Increase of the Legal Termination Indemnity
The new labor law change things slowly but steadily. One these changes is the increase of the termination indemnity.
Previously
In the previous labor law, the termination indemnity was calculated for terminated employees of at least 1 year of seniority.
The indemnity was worth 1/5 of the average monthly salary.
For employees with at least 10 years of seniority, the indemnity was increased of 2/15 of the average monthly salary per year of seniority over 10 years.
The average monthly salary was the best of the average salary over 12 months or over 3 months.
The termination indemnity is not to be paid in case of a termination for grave misconduct.
Example
An employee of 25 years of seniority was paid an indemnity of:
[25*(1/5)] + [15*(2/15)] = 7 times the average monthly salary.
With the new law
For all termination signed after the 26th of September 2017 the termination indemnity is calculated for terminated employees of at least 8 months of seniority.
The indemnity is worth 1/4 of the average monthly salary for the first 10 years of seniority. And 1/3 of the average monthly salary for the rest of the seniority.
The average monthly salary is the best of the average salary over 12 months or ,if the employee has less than 12 months of seniority, the average monthly salary over all the months previous to the termination, or over 3 months.
The termination indemnity is not to be paid in case of a termination for grave misconduct.
Example
An employee of 25 years of seniority was paid an indemnity of:
[10*(1/4)] + [15*(1/3)] = 7,5 times the average monthly salary.
French Payroll advises
There are 2 things to keep in mind:
- The collective bargaining agreement termination indemnity can exceed even the new legal. Have a look at your CBA before calculating your termination indemnity.
- Other indemnities such as retirement indemnities and mutual agreement indemnities are linked to the legal termination indemnity. Therefore, their calculation method evolves the same way.
French Payroll Expert
Source: https://www.service-public.fr/particuliers/vosdroits/F987
Employee registration – REMINDER
As you know, I have recently been sworn in as an assessor to the TASS (social security tribunal).
During the last session, I had to judge a very troubling case.
The case
An employee quite a company on a Friday without notice.
During the weekend the employer seek a new employee for an urgent job on Monday.
On Monday at 10 AM the employer finds a suitable employee. The employee start working immediately. At 10:17 AM the employer request from the accountant that the declaration of employment is done.
On the same date at 10:30 AM the labor inspection comes to the work site. They request the receipt for the employment declaration of each employee.
At 11:30 AM the labor inspectors leave the work site. They then send a notice to the police for undeclared employment.
At 12:00 AM the accountant does the declaration of employment.
A few months later the employer is in court facing jail time and a fine.
The law
For each new employee, the employer is to do with the 8 days prior to the employment a declaration to the social security.
This declaration is called the Déclaration Préalable A l’Embauche (DPAE). It can be done via the internet on this web site: https://www.due.urssaf.fr
The penalties for non-compliance
If, the employer does not comply with the law the penalties are:
- Up to 225 000€ of fine
- Up to 3 years of jail time
The outcome
As the employer requested the DPAE to be done by the accountant before the labor inspection’s arrival, the employer was declared innocent by the penal court.
The employer paid no fine and was not sentence to any jail time.
French Payroll Expert advice
We strongly recommend that you keep your payroll provider informed as soon as possible of any new employment. Do not wait for the first work day.
Do not hesitate to do the registration yourself on the URSSAF web site. It takes only a few minutes and google translate can help you understand the needed information.
French Payroll Expert
The lunch voucher in the French payroll
As you know the social contribution on a French payroll are non-negligible.
Most of the benefits provided to the employees are taxable.
However, some are not.
The lunch vouchers are one of those benefits.
What is a lunch voucher?
A lunch voucher is a ticket with which the employee can pay for his food in most restaurants and food stores.
Then what is the difference with direct cash?
The difference is that the employer pays part of the face value of the voucher.
What are the condition for the exemption of social contributions?
As the employer pays part of the value of the voucher, this is a benefit provided to the employees.
