Covid-19 | Emergency measures in terms of partial activity

Version updated on 13 May 2020

In order to face the economic, financial and social consequences linked to the spread of the Covid-19 epidemic, Law no. 2020-290 of 23 March 2020 authorizes the French government to make adjustments to labour law rules, by way of ordinances, notably relative to partial activity.

In this context, Decree no. 2020-325 of 25 March 2020 (Décret Activité Partielle – Decree on partial activity) has implemented an exceptional partial activity mechanism applicable retroactively as of 1 March 2020.

Ordinance no. 2020-346 of 27 March 2020 (Ordonnance Activité Partielle – Ordinance on partial activity) –published in the Official Journal of 28 March 2020 and which entered into force immediately thereafter – completes this mechanism.

The Decree no. 2020-435 of 16 April 2020 issued pursuant to the Ordinance on partial activity specifies the methods for calculating the partial activity indemnity and compensation – in particular for certain specific categories of employees – to be paid after the placement in a situation of partial activity due to the Covid-19 epidemic from 12 March 2020 to 31 December 2020.

The scheme has also been supplemented by certain provisions contained in Ordinance no. 2020-460 of 22 April 2020.

NEW RULES RELATIVE TO THE IMPLEMENTATION OF PARTIAL ACTIVITY

The Decree on partial activity provides that where an employer is forced to reduce its activity due to circumstances of an exceptional nature (such as the Covid-19 outbreak), it can opt for partial activity, subject to the following conditions:

• The employer must file its partial activity request online here no later than 30 days after having placed its employees in a situation of partial activity.
• The administration has 2 days following receipt of the partial activity authorization request to notify the employer of its decision to either refuse or accept said request – it being specified that if the administration fails to answer within that time frame, it shall be deemed to have implicitly accepted the request.
• The partial activity authorization can now be granted for a maximum duration of 12 months, renewable under certain conditions (instead of 6 months previously).
• The employer must send the administration the opinion rendered by the Works Council (Comité Social et Économique – CSE) at the latest within 2 months following the date it filed its partial activity request.

As for the Ordinance on partial activity, it specifies that where the partial activity measure affects all the employees of a company, establishment (établissement), department (service) or workshop (atelier) to which is assigned a protected employee, such partial activity also applies to the protected employee (knowing that previously this was subject to authorization).

INDIVIDUALISATION OF PARTIAL ACTIVITY

Article 8 of Ordinance no. 2020-460 of 22 April 2020 provides for the ability to individualise partial activity and thus, derogate from the collective nature of the mechanism, through:

• placing in partial activity only part of the employees of an establishment, department or workshop, including if they belong to the same professional group (même catégorie professionnelle);
• applying a non-uniform division of working hours and non-working hours (heures chômées) between these employees.

This individualisation must be necessary to ensure the activity’s continuity or resumption and requires:

• either a company-wide agreement (accord d’entreprise) or an establishment-wide agreement (accord d’établissement), where none, an industry-wide agreement or convention (convention ou accord de branche);
• or a favourable opinion of the Works Council (CSE or Conseil d’entreprise).  

The collective agreement (accord collectif) or document submitted to the Works Council (CSE or Conseil d’entreprise) shall determine:

• the skills identified as essential to maintain or resume the activity of the company, establishment, department or workshop;
• the objective criteria, related to the positions, functions occupied or professional qualifications and skills, justifying the designation of the employees who continue working, of those placed in partial activity or of those subject to a different distribution of working hours and non-working hours;
• the procedures and frequency, which may not be less than three months, according to which the criteria are reviewed, so as to take into account the volume and operating circumstances of the company, in order to, where appropriate, modify the agreement or document;
• the specific arrangements for achieving a work-life balance for the employees affected;
• the procedures put in place to inform the company’s employees of the implementation of the agreement throughout its duration.

EXTENSION OF THE PARTIAL ACTIVITY MECHANISM

As a temporary and exceptional measure, the Ordinance on partial activity broadens the scope of application of the partial activity mechanism, notably making the following entities eligible:

• public companies self-covered against unemployment risks;

In this respect, Article 6 of Ordinance no. 2020-460 of 22 April 2020 amends the wording of Article 2 of the Ordinance on partial activity in order to clearly provide that the employees subject to private law are eligible for partial activity:

• of companies listed in the national directory of companies as majority-owned by the State;
• of semi-public companies (sociétés d’économie mixte) in which regional authorities have a majority shareholding;
• of chambers of trade, chambers of agriculture as well as the establishments and departments of these chambers;
• of the chambers of commerce and industry;
• of the companies in the electricity and gas industries;
• of the Post Office;
• of public entities of an industrial and commercial nature (établissements publics à caractère industriel et commercial)
• of public interest groups (groupements d’intérêt public);
• of local public companies (sociétés publiques locales);

provided that such employers are primarily carrying industrial and commercial activities, the proceeds of which constitute the major part of their revenue.  

