The health crisis linked to Covid-19 is exposing firms to economic difficulties which may have serious ramifications. In this context, the government’s aim is to preserve jobs, whilst reducing costs incurred by firms.
For this purpose, the government is currently carrying out necessary amendments to the partial activity mechanism already in place (1), whilst asking employers to maintain their employees’ jobs and adapt working conditions in light of recent health restrictions (2).
Payment of social charges has been postponed in order to preserve firms’ cash flow (3). With regard to disputes, those subject to employment law and social protection law have been suspended (4). Employment protection plan (PSE) procedures and collective termination by mutual consent (RCC) procedures are also impacted (5).
Lastly, on 22 March 2020, the French parliament definitively adopted a bill allowing the government, through the passing of orders, to take a certain number of measures in order to amend employment law and laws related to social security. This law was published in the French Official Journal (Journal Officiel) on 24 March 2020 (hereinafter the “Emergency Law”). The first orders were published on 26 March 2020 in the French Official Journal (Journal Officiel) (6).
1. PARTIAL ACTIVITY MECHANISM (SHORT-TIME WORK)
The developments set out in this section reflect announcements made by the government and the President of the French Republic. Conditions relating to partial activity were announced by a new decree n°2020-325, published in the French Official Journal (Journal Officiel) of 26 March 2020 and came into force the same day.
In addition, a draft order was presented to the Council of Ministers (Conseil des ministres) on 27 March 2020. The final version of the order came into force on 28 March 2020. The measures it provides for have will apply for a period to be fixed by decree later but will end at the latest on 31 December 2020.
The cost to the State of such measures is estimated at 8 billion euros, over a period of 2 months.
This “widespread” implementation of partial activity must however be seen in perspective. The most recent feedback from the authorities indicates that firms where remote working is not impossible and where barrier gestures can be implemented are obliged to resume work, unless it can be clearly demonstrated that the firm is suffering from a significant drop in activity.
Firms are therefore obliged to provide solid reasons in order to be eligible for the application of the partial activity mechanism, the current health crisis alone is not sufficient grounds. Those reasons are, in particular: the majority of employees are infected or confined and therefore forced to remain at home, the majority of employees are absent due to the suspension of transport, an almost complete absence of clients causing a drop in activity, administrative closure, etc.
The aim is to ensure that the economic health of the country is not seriously damaged. This turnaround is also justified by measures taken with regard to paid holidays and days of rest.
The French Ministry of Employment has also summarised very succinctly and schematically the hypotheses in which recourse to the partial activity mechanism is possible through the diagram presented below.
1.1 Which employees will be eligible for partial activity?
Employees with either an indefinite term contract (CDI) or a fixed term contract (CDD), apprentices, people on a training contract (contrat de professionnalisation), employees subject to a flat-rate pay agreement covering days worked (even if there is not a total closure of the establishment in which they work) and temporary workers will be eligible for partial activity (under certain conditions). Employees still in their trial period will also be eligible.
The order published on 28 March 2020 contains the following provisions:
However, trainees, self-employed workers and autoentrepreneurs will not qualify for partial activity.
1.2 What form might the implementation of the partial activity mechanism take?
The temporary decline in business may take two different forms, for an initial period of 12 months:
̶ temporary closure of a company; or
̶ reduction / reorganisation of work time; in this case, employees may be selected individually and alternately for a reduction in their working hours, so as to establish a rotation system, by production unit, workshop or department.
1.3 What level of compensation can employees and firms expect?
The partial activity mechanism provides for (i) a temporary suspension of employment contracts of the employees concerned and (ii) payment, by the employer, to the employees concerned of compensation equal to 70% of their gross salary (ie approximately 84% of their net salary), except for employees on the minimum wage (SMIC), who would receive 100% of their pay.