This benefit it exempted from social contribution if the employer complies with 3 conditions:
- The employer part must not exceed the indexed limit on the income tax scale. In 2017 that limit is of 5.38€
- The employer part must be between 50% and 60% of the voucher value
How many lunch voucher can I give to my employees?
An employer can only give one voucher per employee per lunch break within the daily working schedule.
This means that you can only give one lunch voucher per day.
This also indirectly means that if the lunch of a specific lunch break is already paid, you cannot provide a lunch voucher.
For example:
You provide 22 lunch voucher to an employee for his 22 days of work during the month.
At the end of the month, the employee provides you with and expense for inviting a client to lunch.
In this case, the lunch is paid twice, by the expense and by the voucher. In case of an URSSAF audit, the URSSAF will consider the expense as the normal lunch payment and the lunch voucher as a benefit fully subject to contributions.
Best practice
The best way to make sure you provide your employees with the correct number of lunch voucher is to provide them with one month delay.
For example, the number of lunch voucher given to an employee in the beginning of April will be the number of days worked in March.
You also must make sure that the employee signed a receipt each time he receives his vouchers from the company. To make things simpler dematerialised vouchers now exists. It the best way to insure the receipt of the voucher as well as their safe keeping.
Source
French Payroll Expert
Thomas BIDOU has been sworn in as a new assessor at the social security tribunal
In late January our CEO Thomas BIDOU was sworn in as a new assessor at the social security tribunal.
What is the social security tribunal?
When an employer or an employee has a problem with the social security the first step is to seek an amicable recourse.
If the recourse is not satisfactory for the employer (or the employee) the next step is to go to court. This court is the social Security tribunal called TASS (Tribunal des Affaires de la Sécurité Sociale).
What does an assessor do?
The court of the social security tribunal is composed of one professional judge, one assessor from an employee union and one assessor from an employer union.
The decisions of the tribunal are taken by the majority of the three (judge + assessor).
An assessor therefore renders justice in the name of the French people. The decisions of the assessor are based on the law (social security code).
Source:
La CNDI (employers union) : http://www.la-cndi.fr/tass/
French Payroll Expert
The Absences
During his life in his company, the employee can be absent from work.
The French law strictly regulate these absences. You will find in this post a short list of some possible absences and their regulations.
Paid vacation
Each employee is allowed 25 opened day of vacation per years for a full year of work.
When an employee joins a company he doesn’t have any right to vacation days. He needs to acquire them.
Each employee acquires 2,08 opened days of vacation for a month of work. He can only use these vacation days once they are acquired.
Legally the acquisition period is from June to May. This means that an employee should not be allowed to use his acquired vacation before June of the next year.
Example:
An employee joins a company on November 2015. He acquires 2,08 days of vacation per month from November 2015 to May 2016. However, he can only use them starting June 2016.
At the end of May 2016, he would have acquired 14,56 (2,08 x 7) days. At the end of the period the acquire days are always rounded to the higher digit. Therefore, starting June 2016 he will be able to use 15 days of vacation.
At the end of May 2017, he would have acquired 25 days to be used starting June 2017.
Collective Bargaining Agreement
A collective bargaining agreement can give additional vacation days to an employee based on his seniority.
RTT
The RTT are compensation days for unpaid overtime. They are also called rest days.
When the legal working time became 35 hours per week, the employer had the possibility to keep the previous legal working time (39 hours per week) without paying overtime. In compensation, they had to give their employee extra rest days. These days are the RTT.
The RTT are acquire monthly and they must be used before the end of the civil year.
The number of acquired RTT will change based on the type of employment contract (based on the hour or based on the day worked) and the working time.
Example:
The calculation for the number of RTT of a “cadre” (usually translated as executive) with a working time of 218 days per year is the following:
Number of days in a year – number of vacation days – number of weekend days – number of bank holidays during the opened days – number of worked days = number of RTT days
In 2017 it is:
366 – 25 – 104 – 9 – 218 = 9
Therefore, the employee acquires 0,75 RTT days per month.
Bank Holidays
The bank holidays are normal working days for which the employee is not required to work.
