France’s Inflation Law Impacts Employee Benefits

The recent passage of France’s inflation laws (‘purchasing power’ and rectifying finance laws) impacts employee benefits. These laws aim to limit the impact of inflation on the purchasing power of the French household. Indeed, several solutions have been proposed, some of them directly concerning companies. Several social measures have been included in the law on purchasing power, so some of them deserve to be highlighted. Gerep offers you a summary of the main measures definitively adopted this August 12th by the Constitutional Council.

Employee savings: profit-sharing and participation

One of the main axes concerns employee savings. This is the collective savings system set up within voluntary companies. These savings can be distributed to employees in the form of intéressement (a bonus linked to the company’s performance) or participation (a bonus representing a share of its profits). They can be paid directly to the employees or placed in an employee savings plan.

What changes with this purchasing power law: The validity of the intéressement agreement of companies that have one, goes from 3 to 5 years. It can be renewed by tacit agreement several times.

To accelerate access to savings, the government is proposing a dematerialized procedure for drafting intéressement agreements, which will make it possible to verify compliance. In addition, the deadline for checking the legality of agreements and plans filed as of January 1, 2023, has been reduced by one month.

Finally, payments made into the Plan Epargne Entreprise (Company Savings Plan) are blocked for a period of 5 years, but a fourth case of unlocking has been added to the list: the acquisition of goods or the provision of services up to a limit of 10,000 euros, net of social contribution deductions, until December 31, 2022.

Overtime: flat-rate deduction of employer contributions

Companies with more than 20 employees could deduct a lump sum of €1.50 per hour of overtime. With this purchasing power law, from October 1, 2022, companies with 20 to 249 employees will benefit from a new flat-rate deduction.

August 2022 – Gerep, independent insurance brokerage company – 4 rue de Vienne 75008 Paris – SAS with a capital of 101 120 €. Registered with the ORIAS under the number 07 000 294 (www.orias.fr), Gerep is subject to the control of the ACPR (Autorité de Contrôle Prudentiel et de Résolution), 61 rue Taitbout 75436 Paris Cedex 09.

Revaluation of retirement pensions and minimum social benefits

After the 1% increase in retirement pensions on January 1, 2022, this law proposes an early increase of 4% as of July 1, 2022. As this article has just been published in the Bulletin Officiel, the July increase will be paid retroactively to those concerned.

The social measures of the amending finance law

On August 4, the Senate adopted the draft amending finance law for 2022, which aims to secure the financing of measures to fight the fall in purchasing power. The French GDP growth for 2022 has been revised downwards, from 4% to 2.5%. Without a rectifying finance law, the purchasing power law cannot be financed.

Monetization of JRTT (days of reduced working hours)

Established by the law of July 25, 1994, the compte épargne temps (time savings account) allows employees to deposit their unused leave or rest periods in a savings account opened by the company.

With this amending finance law, employees are no longer compelled to use this compte épargne temps to monetize their RTT. In fact, they can renounce all or part of their RTT acquired from January 1, 2022, to December 31, 2025 (in application of an agreement or a collective bargaining agreement instituting a working time reduction scheme). The half-days or days worked will be remunerated on the same basis as the first hour of overtime.

Tax exemption for overtime and complementary hours

As of January 1, 2022, the tax exemption ceiling for overtime and complementary hours will be raised from 5,000 to 7,000 euros.

Covid-19: Partial activity for vulnerable employees

From September 1, 2022, to January 31, 2023, employees who are vulnerable to Covid-19 and unable to continue working may be placed on partial activity.

Tax exemption for the transport bonus

The income tax exemption of the transport and sustainable mobility bonuses received in 2022 and 2023, increases to 700 euros per year (including 400 for fuel).

 

Gerep, Asinta’s employee benefits consulting Partner in France, provided this information about how France’s inflation law impacts employee benefits.