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19 March 2020
Client Alert | France | Employment
The purpose of partial activity is to allow employers to lower the employees’ work activity while paying them an indemnity, which, in principle, (i) is lower than the amount of their salary and (ii) is partially financed by the State.
Such mechanism may be used by any employer that is forced to reduce or temporarily suspend its activity due to circumstances of an exceptional nature.
The French administration has already confirmed that a reduction of activity relating to the Covid-19 epidemic may justify the implementation of partial activity.
Partial activity can take two forms:
The reduction or cessation of activity must be temporary and collective, and where it does not concern the company’s entire personnel, must concern a clearly defined and well-differentiated group of employees assigned to a given and same activity (establishment, department, production unit, etc.).
In principle, the employer must:
However, given the growing influx of requests in the specific context of the Covid-19 epidemic, the French government has announced that employers:
These measures will be explained in detail in a decree to be published shortly.
The duration of the partial activity must be adapted to meet the company’s needs. In principle, partial activity is granted for a maximum period of six months; however, in the draft decree to be published by the French government in the context of the Covid-19 epidemic, it will be possible to extend this time frame to 12 months.
Lastly, in principle, the Labor administration must notify its decision to the employer within 15 days. Failing an answer within this time frame, said authorization shall be considered granted. However, with the draft decree, this review period will normally be lowered to two days provided the partial activity request is filed within the scope of circumstances of an exceptional nature (such as the Covid-19 epidemic).
With the exception of protected employees (essentially, staff representatives), an employee cannot refuse to be placed in a situation of partial activity, whether it involves the partial suspension of his/her employment contract (in case of a temporary working time reduction) or the total suspension of his/her employment contract (in case of temporary closure).
Usually, during the period of partial activity, the employer pays each concerned employee an indemnity amounting to 70% of his/her gross hourly pay for each unworked hour.
The number of hours that must be indemnified at the 70% rate is equal to the difference between legal working time (or if it is inferior, the working time set forth by CBA or contract) and the number of hours actually worked during the partial activity period.
The employer can then obtain financing from the State to cover part of the indemnity paid to each concerned employee.
In principle, the hourly rate of State financing is a lump sum and amounts to:
• EUR7.74 in companies employing up to 250 employees;
• EUR7.23 in companies with 251 employees or more.
However, in the context of the Covid-19 epidemic, the draft decree provides for full reimbursement by the French State of the indemnity paid by the employer to each employee within the limit of salary up to 4.5 times minimum wage. Hence, the hourly rate of the partial activity indemnity paid by the employer will be equal to 70% of the employee’s gross remuneration, within the limit of 4.5 times the hourly rate of minimum wage.
Lastly, presently, the employer can obtain the abovementioned financing within the limit of 1,000 hours per year and per employee.
A partial activity compensation simulator is available online: http://www.simulateurap.emploi.gouv.fr
In order to take into account the impact of the Covid-19 epidemic on economic activities, and in accordance with the French President’s announcements on 12 March 2020, the URSSAF (French Social Security Authorities) has authorized the adjustment or deferment, up to three months, of the payment of URSSAF contributions owed on pay for the month of February, without the application of late-payment penalties.
The terms and conditions vary according to the due date applicable to the company and are available for perusal on the DSN (electronic payroll reporting) website.
For employers that filed their DSN on 15 March 2020, the payment adjustment or deferment can be requested up to 19 March 2020.
Companies experiencing difficulties for the payment of their taxes in the context of the Covid-19 epidemic can request a due date extension or a direct tax remission.
The request forms can be downloaded on the impots.gouv.fr website.
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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.
