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Covid-19: new adjustments to labour law

The law containing various measures relating to the health crisis

12/06/2020

The law containing various measures relating to the health crisis, other urgent measures and the United Kingdom's withdrawal from the European Union, was passed by Parliament on 10 June, 2020. The new legislation, which empowers the government to pass ordinances to implement a number of measures falling within the scope of the law, also includes numerous labour law provisions to tackle the consequences of the health crisis. We review the main measures.

Maintenance of pay during short-time working

To make up for the potential loss of pay suffered by employees placed on short-time working, the law provides for the possibility of implementing two types of mechanisms via collective or branch agreements, with retroactive effect from 12 March 2020 and until 31 December 2020:

  • the first allows employers to require employees placed on short-time working, whose pay is fully maintained pursuant to contractual provisions, to allocate contractual rest days or part of their annual leave in excess of 24 working days to a solidarity fund to be monetised to compensate for all or part of any reduction in pay suffered by other employees placed on short-time working;
  • the second allows employees placed on short-time working to ask for the monetisation of contractual rest days or part of their annual leave in excess of 24 working days, in order to compensate for all or part of the reduction in pay they have suffered.

Each employee may monetise a maximum total of five contractual rest days and annual leave days acquired and not taken.

Acquisition of pension rights

Previously, since short-time working allowances were not subject to social security contributions, they were not taken into account for pension purposes, either for the calculation of eligibility rights based on quarters worked, or for the amount of the retirement pension. This situation risked penalising part-time, intermittent or low-income employees in sectors affected by short-time working for the longest periods, given the requirement to have made contributions on pay for 150 hours at the minimum wage to validate one quarter and 600 hours at the minimum wage to validate four quarters (French Social Security Code, Art. R.351-9).

To avoid this, it is stipulated that periods between 1 March and 31 December 2020 during which the insured party receives the short-time working allowance will be taken into account for pension entitlement, under conditions set by Council of State decree. These provisions apply to periods during which the hourly short-time working allowance is received from 1 March 2020, for retirement pensions effective from publication of the law.

Maintenance of personal protection cover

The majority of supplementary social security protection schemes in force in companies (such as personal protection, health costs, pension, retirement bonus) stipulate that contributions are based on salary subject to social security contributions. However, the short-time working allowance is not a salary and is therefore not counted as a basis for social security contributions. In principle, contributions should therefore not be deducted from that allowance. The drawback is that, in principle, benefits are suspended in the absence of contributions, which is detrimental to employees, especially in the context of a pandemic.

For the period from 12 March to 31 December 2020, the law creates the obligation for employers, employees and insurers to make contributions on at least the short-time working allowance provided for by law (i.e. up to 70% of gross pay) in respect of personal protection schemes, health costs, unemployment risk, incapacity and retirement bonus, notwithstanding the stipulations of agreements, conventions, unilateral decisions taken by the head of the company, or clauses in insurance policies. Failure to comply with this obligation deprives the cover of its collective and binding nature, exposing the company to an URSSAF adjustment charge.

On the other hand, the determination of a calculation base for contributions and benefits higher than the legal allowance must be subject to a collective agreement or a unilateral decision by the head of the company and an addendum to the group insurance policy taken out by the employer.

Furthermore, the text stipulates that until 15 July 2020:

  • at employers’ request, insurance bodies must delay or defer payment deadlines for premiums and contributions designed to fund the cover referred to above, free of any costs or penalties;
  • regardless of the terms of the insurance policy taken out by the employer or its rules, insurance bodies may not suspend cover or terminate the policy for non-payment of contributions.

All supplementary social security protection is covered by this measure, with the exception of supplementary pension cover.

Establishment of an optional profit-sharing scheme in very small companies

In order to encourage the development of optional profit-sharing, employers in companies with fewer than 11 employees, without a union delegate or an elected employee representative on the social and economic committee (CSE – comité social et économique), may, by a unilateral decision, establish an optional profit-sharing scheme for a period of between one and three years, on condition that no optional profit-sharing agreement is applicable or has been concluded in the company for at least five years before the effective date of their decision. They shall inform employees of this by any means. The optional profit-sharing scheme established in this way constitutes an optional profit-sharing agreement within the meaning of Article L.3312-5 of the French Labour Code.

At the end of the validity period of the decision, the optional profit-sharing scheme may be renewed in the company in question under the provisions of ordinary law.