• foreign companies with no establishment in France and with at least one employee working in France (provided such companies come under the French social security and unemployment insurance systems);
• home-based workers employed by private employers and nurses (assistantes maternelles) (it being specified that a specific mechanism applies to them);
• employees of businesses with financial autonomy operating an industrial and commercial public service of ski lifts or ski slopes.

Ordinance no. 2020-428 of 15 April 2020 on various social provisions aimed at dealing with the Covid-19 epidemic sets out the terms and conditions for financing the partial activity indemnities paid to nurses and employees of private employers by providing that the reimbursement of the sums paid by the employer is covered by the State and the body in charge of managing the unemployment insurance, following the example of the terms and conditions applicable to other employees.

PARTIAL ACTIVITY ELIGIBILITY EXTENDED TO EMPLOYEES WORKING UNDER A FIXED-ANNUAL WORKING TIME SCHEME, SALES REPRESENTATIVES (VRP) AND SENIOR EXECUTIVES

For employees working under a fixed-annual working time scheme

The Decree on partial activity 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 reimbursement must be calculated on the basis of the legal  working week corresponding to the days of reduced working time 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:

• a half-day not worked corresponds to 3.5 hours not worked;
• a day not worked corresponds to 7 hours not worked;
• a week not worked corresponds to 35 hours not worked.

Decree no. 2020-435 of 16 April 2020 also specifies that when employees working under a fixed-annual working time scheme take a paid or rest day or when a public holiday not worked – corresponding to one working day – occurs during partial activity, these days are converted into hours according to the same methods. The hours resulting from this conversion are then deducted from the number of hours not worked during partial activity.

For employees not subject to legal provisions on working week (sales representatives and senior executives)

The Ordinance on partial activity provides that employees not subject to the legal or CBA provisions on working week (sales representatives (Voyageurs, Représentants, Placiers – VRP) and senior executives) can be placed in a situation of partial activity.

Ordinance no. 2020-428 of 15 April 2020 indicates however that senior executives can only be placed in a situation of partial activity in case of temporary closure of their establishment or part of establishment.

Decree no. 2020-435 of 16 April 2020 specifies the methods for calculating the partial activity indemnity for sales representatives:

• the monthly salary reference corresponds to the average gross remuneration received during the last 12 calendar months preceding the first day the employee was placed in a situation of partial activity;
• the hourly reference amount is determined by deducting the amount of the reference monthly salary to the legal working time;
• the loss of remuneration corresponds to the difference between the reference monthly salary and the remuneration actually received during the same period;
• the number of payable hours not worked corresponds to the difference in remuneration received by deducting the hourly reference amount, within the limit of the legal working week.

For senior executives,the calculation methods are defined by Decree No. 2020-522 of 5 May 2020, as follows:

• the monthly reference salary corresponds to the average gross remuneration received during the last 12 calendar months, or of all worked calendar months if the employee has worked less than 12 months,preceding the first day the company or establishment was placed in a situation of partial activity;
• the hourly rate is determined by indexing one-thirtieth of the monthly reference salary to 7 hours;
• the number of unworked hours eligible for compensation, within the legal working time, is obtained by making the following conversion: half a day equals 3.5 hours, a day equals 7 hours, a week equals 35 hours.

MODIFICATION OF THE PARTIAL ACTIVITY INDEMNITY AND COMPENSATION

Modification of the method for calculating the State-funded partial activity compensation

The state-funded partial activity compensation paid to the employer is no longer a fixed-rate sum, but is instead proportional to the remuneration of the employees in partial activity. It now covers 70% of the employee’s pre-partial activity gross remuneration taken into account within the limit of 4.5 times minimum wage, with an hourly minimum of 8.03 euros, whatever the company’s headcount.

The decree specifies that this minimum does not apply to employees working under an apprenticeship or professional training contract, whose remuneration corresponds to a percentage of minimum wage.

