20 November 2020
Client Alert | France | Employment Law
In order to face the economic, financial and social consequences linked to the Covid-19 outbreak, the Law no. 2020-290 of 23 March 2020 authorizes the French government to make adjustments to labor law rules, by way of ordinances, notably relative to partial activity.
In this context, Decree no. 2020-325 of 25 March 2020 implemented an exceptional partial activity mechanism applicable retroactively as of 1 March 2020.
Ordinance no. 2020-346 of 27 March 2020 – published in the Official Journal of 28 March 2020 and which entered into force immediately thereafter – completes this mechanism.
Since then, different texts were published, further specifying or amending the partial activity mechanism.
Draft decrees sent to the social partners for consultation early September 2020, then mid-October 2020, were initially supposed to lower the partial activity compensation rate as of 1 November 2020.
However, the accelerated spread of the epidemic and the deterioration of the health situation led the public authorities to reconsider their plan of action.
Further to Decree no. 2020-1257 of 14 October 2020 whereby the state of public health emergency was declared, a curfew was imposed, later followed by a new lockdown with effect from 30 October 2020, the conditions of which were specified in Decree no. 2020-1310 of 29 October 2020.
Three decrees on partial activity and long-term partial activity were published in the Official Journal of 31 October 2020:
The specific mechanism relative to long-term partial activity is explained in a separate article available here .
The French government has decided to prolong the State-funded compensation system as is up to 31 December 2020. Most of the provisions initially scheduled to enter into force on 1 November 2020 have been pushed back to 1 January 2021, except for certain measures.
Moreover, the Law of 14 November 2020, which enacted the extension of the public health emergency, authorizes the French government to amend the overriding legislative provisions on partial activity, by way of ordinances, up to 16 February 2021.
Where an employer experiences a reduction in its activity due to circumstances of an exceptional nature (such as the Covid-19 outbreak), it can opt for partial activity, in application of Decree no. 2020-325 of 25 March 2020, in the following conditions:
For preliminary authorization requests sent to the administrative authority with effect from 1 January 2021, the maximum duration of authorized partial activity will be 3 months, renewable within a limit of 6 months, whether consecutive or not, over a reference period of 12 consecutive months (Labor Code, Article R.5122-9, amended with effect from 1 January 2021; Decree no. 2020-1316 of 30 October 2020).
For employers having been authorized to implement partial activity before 1 January 2021, this period will not be taken into account for the calculation of the maximum durations (Decree no. 2020-1316 of 30 October 2020).
Given that the measure affects all the employees of a company, establishment, department or workshop to which a protected employee may be assigned, such partial activity also applies to the protected employee (knowing that previously this was subject to authorization).
Article 8 of Ordinance no. 2020-460 of 22 April 2020 provides for the possibility of individualizing partial activity and thus, derogating from the collective nature of the mechanism, by:
This individualization must be necessary to ensure the activity's continuity or resumption and requires:
The collective agreement or the document submitted to the social and economic council or company council must determine:
Under Decree no. 2020-794 of 26 June 2020, the company or establishment agreement, or the staff representatives' favorable opinion, must be sent to the Direccte:
The employer must obtain the opinion of the protected employees concerned by this measure insofar as this is an individual measure, not a collective one.
The agreements entered into and the unilateral decisions of the employer made with a view to individualizing the partial activity mechanism will terminate on 31 December 2020 at the latest.
As a temporary and exceptional measure, Ordinance no. 2020 346 of 27 March 2020 broadens the scope of application of the partial activity mechanism, notably making the following entities eligible:
Decree no. 2020-325 of 25 March 2020 provides that employees working under a fixed annual working time in days or hours scheme are now eligible to benefit from the partial activity mechanism, including when such partial activity involves a reduction of working time.
In such a case, the number of hours eligible for the State-funded compensation must be calculated on the basis of legal working time corresponding to the days of reduced working hours applied in the establishment in due proportion to this reduction.
The number of hours taken into account for the calculation of the partial activity indemnity is determined by converting a number of days or half-days into hours, in accordance with the following terms and conditions provided by the Decree No. 2020-435 of 16 April 2020:
Decree no. 2020-435 of 16 April 2020 also specifies that when employees working under a fixed annual working time scheme take a day of paid vacation or rest, or when a public holiday not worked –corresponding to one weekday– occurs during partial activity, these days are converted into hours according to the same terms and conditions. The hours resulting from this conversion are then deducted from the number of hours not worked within the scope of the partial activity mechanism.
Ordinance no. 2020-346 of 27 March 2020 indicates that the partial activity mechanism applies to employees not subject to the legal or CBA provisions on working time (sales representatives (Voyageurs, Représentants, Placiers - VRP) and senior executives).
Senior executives can only be placed in a situation of partial activity in case of the temporary closure of all or part of their establishment.
Decree no. 2020-435 of 16 April 2020 specifies the terms and conditions for calculating the partial activity indemnity for sales representatives:
For senior executives, the terms and conditions of calculation are defined by Decree no. 2020-522 of 5 May 2020, as follows:
Article 4 of Decree no. 2020-794 of 26 June 2020 provides that when the preliminary authorization request for partial activity concerns, for the same reasons and for the same period, at least 50 establishments located in several different departments, the employer can send a single request for all these establishments to the prefect of the department where any one of these establishments is located. This provision was a derogation from paragraph 1 of Article R.5122-2 of the French Labor Code.
Initially set to last until the end of 2020, Decree no. 2020-1316 of 30 October 2020 has made this derogation permanent, inserting it directly into Article R.5122-2 of the French Labor Code, which now has two new paragraphs on the subject.
As a result of its integration into the French Labor Code, Article 4 of Decree no. 2020-794 of 26 June 2020 was repealed (Decree no. 2020-1316, 30 October 2020, Art. 3).