In France (except Alsace-Moselle region) the bank holidays are the following:
New year: 1st of January
Easter Monday: The 1st Monday after Easter
Labour day: 1st of May
Ascension Thursday: 40 days after Easter
The 8th of May: world war 2 victory
Pentecost Monday: 50 days after Easter
National Holiday: 14th of July
Assumption day: 15th of August
All Saints day: 1st of November
The 11th of November: End of world war 1
25th of December: Christmas
Only the 1st of May is a mandatory rest day. The rest of the bank holidays can be worked should the employee.
Collective Bargaining Agreement
The law does not state that a worked bank holiday should be over paid. However, it is very common to have such statement in the collective bargaining agreement.
Sick leave and accident
During the life of an employee sickness or accidents may happen.
The absences to these causes are allowed as long as the employee provides a certificate from his doctor.
There is no limit to the number of sick or accident leave allowed to an employee.
During this absence, the employee is paid by the social security. The indemnity paid is called IJSS “Indemnité journalière de securité sociale”.
However, if the employee has at least 1 year of seniority, and if the social security pays the indemnity, the employer as the obligation to pay the employee 90% of his salary for 30 days and then 2/3 of the salary for 30 more days. Each duration is increase by 10 days every 5 year of seniority.
This indemnity only applies after 7 days in case of a sick leave. In case of an accident this indemnity applies from the 1st day of leave.
The IJSS are deduced from the employer indemnity so that the employee doesn’t get paid twice. To simplify the calculation, the employer can ask that the IJSS be paid to the company.
Collective Bargaining Agreement
The collective bargaining agreement can increase the duration and the rate of the employer’s indemnity.
Maternity leave
When a female employee is pregnant she is allowed a maternity leave. The duration of this leave will depend on the number of children to be born and the number of children the employee already has.
| Family situation | Number of week | ||
| Before giving birth | After giving birth | Total | |
| Mother with less than 3 children | 6 | 10 | 16 |
| Mother with 3 children | 8 | 18 | 26 |
| Twice | 12 | 22 | 34 |
| Triplets or more | 24 | 22 | 46 |
| Sickness of the mother | + 2 | + 4 | |
During the maternity leave the employee is paid by the social security.
Collective Bargaining Agreement
Due to the collective bargaining agreement, the employer may have to pay an indemnity to the employee during her maternity leave.
Paternity leave
When an employee becomes a father, he is allowed paternity leaves.
There 2 type of leaves.
The birth leave is a 3-day special leave granted by the employer. This leave is paid 100% by the employer.
The paternity leave is a leave of 11 days granted by the social security. This leave is paid by the social security.
Collective Bargaining Agreement
The collective bargaining agreement can increase the duration of the birth leave. Also due to the CBA the employer may have to pay and indemnity to the employee during the paternity leave.
Parental leave
When an employee becomes a mother or a father he is allowed a parental leave if he has at least 1 year of seniority.
The leave can start after the maternity leave and can last up to the 3rd birthday of the child.
The parental leave is paid by the social security family allowance.
Leave for family events
The French law authorize the employees to have specific days of for specific events.
The events and days allowed are the following:
| Event | Number of days | Paid |
| Wedding of the employee | 4 days | Yes |
| PACS (civil union) of the employee | 4 days | Yes |
| Birth of child (or adoption) | 3 days | Yes |
| Death of a child | 2 days | Yes |
| Death of a spouse (wedding or PACS) | 2 days | Yes |
| Wedding of a child | 1 day | Yes |
| Death of a mother/father/step-mother/step-father | 1 day | Yes |
| Sickness of child of less than 16 years old | 3 days per year | No |
| Sickness of child of less than 1 year old | 5 days per year | No |
| Sickness of child of less than 16 years old if the parent has at least 3 children of less than 16 years old | 5 days per year | No |
| If a parent needs to take full care of the child with grave sickness of handicap | 310 days over 3 years | No |
Collective Bargaining Agreement
Your CBA can add other events or increase the number of paid days. The most common example (and frequently requested by the employee) is the moving day.
When an employee changes his home address he usually thinks he is untitled to 1 day of leave. This is not true unless your company’s CBA says so.