This compensation is calculated on the basis of holiday pay, as provided for in paragraph II, article L.3141-24 of the French Employment Code (Code de travail), reduced to an hourly rate based on the firm’s number of legal working hours or, if lower, the collective duration of working hours or the duration stipulated in the employment contract.
To assist employers with the payment of this compensation despite a decline in business, a lump-sum allocation, co-financed by the State and the National Professional Union for Employment in Industry and Trade (UNEDIC), will be paid to them. The lump-sum allocation was initially fixed at € 7.74 per unemployed hour for firms with less than 250 employees and € 7.23 for firms with more than 250 employees.
According to the abovementioned decree of 26 March 2020, the lump-sum allocation paid to firms is:
- at least € 8.03 per unemployed hour, irrespective of the size of a firm’s workforce.
- equal to 70% of a gross hourly wage (approximately, 84% of a net hourly wage) as provided for at article R.5122-18 of the French Employment Code (Code du travail), limited to 4.5 times the minimum hourly wage (SMIC) (i.e. € 45.67 gross per hour for 2020 / € 6,927 gross per month).
Thanks to this mechanism, sums disbursed by firms in compensation due to employees are then fully reimbursed to those firms by the State in the form of an allowance. Consequently, the entire cost of partial activity borne by firms is covered by the State (up to a limit of 4.5 times the hourly minimum wage (SMIC)).
In addition, with regard to the particular cases of employees whose working hours are counted in days, domestic employees and childminders:
A decree is expected to define these terms. The following breakdown is customary: 3.5 hours per half-day and 7 hours per day. Details are awaited on this point.
Compensation paid to these two types of employees is subsequently reimbursed in full by the State in accordance with procedures defined by orders of the ministers responsible for social security, the budget and employment.
1.4 Will employees still be able to take advantage of training opportunities during the application of the partial activity mechanism?
According to the order of 28 March 2020, employees placed in partial activity may still take advantage of training opportunities.
In this case, terms of compensation for employees whose training plan has been approved by an employer after publication of the final order i.e. 28 March 2020 are aligned with those of employees who are not in training.
1.5 Will the State pay compensation directly to employees concerned by the partial activity mechanism?
Direct payment by the State of a part of the compensation due to employees seems limited to periods during which the employee is in training (with the exception of specific exemptions already known).
It seems that direct payment by the State of compensation due to employees placed in partial activity is not envisaged for the time being. In any event, this would imply a total rethink of the regulations applicable to the partial activity mechanism, since this would go from indirect financing by the State (an employer pays its employees then later receives an allowance from the State) to direct financing by the State (which would pay the employees concerned directly, so that an employer would not have to pay out anything at all).
This global reform of the framework applicable to the partial activity mechanism was proposed by the President of the French Republic during his televised speech on 12 March 2020. It would limit a firm’s disbursements and thus preserve its cash flow. However, for the moment, this has not been confirmed by the government.
In addition, due to the pressure on the departments of the French Ministry of Economy and Finance, direct payment by the State of compensation due to employees would seem physically impossible. Lastly, the most recent information received from the French Ministry of Economy and Finance seems to indicate that direct payment of compensation by the State is not envisaged.
1.6 What formalities need to be completed in order to take advantage of the partial activity mechanism?
Implementation of the partial activity mechanism does not require employees' consent but, in principle, an opinion must first be obtained from a firm’s Social and Economic Committee (CSE).
From now on, firms unable to consult their Social and Economic Committee (CSE) before submitting their request to apply the partial activity mechanism will be allowed to do so within two months of the date of such request. The opinion once obtained must then be transferred electronically to the authorities.
In order to take advantage of the partial activity mechanism, firms must submit their application via the website of the French Service and Payment Agency (Agence de service et de paiement (ASP)), which comes under the French Ministry of Employment. Implementation of these measures is ensured in conjunction with regional employment departments (DIRECCTEs). Applications must be filed via the following address: activitepartielle.emploi.gouv.fr/aparts/.
