In France, the number one benefit people care about is healthcare. Governmental support for healthcare through the social security system is insufficient, especially for optical and dental healthcare. This is why French people consider the extra coverage provided by their employer to be very important. When asked to rank three other common benefits in order of importance, the average French employee will likely respond with: Disability, Death, and Retirement. It’s also important to know that in the Paris region, employers must reimburse 50% of a monthly rail pass for employees who commute to work by train.
Damien Vieillard Baron
France has a very complex legal framework, especially related to the social security system which employers must abide by. It is so complex that even French companies need advice from specialists in this area.
The average monthly cost for a typical benefits package is 95 Euros for health, 40 Euros for death and disability and 3% of salary for retirement.
Mandatory employee benefits in France include old-age pension, solidarity allowance for the elderly, long-term disability pension, short-term disability pension, spouse’s pension, death grant and workers compensation. Supplementary employee benefits in France include retirement and death benefits, short term disability, long-term disability, medical insurance, workers compensation, retirement, and career termination indemnities. Perks range from parental leave to profit sharing.
Mandatory Employee Benefits in France
The legal minimum retirement age is 62. The age of automatic entitlement to a full pension is 67. The qualifying period for a full pension varies depending on the insured’s month and year of birth.
Coverage may be credited for periods the insured received an unemployment benefit or a disability pension (with an assessed degree of disability of greater than 66%).
Up to eight quarters of coverage may also be credited to insured women for each child, and under certain conditions, four of these quarters may be awarded to the father. There are special qualifying conditions for persons with disabilities, working mothers, persons working in arduous conditions, persons with long careers, and war veterans.
Solidarity Allowance for the Elderly
This is paid to low-income pensioners at age 65 and insured persons who have reached the legal minimum retirement age and are assessed as unable to work or with at least a 50% permanent disability.
Long Term Disability Pension
For this pension a person must be younger than the normal retirement age, have at least a 66.7% assessed loss of earning capacity in any occupation, and have at least 12 months of coverage before the disability began and 600 hours of employment in the last 12 months. This includes 200 hours in the last three months; or have contributed based on earnings of at least 2,030 times the legal hourly minimum wage, including at least 1,015 times the legal hourly minimum wage in the last six months.
Short-Term Disability Pension
To qualify for short-term sickness benefits, an employee must have worked a minimum number of hours, or must have accrued a certain level of contributions in the period preceding sickness.
The amount of the daily allowance paid during a sick leave equal to 50% of the employee’s daily reference salary for the last 3 months. It’s calculated on the average of gross salary taken into account, limited to 1.8 times the monthly SMIC in force (SMIC = Guaranteed Minimum Wage) 1/91,25th with a maximum of € 2,601.68 for the first 30 days of absence.
The benefit increases to 66.66 % of daily reference salary from day 31 of sick leave if the employee has 3 dependent children (max. of € 42.77 for insured without dependent children and € 57.02 for insured with 3 dependent children).
Employee benefits in France include pensions for spouses. Eligible survivors include a widow(er) aged 55 or older or who is disabled (including a divorced wife who has not remarried). Unmarried surviving partners are ineligible, even if they had a civil partnership with the deceased.
A child’s supplement is paid if the widow(er) is aged 55 or older and has given birth to, or raised, three or more children.
This grant is given if the deceased was employed, or received an unemployment benefit, a cash sickness benefit, or a disability pension (with an assessed degree of incapacity of at least 66.67%) at the time of death.
Since 01/01/2010, the daily allowances paid for Occupational Accident or Disease is subject to an income tax for 50% of their amount.
- Permanent Disability Pension – The pension amount is determined according to the Incapacity Rate of the employee (determined by the Social Security Referent Practitioner) and the earnings amount before the accident. The minimum incapacity for a permanent disability pension is 10% (for disability below 10%, a lump sum benefit may be payable). When the injured person has an incapacity rate of at least 80% and is unable to perform daily activities, the permanent disability pension may be increased by up to 40%.
- Survivor’s Benefits – A spouse may be entitled to a pension equal to 40% of the deceased’s annual salary. If the spouse is older than 55 years-old or has an incapacity rate of at least 50%, he or she will be entitled to a pension whose amount is 60% of the insured’s annual salary. Dependent children or descendants under age 20 may be entitled to a pension equal to 25% of the insured’s annual earnings for each of the first 2 children, and 20% per child for the 3rd and each additional child. If the child is a total orphan, the pension rate equals 30%. Ascendants may receive a benefit under defined specific conditions. The total pensions payable to survivors cannot exceed 85% of the deceased’s annual earnings.
