State aid for short-time work: focus on the latest adjustments

Since the very beginning of the Covid-19 crisis, French Government implemented a new short-time work system in order to foster employment retention and avoid mass redundancy.

The French short-time work system allows the employer, when it faces exceptional circumstances such as a pandemic, leading to decreasing its activity under 35 hours a week or even a temporary closure of business, to ask for a specific indemnification from public authorities to cover the costs of unworked hours.

During the lockdown, the costs of compensation paid to employees were supported by the State and the Unemployment Fund.

Since May 11th, i.e. the end of the French lockdown, the economy slowly resumes in most sectors of activity.

Consequently, French Government announced on May 25th that starting from June 1st, 2020, the rules regarding the compensation of short-time work system would change as follows:

• The indemnity paid to the employee who is on short-time work remains unchanged. The employee receives an indemnity corresponding to 70% of his gross remuneration  and at least the net statutory wage;
• But the aid provided by public authorities to the employer is of 85% of the global amount paid to the employee, within the unchanged limit of 4.5 times the minimum statutory wage. This means that since June 1st, 2020, the employer will get a reimbursement amounting to 60% of the employee’s gross remuneration (instead of 70% previously). Therefore, as from June 1st, 2020, the remaining cost for an employer putting employees on short-time work will be increased.

However, French Government announced that sectors of activity which are still impacted by restrictive measures due to current pandemic (such as tourism, sporting and cultural events), will continue to benefit from a full compensation as before.

This measure will be implemented by decree following the adoption of the bill on various provisions related to the health crisis, which is currently discussed before Parliament.

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