The government has shortened processing times for applications for partial activity. From now on, applications must be dealt with within 48 hours (as opposed to 15 days previously). If, at the end of this period, no communication has been received from the authorities, their acceptance is implied. This acceptance period, express or tacit, will however only apply until 31 December 2020.
In addition, to simplify matters, employers will be able to submit one single request for partial activity even if the request concerns several establishments. This facility is reflected in the Q&A published by the Ministry of Employment in its 29 March 2020 version. It is to be added to the website for applications made during April.
The French Service and Payment Agency (Agence de service et de paiement (ASP)) server, where employers can apply for partial activity, is still submerged with requests, which means that many firms are unable to access the site. Telephone support lines are also saturated. The French Service and Payment Agency’s (Agence de service et de paiement (ASP)) technical staff is carrying out necessary work in order for the site to function correctly. The website still has occasional technical problems.
So that firms are not penalised due to technical problems, the French Ministry of Employment has decided to allow a period of 30 days for firms to submit their applications in exceptional circumstances.
Once an application has been accepted, partial activity will be covered retroactively as from 1 March 2020.
For those establishments which the government has forced to close for health reasons, costs linked to partial activity will be picked up retroactively from the date the firm was ordered to close.
On 23 March 2020, the French Ministry of Employment stressed that applications for partial activity would be dealt with on a case-by-case basis and that authorisation to implement these measures would be subject to a detailed examination of the eligibility requirements for each applicant firm. Regional employment departments (DIRECCTEs) are circulating internal memos encouraging vigilance and requesting their agents to rigorously check each application received.
The Paris region labour department (DIRECCTE Ile-de-France) has indicated that "preventative shutdowns of activity will not allow for short-time working if the firm is not impacted by the Coronavirus or if health recommendations are respected". This means that partial activity will not be covered by the State if there is no justification for it.
1.7 When will these new regulations come into force?
The new regulations described above come into force immediately.
Due to technical reasons linked to the operation of its administration’s IT system, the French Service and Payment Agency (Agence de service et de paiement (ASP)) will pay compensation equal to the minimum wage (SMIC) hourly rate (€ 8.04) for each unemployed hour until 31 March.
As from 1 April, the French Service and Payment Agency’s (Agence de service et de paiement (ASP)) IT system will be updated, thus enabling the payment of benefits in accordance with the new regulations. Secondly, the French Service and Payment Agency (Agence de service et de paiement (ASP)) will regularise the situation for applications submitted between 15 March (the day following the date of the decree adopting various measures relating to the control of the spread of Covid-19) and 1 April.
1.8 Are social security contributions payable on partial activity compensation?
Partial activity compensation paid to employees is exempt from employees’ and employers’ social security contributions (except in particular cases, in Alsace-Moselle, for example).
However, partial activity compensation is subject to the Generalised Social Contribution (Contribution sociale généralisée (CSG)), at a rate of 6.2%, and the Contribution for the Reimbursement of the Social Debt (Contribution au remboursement de la dette sociale (CRDS)), at a rate of 0.50%. These rates may be reduced depending on employees’ remuneration. Both contributions are calculated on the basis of 98.25% of the compensation paid (after deduction of 1.75% for professional charges). These rates are not modified by the draft order dated 27 March 2020, which provides that these rates also apply to additional compensation paid by the employer pursuant to a collective agreement or unilateral decision.
The treatment / rate of the Contribution for the Reimbursement of the Social Debt (Contribution au remboursement de la dette sociale (CRDS)) is not targeted at this stage.
It is not stipulated as to whether these contributions will be reimbursed by the State or deducted from amounts paid to employees.
These contributions will be collected in part by the National Professional Union for Employment in Industry and Trade (UNEDIC) and in part by the State.
A future order could change these contributions. Pending its adoption, these contributions remain due under the conditions described above.