All employees are qualified for a mandatory medical care benefits since 1945 through France’s social security system. Employees with very low income are also covered through PUMA (Universal Protection for Medical Care).
Supplementary Employee Benefits in France
Retirement and death in service benefits
State retirement provision within the French Social Security system is complex, with different plans applicable to different classes of employees. For most private sector employees it is split into 2 categories, the compulsory general scheme and the compulsory supplementary plans as shown below.
- General Scheme – Managed at National level by the National Old-Age Insurance Fund (CNAV).
- Supplementary plans – The Association for Employees’ Supplementary Plans (ARRCO) and the General Association of Retirement Institutions for Executives (AGIRC), as part of the ‘Cadre National Bargaining Agreement’ (CCNC).
The General Scheme and the Supplementary Plans are funded on a pay-as-you-go basis and are similar to a career average defined benefit (DB) plan.
Employers have the obligation to pay a death in service benefit to executives (Cadres). In addition, a death allowance may be paid by the National Sickness Insurance Fund (CNAMTS)
Complementary death-in service benefits may also be paid according to National Collective Bargaining Agreement (CCN) and industry agreements. Death-in-service benefits are provided through Survivors Insurance and Group Life Insurance (GL).
To qualify for short-term sickness benefits, an employee must have worked a minimum number of hours, or must have accrued a certain level of contributions in the period preceding sickness. The minimum amount of the daily allowance proposed by the supplementary scheme is defined by the collective bargaining agreement (CBA).
A disability pension is serviced to employees under age 60 who have been insured for at least 1 year and who fully meet the contribution criteria. An employee is considered permanently disabled when sickness has reduced his/her earning capacity to 1/3rd or less. The minimum level of pension is defined by the CBA.
The disabled widow(er)’s disability pension is granted to the surviving spouse of a disabled or old-age pensioner; or to a person likely to be entitled to such pension. To qualify for this benefit, the surviving spouse must be aged under 55 with a permanent disability reducing his/her working capacity by 2/3rd (and must not have an income exceeding a defined limit). The pension amount is equal to 54% of the pension paid to the insured or to be paid in case of death of the insured.
Medical insurance is a crucial component of competitive employee benefits in France. Since January 1st 2016, all employees are qualified for medical care benefits through the National Inter-Professional Agreement (ANI) which imposes a minimum care basket. However, the CBA can provide better minimum coverage. The insured person is usually responsible for a copayment of healthcare, and the employer’s share is not be less than 50% of the insured’s premium.
There are two parts to France’s employer sponsored workers compensation:
- Permanent Disability Pension – If provided by the CBA, the supplementary pension amount is also determined according to the Incapacity Rate of the employee (determined by the Social Security Referent Practitioner) and the earnings amount before the accident. The CBA define the minimum amount.
- Survivor’s Benefits – If provided by the CBA, a spouse may be entitled to a supplementary pension. The CBA defines the minimum amount.
The General Scheme and the Supplementary Plans are funded on a pay-as-you-go basis, and are similar to a career average defined benefit (DB) plan. The annuities due to the retiree in any particular year are paid from the contributions of active employees and employers collected during the same year.
Career Termination Indemnities
Termination Indemnities are served by employers through reserves or insurance. Where the National Inter-Professional Agreement (ANI) applies, the Employer must continue to provide benefits after termination of the work contract.
- As per the labor code, an indemnity is payable to an employee with at least one year of service. The indemnity is 1/5th of one month’s salary for each year of service plus an additional 2/15th of one month’s salary for each year of service after 10 years (1 month of salary after 10 years’ seniority).
- As per CBA, the benefits bases vary according to the type of agreement enforced, but generally, the benefits represent a fraction of the average salary for the prior 12 months, based on the length of service.
- As per the ANI, companies must maintain health, life and disability coverage for their former employees up to 9 months following work contract termination, unless the employee opts out of the proposed scheme.
The perks provided by the employer depends on the CBA and the size of the company. Usually, the following perks are provided:
- Parental leave
- Flexible hours
- Remote working
- Days off (working time reduction) on top of the paid holidays
- Lunch allowance
- Transportation allowance
- (Gym allowance)
- Holliday allowance
- Profit sharing
This information about employee benefits in France is provided by Gerep, Asinta’s employee benefits consulting Partner in the country.