This listing of the absences is not exhaustive and very simplified. Do not hesitate to contact us or your payroll provider for more détails.
Sources:
Vacations: https://www.service-public.fr/particuliers/vosdroits/F2258
Sick leave: https://www.service-public.fr/particuliers/vosdroits/F2022
Family events: https://www.service-public.fr/particuliers/vosdroits/F2278
French Payroll Expert
Life and Health insurance – 3/3 – How to set it up
On the 1st of January 2016 it became mandatory for every company under French social law to offer life and health insurance (called “prévoyance” and “mutuelle” in French) to its employees.
What does this means?
What will be the cost for the company and for the employees? And for what benefits?
How does the company setup these contracts?
The French labour law can appear very complex to a foreigner. Our job is to simplify it to the core issue you must deal with.
Therefore, we will see, as simply as possible, what are your legal requirements, how much will it cost you and how to best set it up.
The law
Cost and benefits
How to set it up
To setup a life and health insurance contract, you need to contact an insurance company or an insurance broker.
Do not hesitate to request 2 to 3 quotes.
Once you have chosen the contract(s) you wish to provide to your employees you will need to return the sign contract to the insurance company along with a registration form. Depending on the contract and the insurance company other documents may be requested.
Then you will have to have all of your employees fill in and sign an individual registration form that you will have to send to the insurance company. This formality can sometime be done online.
You will have to draft a unilateral declaration (called “Déclaration unilatéral de l’employeur” in French) and have it sign by the company and all the employees. This document is a summary of the cost and benefits of the insurance contracts. Unfortunately this document must be in written in French.
The employee will not receive confirmation of his registration to the life insurance. However, he will receive a health insurance card confirming his registration to the health insurance.
The contributions of both contracts will be added to the payroll. The contributions will have to be paid quarterly to the insurance company. Your payroll provide will provide the insurance company with a yearend declaration.
The insurance rate are usually fix for a year. And they usually increase on January of every year. You will receive a notification of the new rate from the insurance company. Make sure it is passed along to you payroll provider for implementation on the payroll.
French Payroll Expert advice
Recently retirement fund started to provide life and health insurance contract. Since your company must be registered to a retirement fund, we recommend that you contact your retirement fund for a quote. If the quote agrees with you it may be a non-negligible benefit to limit the number of contacts by having the same company managing your retirement and you insurance.
If you do not know who to contact to have a quote, do not hesitate to contact us. We will provide you with brokers and insurance company we recommend and who can provide costs in English.
You cannot escape it. You must register to a life and health insurance for your employees. To make it simple do not forget to:
- Be in compliance with the law and your collective bargaining agreement.
- Evaluate the cost and the benefits with forgetting the HR benefits.
- Contact us or your payroll provider. It is our job to assist you so that you can focus on your business.
French Payroll Expert
Life and Health insurance – 2/3 – Cost & benefits
On the 1st of January 2016 it became mandatory for every company under French social law to offer life and health insurance (called “prévoyance” and “mutuelle” in French) to its employees.
What does this means?
What will be the cost for the company and for the employees? And for what benefits?
How does the company setup these contracts?
The French labour law can appear very complex to a foreigner. Our job is to simplify it to the core issue you must deal with.
Therefore, we will see, as simply as possible, what are your legal requirements, how much will it cost you and how to best set it up.
The law
Cost and benefits
Now that you know what contracts you need what will it cost you? And for what benefits?
The French labour law may be complicated but in the matter of insurance contract some things are universally simple.
The more you pay the more you get.
Life insurance
For the life insurance, the minimum cost is of 1.5% of the slice A of the officer’s salary (from 0 to 3218 € in 2016 check our web site for more detail). This contribution is paid 100% by the employer.
With this cost, the benefit is only for the employee. It is a lump sum paid to his (or her) heirs’ should he die. And a lump sum or an annuity should the employee be incapacitated.
As we indicated previously, most of the collective bargaining agreement exceed the law. They usually indicate a higher rate of contributions but with higher benefits as well.