2. SECURING JOBS AND ADAPTING EMPLOYEES’ WORKING CONDITIONS
The French Ministry of Economy and Finance announced on 16 March 2020 that it intended to prohibit any dismissals during the health crisis. However, France’s Prime Minister, Edouard Philippe, appeared to set this measure aside during his televised speech of 17 March 2020. In addition, all amendments in that respect tabled during the parliamentary debate on the Emergency Law have been rejected.
The French Ministry of Economy and Finance also called for employers to modify annual leave (or days of rest (RTT)) timetables where possible and encourage employees to take their holidays. The measures taken by order are along these lines. However, it should be noted that these arrangements must be balanced in the light of annual/temporary closures (in particular, during the summer) which are already planned.
In addition, in order to guarantee employees’ health and safety, employers are asked to adapt working conditions to the current health crisis, and, in particular, implement the following:
̶ compulsory introduction of remote working for all jobs which allow it;
̶ observation of rules on distance for jobs which are not eligible for remote working (organisation of remote meetings, ban on grouping of employees in small spaces, cancellation or postponement of non-essential travel, shift work, etc.);
̶ re-arrangement of staff canteens in order to observe rules on distance;
̶ if remote working is not possible and child-minding is not available, parents of children under the age of 16, entitlement to paid sick leave, with no waiting period, and valid throughout the closure of child-care facilities. This sick leave may be shared between both parents. It is the employer’s responsibility to declare this using the following link: https://declare.ameli.fr/employeur/declaration.
According to France’s health insurance body (Assurance maladie), new procedures are currently being implemented in order to manage confined parents’ sick notes, in particular for firms with a large volume of sick notes to deal with.
When remote working is not possible and an employee is obliged to go to his or her place of work, given the restrictions on movement put in place following France’s President’s speech on 16 March 2020 and in force since midday 17 March 2020 (for at least 15 days), employees must carry a document provided by their employer justifying their movements.
Templates are published by the French Ministry of the Interior. The current template stipulates that if an employer has provided their employees with a document justifying their movements, employees are not required to carry a separate certificate justifying their movements. The document provided by the employer may be drawn up for a specified period and does not need to be re-issued on a daily basis.
In the specific case of employees carrying out an activity which is necessary for the continuity of the economic life of the Nation, medical appointments (other than routine ones) are in principle maintained. Teleconsultations are encouraged. It should also be noted that, by order dated 19 March 2020, the government has extended the validity of periodic occupational medical examinations to 30 months.
In the specific case of applications for authorisation to dismiss a protected employee, France’s Directorate-General for Employment (DGT), in an instruction dated 17 March 2020, precludes all physical meetings during the adversary proceedings. Proceedings in writing therefore are the norm, hearings may be carried out by videoconference or telephone.
In addition, the government has announced that measures requiring a waiting period of one day prior to sick leave applying have been suspended throughout the "health emergency", in both the private and public sectors. Consequently, both employees in the private and public sectors will be compensated in full as from the date of their sick note.
Lastly, the government has called for firms to pay a bonus of 1,000 euros to their employees who have to go to their place of work in order to encourage employees to maintain "a minimum economic service". This bonus must be paid in accordance with the conditions laid down by the Social Security Financing Act for 2020 (la Loi de Financement de la Sécurité sociale pour 2020) (conclusion of an incentive agreement, respect of upper limits, etc.). The orders dated 26 March 2020 contain no amendments on this point.
3. MEASURES POSTPONING PAYMENT OF SOCIAL CONTRIBUTIONS
Firms with a payment deadline for social contributions of 5 April may postpone payment of their contributions in whole or in part for a maximum period of 3 months without penalty, either by paying part of their contributions or a nil amount.
In any case, the Nominative Social Declaration (DSN) for the month of March must be delivered before 6 April, 12 noon at the latest.
It should also be noted that deadlines for the payment of supplementary pension contributions to the AGIRC-ARCCO scheme may be postponed. On this point, firms are invited to contact their supplementary pension fund.
