is low, social partners have signed company-level agreements since 2013 to agree on an employment safeguard plan. In such agreements, which can be signed by one or several unions representing at least 30% of the workforce (instead of 50% to conclude a valid agreement to maintain employment), provisions affecting working time (increase of working time) or/and wages (increase of working time with no wage increase, or freeze of wages etc., can be introduced. In 2013, about a hundred of such agreements were signed according to Dares (2015).
Eurofound (2015), France: Working time flexibility, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/working-time-flexibility/france
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