COVID-19: Update on New Social Measures in France

Temporary Unemployment Measures, so-called “partial activity”

Under French law, when a company faces temporary economic difficulties, it may use temporary unemployment measures. In the context of the current COVID-19 crisis, the French Government promotes the use of such measures in lieu of massive lay-offs, and has published on March 26, 2020 a decree providing for more favorable partial activity measures which are summarized below (see also government presentation: https://travail-emploi.gouv.fr/IMG/pdf/covid19-dispositif-exceptionnel-activite-partielle.pdf ).

1.  Can a company use partial activity measures?

A company can use partial activity when it has to reduce, or temporarily suspend, its activity for one of the following reasons:

• economic difficulties;
• difficulties in the supply of raw materials or energy;
• disaster or bad weather of an exceptional nature;
• transformation, restructuring or modernization of the company;
• any other circumstances of an exceptional nature.

 The COVID-19 crisis is considered by the French government as an exceptional circumstance. However, not all companies can use it. The employer must demonstrate that it is facing difficulties as a result of the COVID-19 crisis. In this respect, the government has specified that the following companies can request partial activity measures:

• the company is subject to a government order providing for the closure of its business;
• the company is facing a drop in activity/supply difficulties;
• it is impossible for the company to put in place the preventive measures necessary to protect the health of employees (work-from-home, “barrier gesture”, etc.) for all of its employees.

2.  What process should be followed?

Consult with the Social and Economic Committee (‘SEC’)

In principle, the employer must obtain the opinion of the SEC before implementing partial activity. In the context of the Covid-19 crisis, the employer can implement partial activity measures without the prior SEC consultation. In such a case, the employer must mention to the French administration a planned date for consulting the SEC. The employer will then have two months to send the SEC’s opinion.

Apply for an authorization from the Labor authority (‘DIRECCTE’)

Partial activity is normally possible only after a prior authorization from the DIRECCTE via a dedicated online platform (https://activitepartielle.emploi.gouv.fr/aparts/). By derogation during the COVID-19 crisis, the employer can implement partial activity measures first and apply for an authorization within 30 days. The authorization will have a retroactive effect.

Various information must be provided concerning: the identity of the company, the reason for the request (exceptional circumstances + coronavirus), the detailed circumstances and the economic situation giving rise to the request, the foreseeable period of partial activity, which can extend until June 30, 2020 from the first request, the number of employees concerned, and the number of planned non-working hours.

Given the crisis, the DIRECCTE has 48 hours to respond to the partial activity’s request by email. Failure to do so, it is deemed to have been accepted.

3.  How to implement it?

All employees under an employment contract can benefit from partial activity (permanent or fixed-term contracts, part-time employees, apprentices, etc.). The new decree no longer excludes from partial activity employees having a working time defined in days or hours over the year who were previously excluded.

Partial activity can take the form of either reduced working hours below 35 hours per week, or  temporary closure of all or part of the company.

It is not possible to apply partial activity measures only to certain employees of the same department. However, it is possible to reduce working hours of all employees in the same department or to place them alternatively in partial activity in shifts. According to the government, it is even possible to differentiate employees by function and not by team or department.

4.  How much is paid to the employee and who pays?

The employer has to pay its employees an indemnity equal to 70% of their gross salary (i.e. approximately 84% of the net salary), which cannot be lower than €8.03 per hour (except for apprentices, professional training contracts, temporary workers). The employer may decide to pay more, or a collective bargaining agreement may provide for a higher percentage.

The partial activity allowance paid by the employer is not subject to social security contributions but is subject to employees’ CSG/CRDS tax at a specific rate.

Partial activity allowances are subject to income tax.

5.  How much is the employer reimbursed by the State?

Once the employer has paid its employees, it can apply for the payment, by French authorities, of a specific allowance. In the context of the COVID-19 crisis this allowance has been raised to 70% of the gross remuneration of the employee concerned with a minimum of €8.03 per hour. However, the salary taken into account is capped at 4.5 times the minimum salary in France (i.e. €6,927.39 gross per month).

Therefore, the cost for the employer will only be for the portion of remuneration exceeding 4.5 times the minimum salary.

The partial activity allowance is paid within a limit of 1,000 hours per employee and per calendar year.

Partial activity is normally not supposed to last more than 6 months but the decree extends this period to 12 months.

6.  What is the status of the employee during partial activity?

During partial activity, the employment contract is suspended. However the term of fixed-term contracts is not extended.

An employee cannot refuse partial activity measures even though this results in a reduced salary. A refusal may be considered as a misconduct and lead to dismissal. By derogation, prior consent is required for employees who benefit from legal protection (such as union members or SEC members). 

Derogation to paid leave and rest days rules

Paid leave and additional rest days, which have already been approved, should be taken unless the employer agrees to a postponement.

By derogation to ordinary rules, and subject to an in-house or industry-wide collective bargaining agreement, an employer can put its employees on paid leave, or change paid leave dates within the limit of 6 already accrued days of leave. A one full-day notice must be given. 

By derogation to ordinary rules, and if this is justified by the interest of the company for economic reasons in relation to the COVID-19 crisis, an employer can unilaterally impose the taking of, or change of, the dates of days of rest acquired by its employees. A one full-day notice must be given. Similarly, the employer can impose the taking of days vested by employees in their “time saving account”. An overall limit of 10 days applies.

These derogations apply up and until December 31, 2020.

Derogation to working time rules

For companies in sectors of activity particularly necessary for the security of the Nation and the continuity of economic and social life, determined by decree, by derogation to ordinary rules the following applies:

• Maximum daily working time can be of 12 hours (specific rules apply to night workers);
• The daily minimum rest can be reduced to 9 consecutive hours, subject to the granting of a compensatory rest;
• The maximum weekly working time can be of 60 hours, or 48 hours over a period of 12 weeks (or 44 hours for night workers);
• Work on Sunday is allowed with the granting of one day of rest per week in shifts.

The SEC and labor authority (DIRECCTE) must be informed. These derogations apply up, and until, December 31, 2020.

Postponement of payment for profit-sharing schemes

By derogation to ordinary rules, the payment and vesting of proceeds from legal profit-sharing schemes (Participation) and optional profit-sharing schemes (Intéressement) usually granted in 2020 may be postponed up and until December 31, 2020.

Sickness allowance

By derogation to ordinary rules, all employees on sickness leave benefit from a sickness allowance paid by the employer, in addition to the allowance paid by the social security system, without a condition of seniority.