With effect from Ordinance no. 2020-770 of 24 June 2020, the State-funded partial activity compensation paid to the employer is adjusted based on the sector of activity. The rate of this compensation is set at 60% in general cases and at 70% for protected sectors (Decree no. 2020-810 of 29 June 2020).
For all non-working hours within the scope of partial activity, the hourly rate of the indemnity paid by the employer to the employee equals 70% of the gross hourly salary, serving as the basis for the paid vacation indemnity in accordance with the rule on maintained salary up to 31 December 2020 (Decree no. 2020-810 of 29 June 2020; Decree no. 2020-1319 of 30 October 2020).
Furthermore, Decree no. 2020-1319 of 30 October 2020 specifies that when paid vacation entitlement is owed in the form of an indemnity in lieu thereof, this indemnity must be paid in addition to the partial activity indemnity (Labor Code, Article R.5122-11).
Up to 31 December 2020, the rate of State-funded partial activity compensation reimbursed to the employer is maintained at 60% of the reference gross hourly remuneration, within the limit of 4.5 times minimum wage in general cases (minimum hourly indemnity of 8.03 euros and maximum hourly indemnity of 27.41 euros).
By way of derogation, this rate is increased to 70% of the reference gross hourly remuneration, within the limit of 4.5 times minimum wage (minimum hourly indemnity of 8.03 euros and maximum hourly indemnity of 31.97 euros), for companies belonging to protected sectors.
As regards Mayotte, the minimum rate of State-funded partial activity compensation paid to the employer is set at 7.05 euros up to 31 December 2020 (Decree no. 2020-1318 of 30 October 2020).
Partial activity indemnity system applicable with effect from 1 January 2021
With effect from 1 January 2021, the hourly rate of the indemnity paid by the employer to the employee will equal 60% (instead of 70%) of the reference gross hourly remuneration, within the limit of 4.5 times minimum wage (Labor Code, Article R.5122-18 amended with effect from 1 January 2021; Decree no. 2020-1316 of 30 October 2020).
The Decree specifies that the net indemnity paid by the employer cannot exceed the employee's usual net hourly remuneration, knowing that the net indemnity and remuneration are the amounts after deduction of the mandatory social security contributions and charges withheld by the employer.
The hourly rate of State-funded partial activity compensation reimbursed to companies will equal 36% of the reference gross hourly remuneration, within the limit of 4.5 times minimum wage (Labor Code, Article D.5122-13 amended with effect from 1 January 2021; Decree no. 2020-1319 of 30 October 2020).
This hourly rate cannot be inferior to 7.23 euros, and, as regards employers located in Mayotte, cannot be inferior to 6.35 euros (Labor Code, Article D.5522-87 amended with effect from 1 January 2021; Decree no. 2020-1318 of 30 October 2020).
With effect from 1 January 20121, the special rate applicable to companies belonging to protected sectors will cease, as the Decree of 29 June 2020 now provides that the provisions of its Article 1 apply to partial activity compensation requests sent up to 31 December 2020 (Decree no. 2020-810 of 29 June 2020, amended; Decree no. 2020-1319 of 30 October 2020).
Further details regarding the basis for the partial activity indemnity and compensation
Pursuant to Articles R.5122-12 and R.5122-18 of the French Labor Code, the basis for calculating the partial activity indemnity and compensation corresponds to the basis used for calculating the paid vacation indemnity in accordance with the rule on maintained salary (i.e., the salary of the month preceding the application of partial activity).
Decree no. 2020-435 of 16 April 2020 specifies that:
Decree no. 2020-1316 of 30 October 2020 inserts a new paragraph in Article R.5122-18 of the French Labor Code, thus making this reference salary calculation rule permanent as of 1 January 2021;
Up to 31 December 2020, the special rate applies to:
Decree no. 2020-1319 of 30 October 2020 added new sectors to Annexes 1 and 2:
REINFORCED INFORMATION OF SOCIAL AND ECONOMIC COUNCIL
In companies with 50 employees and over, the social and economic council must be consulted in the event of a request for partial activity (Labor Code, Article R.5122-2).
With effect from 1 November 2020, in companies with at least 50 employees, the social and economic council must also be informed, on the due date, of each authorization of the conditions in which partial activity was implemented (Labor Code, Article R.5122-2; Decree no. 2020-1316 of 30 October 2020, Art. 1, 1°).
SOCIAL SECURITY REGIME
The partial activity indemnity is considered replacement income. As such, it is exempt from the social security contributions and charges payable on earned income, but remains subject to the payment of the CSG (Contribution Sociale Généralisée) contribution on replacement income at a rate of 6.2% and to the CRDS (Contribution pour le Remboursement de la Dette Sociale) contribution at a rate of 0.5%. These contributions are paid on the partial activity indemnity, after application of the tax deduction linked to professional expenses (1.75%).
This social security regime also applies where the employer does not request the compensation reimbursing the partial activity indemnity.
In the case where the employer pays a supplementary portion in addition to 70% of the gross remuneration, this supplement is subject to the same regime in terms of social security contributions limited as follows:
Hence, in the case where the legal indemnity is superior to 31.97 euros, the supplementary indemnity shall be entirely subject to the social security contributions and charges payable on earned income.
In the case where the legal indemnity is inferior to 31.97 euros, only the portion of the supplementary indemnity that results in exceeding this limit is subject to the social security contributions and charges payable on earned income.
* Protected sectors (tourism, hotels, restaurants and catering, sports, culture, air transport, events) • Related sectors, if 80% loss in turnover • Companies welcoming public, closed by administrative decision.
** Employees remunerated on the basis of a percentage of minimum wage.
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Gide's Employment practice group is available to answer any questions you may have in this respect. You may also get in touch with your usual contact at the firm.
This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee..
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