As a consequence, (i) below the ceiling of 4.5 times minimum wage, the employer will obtain a full refund from the State, whereas (ii) over and above this ceiling and/or in case of an increase of the 70% rate, the employer will have to bear the financial burden of the differential.

The French Service and Payment Agency (Agence de service et de paiement – ASP) should proceed to the payment of the compensation to the employer within 12 days on average.

The annual quota of payable hours per employee placed in a situation of partial activity is increased, from 1 000 hours according to civil law to 1 607 hours until 31 December 2020 (By-law of 31 March 2020, JORF no. 0081 of 3 April 2020).

Further details regarding the basis of the partial activity indemnity and compensation

Under Articles R. 5122-12 and R. 5122-18 of the French labour code, the basis for calculating the partial activity indemnity and compensation corresponds to the basis used for calculating the indemnity in lieu of paid holidays according to the rule of salary maintenance (i.e. the salary of the month preceding the placement in a situation of partial activity).

Decree no. 2020-435 of 16 April 2020 specifies that:

• for the employees having a variable or paid remuneration on a non-monthly basis, the reference salary takes into account the average variable remunerations paid over the last 12 calendar months, or over all the months worked if the employee has worked less than 12 calendar months, preceding the first day he was placed in a situation of partial activity;
• the calculation basis shall exclude sums representing professional expenses and items of remuneration which, although having the character of a salary, are not the counterpart of actual work or are not affected by the reduction or absence of activity and are allocated for the year;
• where the remuneration includes a fraction corresponding to the payment of the indemnity in lieu of paid holiday, this fraction shall be deducted in order to determine the basis for calculating the partial activity indemnity and compensation, without prejudice of payment by the employer of the indemnity in lieu of notice.

Adjustments of indemnifiable hours for certain categories of employees

With regard to employees who have entered into individual agreements on fixed hours including overtime and for employees whose working hours exceed the statutory working week pursuant to a collective agreement or convention, Article 7 of Ordinance no. 2020-460 of 22 April 2020 provides, by way of an exception, that:

• the working week provided for in the contract for individual agreements on fixed hours or collective working hours (durée collective du travail), shall be taken into account, instead of the statutory working week, to determine the reduction in working hours giving rise to partial activity;
• the overtime provided for by the individual agreement on fixed hours or by the collective agreement or convention shall be taken into account to determine the number of indemnifiable unworked hours.

Article 4 of the aforementioned Ordinance also provides for the recognition of unworked hours in excess of the legal working week of 35 hours when compensating nurses and employees of private employers whose working hours are in excess of the legal working week.

Modification of the indemnification owed to certain categories of employees

In particular, the Ordinance on partial activity adapts the indemnification of:

• part-time employees, in order to allow them to benefit from minimum wage, which up to now only applied to full-time employees;
• apprentices and employees working under a professional training contract, in order to allow them to benefit from a partial activity indemnity paid by their employer, of an amount equal to the percentage of minimum wage applicable to them;
• employees in training, for whom the indemnification conditions have been aligned with those of common law for employees in a situation of partial activity.

Ordinance no. 2020-428 of 15 April 2020 specifies the methods for calculating the partial activity hourly indemnity for the apprentices and beneficiaries of a professionalization contract when their remuneration is higher or equal to the legal minimum wage.

PAY SLIP AND SOCIAL SECURITY REGIME

In order to ensure that employees are properly informed regarding partial activity, the Decree provides that the employer has 12 months, with effect from 26 March 2020, to add a specific ‘partial activity’ heading to their pay slips, indicating:

• the number of indemnified hours;
• the rate applied for calculating the indemnities paid to the employees; and
• the sums paid with respect to the period in question.

The Ordinance on partial activity provides that the partial activity indemnities are exempt from social security contributions, but remain subject to the payment of the CSG (Contribution Sociale Généralisée) and CRDS (Contribution pour le Remboursement de la Dette Sociale) contributions, respectively at a reduced rate of 6.2% and 0.5%.

Article 5 of Ordinance no. 2020-460 of 22 April 2020 limits the exemptions from contributions and social security contributions in the event of payment of an additional indemnity by the employer, in addition to the legal partial activity indemnity, aimed at paying the employee more than 70% if his/her previous gross remuneration.

As of 1 May 2020, if the sum of the legal indemnity and the additional indemnity is greater than 3.15 times the French minimum wage, the additional indemnity will be subject to the contributions and social security contributions applicable to incomes for the portion exceeding 3.15 times the French 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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