Why would you choose a more expensive life insurance?
Except for the obvious HR reason; to provide a benefit to your employee and avoid losing the employee, you company can benefit from a life insurance contract.
When and employee is on sick leave the French labour law state that company must keep paying the employee.
With the correct life insurance contract, the insurance company can reimburse you the salary of your employee when he is on sick leave. The level of reimbursement will change based on the cost of the contract.
Also, please note that except for the minimum legal cost paid 100% by the company, the rest of the cost can be split between the employer and the employee.
Health insurance
The minimum cost of the life insurance will depend on the insurance company you choose. Whatever the case it will a monthly lump per employee. The lowest rate we could find on the internet is of less than 10€ per month.
The cost of the health insurance contribution can be split between the employer and the employee.
The benefits of the health insurance are only for the employee. The benefit is that when the employee has health expenses (doctors, hospitals, drugs …) if the social security doesn’t fully reimburse the employee, the health insurance will reimburse part of what is missing from the social security.
The level of reimbursement depend on the cost of the insurance.
French Payroll Expert advice
When you choose a life insurance you must take into account the HR benefit from it but also the financial benefit. Do you have a lot of sick leave in your company? What is the cost of the sick leave compare to the cost of the insurance? But also do not forget the HR benefits. Do not hesitate to ask you payroll provider what is the usual rate in your line of work.
As the health insurance gives no direct benefit to the company, choosing your health insurance is only an HR benefit Vs financial cost matter. If your employees already have a private health insurance you may want to ask them what the benefits are and align your insurance contract with it.
Bank Holidays in the French Payroll
In France there are 11 bank holidays
- The 1st of January (New year)
- The Easter Monday (the 28th of March in 2016)
- The 1st of May (Labor lay)
- The 8th of May (2nd world war victory)
- The Ascension (the 5th of May in 2016)
- The With Monday (the 16th of May in 2016)
- The 14th off July (National day)
- The 15th of August (Assumption day)
- The 1st of November (All saints day)
- The 11th of November (End of the 1st world war)
- The 25th of December (Christmas)
In Alsace-Moselle, the 26 of December is also a bank holiday, and some collective bargaining agreement can add other days to this list.
Rest on a bank holiday
By law resting on a bank holiday is not mandatory (except for workers under 18 years old).
However, it is very common by usage or collective bargaining agreement that the bank holidays be nonworking days.
FPExpert advice
In over 15 years of experience, never have I seen a rested bank holiday not be paid because the employee had less the 3 months of seniority. Even though it is legal it is never done.
Payment of a worked bank holiday
Contrary to popular believe, the hours worked on a bank holiday are not paid double.
By law a worked bank holiday is paid as a normal day.
However, a lot of collective bargaining agreement state otherwise. In this case the worked bank holiday is paid in compliance with the agreement.
Read the rest of this article in our database accessible on our site for registered members
DatabaseFPExpert
You can monitor your employees’ internet communication
A Romanian employee has been dismissed because he used his professional messenger service to communicate with his family.
On the 12th of January, the ECHR (European Court of Human Right) validated the monitoring of the employee’s use of his professional messenger service. This judgment validated the dismissal of the employee.
The ECHR estimated that the employer had the right to monitor the use of the company’s computer. This monitoring is limited within the general framework of his right to verify the fulfilment by employees of their duties and compliance with the company’s regulations. In this case the company’s regulation banned the use of professional computer for personal purposes.
ECHR allow the employer to monitor an employee’s use of his professional messenger service.
This judgment is aligned with the French law. The law authorises the employer to open computer files indicated as personal in the employee’s professional computer. This authorisation is only applicable if the employee is present.
FPExpert‘s conclusion:
If an employer wishes to monitor the employees use of their professional computer, he must make sure that:
- The company’s regulation prohibits the use of professional computers for personal purposes. A written company rule or policy is advised.
- The monitoring of the computer is limited to verifying the fulfilment of the employee’s duties and compliance to the company’s rules.
Source
Public services: https://www.service-public.fr/particuliers/actualites/A10337
FPExpert