4. POSTPONEMENT OF DISPUTES SUBJECT TO EMPLOYMENT LAW AND SOCIAL PROTECTION LAW
In an email sent on 16 March by the French Minister of Justice to the courts, a list of so-called "essential" disputes is drawn up, which are exceptions to the global shut-down of the courts. No reference is made to employment law or social protection law. Disputes subject to these laws are therefore suspended until further notice.
The order relating to this, adopted on 26 March 2020, provides that for proceedings before courts dealing with non-criminal matters (unless otherwise stipulated):
- as from 12 March 2020, missed deadlines are extended during the health emergency until the expiry of a period of one month from the date on which the state of health emergency ends;
- the industrial tribunal (Conseil de Prud'hommes) will operate with only two advisors, one a member of the employee college and the other a member of the employer college;
- the president of the court may decide, before a hearing opens, that public hearing of the proceedings will be restricted or that they will be held in chambers, that’s to say, privately;
- the president of the formation of the court may decide, by a measure which cannot be appealed, that a hearing will be held via audiovisual communication, and if that is not possible, by any other means of electronic communication, including by telephone;
- if the parties are assisted by a lawyer or if legal representation is compulsory, the president of the formation of the court may decide that the procedure will take place without a hearing. In the absence of any objection from the parties within 15 days, the procedure shall be conducted in writing only.
5. CONTINUATION OF EMPLOYMENT PROTECTION PLAN (PSE) AND COLLECTIVE TERMINATION BY MUTUAL CONSENT (RCC) PROCEDURES
Employment protection plan (PSE) procedures already in progress have been disrupted by the Covid-19 health crisis. Likewise, questions are being raised as to the introduction of new employment protection plan (PSE) procedures.
The following information has been communicated by the French Ministry of Employment:
(1) For cases where procedures have been completed or which have been passed on to the regional employment department (DIRECCTE) for validation/approval, clear validation/approval decisions should be made.
(2) For employment protection plan (PSE) cases at the information/consultation stage, several hypotheses are possible:
(a) The procedure continues as normal, via technological means, the staff representative bodies (IRPs) and representative trade union organisations (OSRs) both being able to fulfil their roles.
Attention: this presumes that a firm has an agreement in place which provides for the possibility of holding meetings electronically and that each employee representative is properly equipped. Otherwise, the provisions of the French Employment Code (Code de travail) only provides for the possibility of holding 3 meetings per year electronically (flexibility provisions regarding conditions for the organisation of Social and Economic Committee (CSE) meetings are included in the upcoming order). This also supposes that staff representative bodies (IRPs) and representative trade union organisations (OSRs) are equipped with the necessary material.
(b) The procedure continues but in a non-consensual manner (without the opinions of staff representative bodies (IRPs) and representative trade union organisations (OSRs)). The employer summons the authorities but staff representative bodies (IRPs) and the representative trade union organisations (OSRs) refuse to come, invoking exceptional circumstances and the ensuing material and health problems. In this case, there is a considerable risk that the procedure will be invalidated for not complying with due process for the following reasons: impossibility of holding meetings, difficulties in carrying out evaluations, inability of the Social and Economic Committee (CSE) to provide an opinion, etc.
(c) The procedure has begun and is still progressing, but the employer believes that they do not have the capacity to continue with it under the proper conditions. In this case, the French Ministry of Employment proposes:
(i) negotiating and signing electronically or by any other means an agreement on method in order to suspend the procedure;
(ii) if it is impossible to negotiate an agreement on method, collecting the opinions of the representative trade union organisations (OSRs) and the Social and Economic Committee (CSE) by email, in order to suspend the procedure, and if in agreement, suspend the procedure;
(iii) if it is impossible to collect opinions or suspension of the procedure is refused, as a last resort, it is possible for the employer to unilaterally suspend the procedure. This decision must be reported immediately by any means to the staff representative body (IRP) and the representative trade union organisations (OSRs). Evidence of this process must be uploaded to RupCo (the portal for communicating dematerialised information relating to dismissals for economic reasons and termination by mutual consent).
