Negotiations. In September 2022, the French government invited social partners to engage in negotiations on value sharing, working off three proposed areas of focus as follows:

Focus no. 1. Generalize the benefit of value-sharing schemes for employees, notably in smaller companies;

Focus no. 2. Strengthen, simplify and see to a coordinated organization of the different value-sharing schemes;

Focus no. 3. Channel employee savings towards key common-interest priorities.

After eleven negotiation meetings, the social partners produced a draft national multi-industry agreement (accord national interprofessionnel – hereinafter “ANI”), signed by the MEDEF, CPME, U2P, CFE-CGC, CFDT, CFTC and FO organizations.

Extension. The content of this national multi-industry agreement is not as of yet applicable, given that it is subject to an extension by the Ministry of Labor. Prime Minister Elisabeth Borne has already undertaken to respect the consensus reached between the trade union organizations and the employer organizations, affirming that the French government will offer a “full and loyal transcription of this agreement into law“. The legislative transcription of this agreement should normally appear in the draft bill on “full employment” (plein emploi) expected for the summer of 2023.

Boost. It has become abundantly clear that value-sharing schemes benefit employees in different ways depending on the size of the company.

In these times of soaring inflation and struggling purchasing power, increasingly value-sharing mechanisms are appearing as promising assets that companies can develop as means to answer employee concerns.

But that’s not all. According to social partners, these schemes also promote employee “retention“, “motivation” and “incentive“, as well as an “alignment of interests within the company“. The objective is therefore to boost value sharing by making the different existing mechanisms more accessible and by identifying new levers to simplify mandatory (participation) and optional (intéressement) profit-sharing and employee shareholding schemes, while concomitantly enhancing the appeal thereof.

The ANI is structured around five priorities broken down in chapters:

1. continue the work started on remuneration and work promotion policies;
2. highlight value sharing within companies and industry sectors;
3. encourage the setting-up of value-sharing schemes in order to facilitate their generalized implementation;
4. facilitate the development of secure employee shareholding;
5. improve employee savings schemes.

Among the 36 articles thereof, only two comprise normative provisions directly applicable to companies (subject to the ANI’s extension), i.e. Articles 7 and 9, whereas the rest are incentive measures.

Normative provisions directly applicable to companies

Generalized implementation of value-sharing schemes within very small, small and medium-sized businesses (Article 7)

Scope of application. Companies with at least 11 but fewer than 50 employees are required to implement a value-sharing scheme, provided they meet certain conditions:

• they are incorporated companies;
• they have been posting a net taxable profit at least equal to 1% of their revenue for three consecutive years, assessed over the years 2022, 2023 and 2024;
• when meeting the previous condition, they do not yet have an implemented value-sharing scheme.

What kind of scheme? Mandatory profit-sharing scheme (participation)^[1], optional profit-sharing scheme, value-sharing bonus, complementary contribution to a company savings scheme, inter-company savings scheme, or retirement savings scheme.

However, one can wonder why the social partners have placed a simple value-sharing bonus at the same level as a profit-sharing scheme…

Tax and social security regime. The sums paid within the scope of such mechanism entail eligibility for the social and tax regime applicable to mandatory profit sharing.

When? With effect from January 1, 2025 (conditional on the extension). For now, this value-sharing mechanism is implemented for a trial period of five years.

Taking “exceptional results” into account (Article 9)

Scope of application. Companies with 50 employees minimum, at least one union delegate and subject to the obligation to implement a mandatory profit-sharing agreement will have to include, within the scope of the negotiations on mandatory and optional profit sharing, a specific clause whereby “exceptional results” must be taken into account.

Definition. At present, whether or not results posted in France are considered “exceptional” is left to the sole discretion of the employer.

This could however come to change insofar as the political party Renaissance would like to “put forward additional propositions” on the notion of exceptional profit, “a point that the social partners have left aside^[2]“, according to the presidential majority.

In this respect, Pascal Canfin, a member of the European Parliament, also expressed some reservations regarding the definition of “exceptional results“. He notably suggested that it not be left to the employer’s sole discretion and that it instead be modelled on the European definition of “surplus profits“, whereby profits exceeding by 20% the average taxable profits over the last four fiscal years are considered exceptional (EU Regulation no. 2022/1854 of October 6, 2022, Article 2, 18).

Terms and conditions. “Exceptional results” can be taken into account either through:

• the automatic payment of a mandatory or optional profit-sharing supplement, the terms and conditions of which (calculation formula, time frame, beneficiaries, etc.) are defined by way of an agreement; or
• the launch of further discussions on the payment of sums within the scope of a value-sharing mechanism (mandatory or optional profit-sharing scheme, value-sharing bonus, complementary contribution to a company savings scheme or a retirement savings scheme, etc.).

Exception. Companies are exempt from the negotiation obligation where they have already set up:

• an overriding mandatory profit-sharing formula that is more favorable than the legal formula; and/or
• a mandatory or optional profit-sharing agreement that already includes a specific clause whereby exceptional results are taken into account.

When? Such negotiations will have to be launched before June 30, 2024, for companies that already have a mandatory or optional profit-sharing agreement.

Incentive provisions

The ANI comprises numerous incentive measures for the attention of:

• the public authorities, in order to modify the legislative and regulatory framework of the current provisions, notably:
  • simplification of the forfait social (corporate social contribution) (Article 11);
  • simplification of the administrative constraints and formalities involved in the implementation and management of optional profit-sharing mechanisms^[3] (Article 18);
• industry sectors:
  • encourage and facilitate the development of mandatory profit sharing in companies with fewer than 50 employees by means of collective negotiation (Article 6). Thus, employer and employee trade union organizations from every industry sector have been asked to launch, before June 30, 2024, negotiations aimed at providing such companies with a ‘voluntary’ mandatory profit-sharing scheme, whose formula can derogate from the legal mandatory profit-sharing formula and provide for a result that may be inferior or superior thereto;
• or, companies:
  • facilitate the choice of corporate social responsibility (CSR) criteria in the optional profit-sharing agreements, by encouraging companies to include at least one non-financial criterion therein (Article 15).

Employee dividend discarded. The social partners have discarded the presidential commitment regarding the ‘employee dividend‘. They indicated that “the signatory parties undertake not to support this concept“, notably recalling the fact that “the term ‘work dividend’ exists in the Labor Code to designate optional profit sharing, mandatory profit sharing and employee savings“. They rightly conclude that the notion of ’employee dividend’ is “inappropriate and likely to cause confusion“.

^[1] It is specified that the abovementioned companies can decide to implement an industry-wide mandatory profit-sharing scheme by collective agreement or unilateral decision (Art. 6).

^[2] Honoré Renaud, “partage de la valeur : le gouvernement prêt à enrichir les mesures des syndicats et du patronat“, Les Échos, Feb. 20, 2023, p.4.

^[3] It is recalled that since February 15, 2023, a dematerialized process is now available and aims at helping employers with the drafting of their optional profit-sharing agreement (https://www.mon-interessement.urssaf.fr/accueil/).