Founded in Paris in 1920, Gide is a leading international law firm with 12 offices spread throughout the world.
Gide is physically present in six regions of the world, with 11 offices, enabling it to act on cases globally.
15 December 2020
The Law no. 2020-734 of 17 June 2020 implemented a mechanism of "long-term partial activity" (LTPA), which enables companies experiencing a sustained reduction in activity to temporarily reduce the working hours of their employees in return for commitments, notably in terms of maintaining employment.
Publication updated on 15 December 2020
The Decree no. 2020-926 of 28 July 2020 relative to the specific mechanism of partial activity in case of a sustained reduction in activity provided further specifications to the terms and conditions of application thereof.
Amendments were subsequently made through Decrees no. 2020-1316 and no. 2020-1318 of 30 October 2020, as well as by decree no. 2020-1579 of 14 December 2020.
Moreover, the Law of 14 November 2020 authorizing the extension of the state of public health emergency allows the Government to amend, by way of ordinances, up to 16 February 2021, the legislative provisions relative to LTPA.
The measures taken relative to partial activity (excluding the specific long-term partial activity mechanism) are described in an article available here.
This mechanism has been put in place for companies "faced with a persistent reduction in activity, which is not liable to jeopardize their sustainability" (Law no. 2020-734 of 17 June 2020).
It can be used by all companies established in France, without any prerequisite of size or business sector.
All employees are eligible, whatever the nature of their employment contract (including employees with apprenticeship or professional training contracts). LTPA is a general and collective measure imposed on employees.
The long-term partial activity mechanism has been available for companies since 31 July 2020, and can be used up to 30 June 2022 at the latest.
The LTPA mechanism can be implemented:
Certain industries already have such agreements, for instance:
When LTPA is implemented by way of a unilateral decision, the social and economic council (comité social et économique) must first be consulted before implementation of the document (law no. 2020-734 of 17 June 2020). The employer can draw up a unilateral decision in application of an extended industry-wide agreement, without being required to hold negotiations on LTPA.
The application for LTPA must be sent online via this portal.
The Direccte (Direction Régionale des Entreprises, de la Concurrence, de la Consommation, du Travail et de l'Emploi - Regional Directorate for Companies, Fair Trading, Consumer Affairs, Labor and Employment) has 15 days with effect from the date of receipt of the collective agreement, or 21 days if it is a unilateral document, to render its decision, which must be substantiated both in case of refusal or validation/homologation.
Within this same time frame, the Direccte must notify its decision to the social and economic council, if any, and to the representative trade unions signing the agreement, if any.
If the Direccte fails to answer within that time frame, it will be considered to have validated or homologated the collective agreement.
The allowance is granted within the limit of 24 months, whether consecutive or not, over a reference period of 36 consecutive months.
This must be calculated in calendar months. Thus, a month during which a company resorts to LTPA counts as a full month.
During this period, recruitments are permitted, except where the purpose thereof is to perform the assignments of those employees placed in LTPA.
Decree no. 2020-1579 of 14 December 2020 neutralises the lockdown period for the assessment of the duration of the scheme's benefits. The neutralised period runs from 1 November 2020 until a date to be set by decree, and until 31 March 2021 at the latest.
This neutralisation applies to collective agreements and unilateral LTPA documents validated or approved as of 16 December 2020.
Collective agreements and unilateral documents validated or approved before the entry into force of the decree of 14 December 2020 may be subject to an amendment or modification, themselves subject to validation and approval, in order to exclude the lockdown period for the assessment of the duration of the system.
The reduction of working hours cannot exceed 40% of legal working time (35 hours a week).
The 40% limit can be exceeded in certain "exceptional cases" where a company finds itself in a particular situation. This is decided by the administrative authority in the conditions set forth by collective agreement, and cannot exceed 50% (Decree no. 2020-926 of 28 July 2020).
When assessing whether or not it is opportune to exceed the 40% limit, the following can be taken into account: the company's specific difficulties, which can notably be linked to the foreseeable extent and duration of the deterioration of its business prospects, or the impact of exogenous elements (substantial fluctuation of the cost of raw materials; court-supervised liquidation of a major client, leading to a sharp drop in the backlog of orders; etc.), as per the "Q&A" of the Ministry of Labor.
This 40 or 50% reduction is assessed per employee concerned over the period of application of the LTPA mechanism set forth by collective agreement or unilateral decision. Its application can lead to a temporary suspension of activity.
In application of decree of 14 December 2020, the period running from 1 November 2020 until a date set by decree (no later than 31 March 2021) is neutralised in the calculation of the volume of the reduction in working hours authorised in the event of an LTPA. Thus, employers will not have to integrate the activity reductions applied during the neutralised period when they check the volume of activity reduction for each employee during the period of recourse to the LTPA.
The hourly rate of compensation paid by the State to the employer, for each employee placed in partial activity, is equal to 60% of the gross hourly remuneration, calculated as set forth in Article R.5122-12 of the French Labor Code, and limited to 4.5 times minimum wage. This hourly rate cannot be inferior to 7.23 euros (Decree no. 2020-926 of 28 July 2020) in France and to 6.35 euros for employers located in Mayotte, with effect from November 1, 2020 (Decree no. 2020-1318 of 30 October 2020).
Since 1 November 2020, the LTPA compensation has been aligned with the more favorable common-law compensation. The compensation paid by the State to the employer is therefore at least equal to that of common-law partial activity, where this mechanism is more favorable (Decree no. 2020-926 of 28 July 2020; Decree no. 2020-1316 of 30 October 2020).
This situation will therefore concern employers in the protected sectors in November and December 2020. Current and future recourse to LTPA will thus be reimbursed at a rate of 70% (and not 60%) of the reference hourly wage, up to 4.5 times minimum wage.
Furthermore, it is also provided that the compensation rates can be modified by decree (Decree no. 2020-1316 of 30 October 2020).
An employee subject to this specific partial activity mechanism receives an hourly indemnity, paid by his/her employer and corresponding to 70% of his/her gross remuneration, which serves as the funding base for the paid vacation indemnity, within the limit of 4.5 times minimum wage, whatever the sector of activity, save more favorable provisions specific to the company.
In the event of the redundancy of an employee placed in LTPA or whose employment the employer had undertaken to maintain, the employer is required to reimburse certain sums received to the French Service and Payment Agency (Decree no. 2020-926 of 28 July 2020), in accordance with the scope of commitments in terms of employment:
The employer can however be fully or partly exempt therefrom in two cases:
With effect from 1 November 2020, the employer must inform the staff representative bodies, and where applicable, the trade unions having signed the LTPA collective agreement, of the following:
This new provision was added by Decree no. 2020-1316 of 30 October 2020.
♦ ♦ ♦
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..
► Please find here all contributions by our lawyers to help you understand the measures taken following the extension of the state of public health emergency, and their impact.