Adjustment of the provisions relating to fixed-term contracts and temporary contracts

In order to tackle the economic, financial and social consequences of the Covid-19 epidemic, the law stipulates with regard to fixed-term and temporary contracts that until 31 December 2020, a collective company agreement may:

  • set the maximum possible number of renewals, except for fixed-term contracts concluded with a view to promoting the recruitment of certain categories of unemployed people or fixed-term contracts by which the employer undertakes to provide the employee with additional training;
  • define the methods for calculating the waiting period between two contracts;
  • specify cases in which that period is not applicable;
  • authorise the use of temporary employees in cases not provided for by legal provisions.

These provisions in company agreements are applicable to employment contracts concluded until 31 December 2020. By way of exception to Article L.2253-1 of the French Labour Code, these provisions shall prevail over those contained in a branch agreement or inter-professional agreement.

These exceptions to collective agreements are extensive, particularly with regard to the exemption from the waiting period and cases of use of interim staff. In the Macron ordinances, the government had not dared to go as far from fear of constitutional censure.

Simplified rules for lending employees

Until 31 December 2020, “employee lending” agreements may relate to several employees and the addendum to the employment contract of the loaned employee may not specify the working hours but simply the weekly number of hours. The hours are then fixed by the user company with the employee's agreement.

The prior information and consultation of the lending company's and user company's CSEs regarding the various agreements signed may be replaced by a consultation carried out within a maximum period of one month from signature of the agreements.

Finally, even when the user company does not reimburse all salary, related social charges and professional expenses paid in relation to the loaned employee, or when the reimbursement is equal to zero, it is considered to be not for profit if:

  • the employee loan is justified by the interests of the user company in view of economic difficulties associated with the spread of Covid-19;
  • and the company operates in business sectors identified as particularly necessary for national security and for the continuity of economic and social life. 

Establishment of a reduced employment scheme for job retention

A specific short-time working scheme is established for companies facing a long-term reduction in activity that does not compromise their future viability: “reduced employment for job retention” (ARME – activité réduite pour le maintien en emploi). This scheme is established by a company, establishment or group agreement or by an extended branch agreement that defines its duration, the activities and employees concerned, the reductions in working hours eligible for an allowance and the commitments specifically made in return, particularly for job retention. The content of the agreement is defined by decree.

When the system is established pursuant to a branch agreement, the company draws up a document in accordance with its provisions and defines the specific commitments made in terms of employment.

The agreement or document is sent to the authorities for validation or approval. The authorities check:

  • in the case of a collective agreement, the validity and compliance of the procedure for negotiating the agreement and the inclusion of all mandatory provisions;
  • in the case of a document drawn up by the employer, compliance with any CSE information and consultation procedure, inclusion of all mandatory provisions, compliance with the provisions of the branch agreement and, finally, the presence of specific employment commitments.

Following receipt of the agreement or document, the validation decision is notified to the employer within 15 days for an agreement or 21 days for a document prepared by the employer. That decision is also notified to the CSE, as well as to representative trade union organisations in the case of a collective agreement. A lack of response from the authorities shall be deemed to imply validation or approval.

The percentage of the allowance and the amount of the benefit paid under this scheme may be increased under the conditions and in the cases determined by decree, particularly according to the characteristics of the company's activity.

This system applies to collective agreements and documents submitted to the administrative authorities for validation or approval no later than 30 June 2022, indicating that the government sees it as a long-term measure for emerging from the economic crisis.

This scheme does not replace the short-time working scheme. The law provides that the scheme may be adapted by ordinance, from 1 June 2020 and for a period not exceeding six months from the end of the health emergency. One important objective of any adaptation will be to limit the expiry and termination of employment contracts, to mitigate the effects of the decline in activity, and to encourage and support the revival of activity:

  • by adapting the rules, particularly through adjustments to government involvement, to companies’ characteristics based on the economic impact they have suffered as a result of the health crisis, to their business sector or to the categories of employees concerned;
  • by allowing employees to demonstrate their contractual relationships by any written means.

Finally, the law contains various provisions relating, in particular, to extending job-seekers’ benefits that ended from 1 March 2020, fixing the election dates for measurement of trade union representivity in very small companies, as well as the extension of some mandates (industrial tribunal advisers, members of regional inter-professional joint committees, employee representatives in collegial administrative, supervisory or management bodies, and employee-shareholder representatives on said bodies).


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