In any case, as soon as suspension of the procedure has been decided, the employer must inform the regional employment department (DIRECCTE) by letter (with a copy to the staff representative body (IRP) and the representative trade union organisation (OSR)) uploaded to RupCo, providing also as the case may be: the method agreement, opinions collected from the staff representative body (IRP) / representative trade union organisation (OSR), or stating that it was not possible to collect opinions.
(3) For cases that have already been validated, it is up to firms to implement the employment protection plan (PSE) adapting timeframes if they so wish, in particular the timeframe for the notification of dismissals in view of the crisis situation. This could be done by an amendment agreement to the employment protection plan (PSE) agreement or on the basis of information provided by any means to the Social and Economic Committee (CSE). No further decision as to validation or approval from the regional employment department (DIRECCTE) is necessary.
The firm may decide to keep to its original timeframe for the implementation of its employment protection plan (PSE), but would then be exposed to the risk of individual disputes, in particular over the serious search for internal redeployment.
(4) For employees already notified to the French Employment Centre (CSP Pôle Emploi) or on redeployment leave, a priori there is no impact, they may continue to work, without being suspended, regardless of the difficulty under current conditions of conducting serious redeployment searches, unless the firm decides otherwise for redeployment leave. Service providers of the French Employment Centre (CSP Pôle Emploi), ensure continuity of support by offering an adapted service (telephone contact, web…).
As for firms which were preparing to implement an employment protection plan (PSE), given the current health crisis and the uncertainties linked to its duration, it is strongly recommended that firms postpone their announcement, taking into account the risks involved concerning the regularity of information/consultation due to difficulties in fulfilling conditions for a social dialogue which respects the role of the authorities. The French Ministry of Employment indicates that it will be extremely vigilant as to matters that could "come out" in the coming weeks.
There are fewer difficulties where collective termination by mutual consent is concerned since firms are not subject to fixed deadlines and can easily take the initiative to suspend negotiations with the representative trade union organisations (OSRs) or delay starting them if not yet begun. It can be noted that no new file has been created on RupCo's dedicated portal since 4 March.
6. OTHER MEASURES PROVIDED FOR BY THE EMERGENCY LAW AND ORDERS
The Emergency Law has allowed the government to take the following principal measures by order. The orders issued in application of the Emergency Law contain the following main provisions:
Restrictions on its payment to employees working from home, seasonal, temporary or occasional workers are also lifted.
The terms and conditions for payment of this allowance will be established by decree;
Likewise, an employer may, by the same agreement, be authorised to split leave without the employee's consent, and temporarily suspend the right for spouses or partners bound by a civil solidarity pact (pacte civil de solidarité) and working in their firm to take holidays at the same time;
According to the French Minister of Employment’s entourage, payment for hours worked over the legal working time, that is from the 36th hour, will be as for conventional overtime.
The use of only one of these derogations, with the exception of the last one concerning weekly rest, entails the obligation for an employer to inform their Social and Economic Committee (CSE) as well as the competent regional employment department (DIRECCTE) "without delay". These measures will cease to have effect on 31 December 2020.
A decree is expected in order to determine the sectors concerned as well as the derogations allowed within these limits.
As a result, the duration of the terms of office of industrial tribunal advisers and employees sitting on regional inter-professional joint committees could be extended.
The government has recognised the temporary nature of the measures described above, but, unless stated above, no deadline for their application has been set. The Emergency Law stipulates that these measures are taken within the context of the state of health emergency, declared by decree published on 24 March 2020 in the French Official Journal (Journal Officiel), for a period of two months, which state may only be extended by an appropriate law.
1In the absence of a precise list to date, a priori companies in the food industry, agriculture, transport, logistics, energy and telecommunications according to the French Minister of Employment‘s entourage.