Short-time working

The minimum hourly rate of the partial activity allowance has been revalued as of 1 May 2023, as set out in a decree dated 28 April 2023 (see Source box). From now on, the minimum rate of €8.21 will apply to hours of unemployment compensated under traditional partial activity. This rate is raised to €9.12 for companies that have introduced long-term partial activity.

As of 1 April, by governmental decision, only vulnerable employees or those obliged to look after a child and unable to telework will continue to be entitled to full reimbursement of short-time working. In fact, all companies using this scheme are now subject to the common law rates, i.e. an allowance paid to employees corresponding to 60% of their previous gross remuneration and an allowance reimbursed to employers equal to 36% of the previous gross remuneration. In order to benefit from more advantageous rates, companies retain the possibility of implementing long-term short-time working (APLD).

On 17 March, in order to cope with the economic consequences of the war in Ukraine, the government has announced that the short-time working scheme (common law) or the long-term short-time working scheme (APLD) are part of the measures that can be mobilised by employers as part of the Economic and Social Resilience Plan presented on 16 March by the Prime Minister. In a "question and answer" circular dated 17 March 2022, the Ministry of Labour details their implementation procedures. It also sent two draft texts, an ordinance and a decree, for consult social partners, to the National Commission for Collective Bargaining, Employment and Vocational Training (CNNCEFP) to adapt the APLD system.

According to the Ministry of Labour, the company that would see its activities slowed down or stopped due to the economic consequences of the conflict in Ukraine can therefore be eligible for partial activity under the "exceptional circumstances" provided for by the Labour Code. On the other hand, this eligibility does not cover a company that voluntarily closes its establishment. No mechanism for increasing the rates of reimbursement is envisaged in relation to the consequences of the conflict in Ukraine. The employees concerned will therefore receive an allowance equal to 60% of their previous gross pay, up to a maximum of 4.5 Smic and a minimum of €8.37. The allowance then reimbursed to the employer will amount to 36% of the employee's previous gross pay, up to a limit of 36% of 4.5 Smic and a floor of €7.53. The remainder borne by the company will amount to 40% of the compensation.

The company must demonstrate that there is a direct or indirect link between the consequences of the war in Ukraine and the drop in the company's activity. For example, the company can prove that the sharp increase in the price of gas or oil has had a significant impact on the company's business.

Employees with an employment contract under French law and employed by Russian, Belarusian or Ukrainian companies established in France and whose activity is reduced due to the consequences of the war in Ukraine are eligible for the partial activity scheme under ordinary law and the APLD, the Q&A states.

Now that "the period of massive recourse to partial activity seems to be over", the organisation that manages partial unemployment schemes, Unédic, has drawn up a report on the state of play of partial unemployment in a study published on 28 February 2022. Unédic concludes that partial unemployment has been and "could in the future remain an important lever for supporting employment". This study underlines that it is mainly small establishments and those in the sectors most affected by health restrictions that have made long-term use of it. On the employee side, it has been widely used, but has particularly helped those close to the minimum wage and on long-term employment contracts (permanent or fixed-term contracts). On the other hand, although it welcomes "the capacity of the system to offer great internal flexibility to companies", Unédic points out that access to training is difficult during the periods of use, and that the financial cost could last.

While it was supposed to end on 28 February 2022, the full coverage of short-time working in the companies most affected by the health crisis remains in force until 31 March 2022. Thus, for those companies that continue to suffer the effects of health restrictions on their activity, the compensation paid to employees in short-time working, as well as the allowance granted to the employer, will continue to be calculated at a rate of 70% of the previous gross remuneration, within the limit of a remuneration capped at 70% of 4.5 Minimum wage (SMIC) and a minimum hourly rate of €8.37.

From 1 April 2022, the common law rates will in principle apply to all companies (an allowance at 60% of the previous gross remuneration and an allowance at 36%).

Most of the sectors and companies that benefit in December 2021 from full coverage of short-time working costs will continue to benefit from it until the end of January 2022, i.e. for an additional month. Two decrees of 27 December provide a framework for this extension and make a few adjustments to the partial activity scheme. Since 1 December 2021, in order to benefit from the increased rates, companies in the so called 'protected sectors' must prove a 65% drop in turnover, instead of the previous 80%. The text also authorises certain employers to use short-time working between 1 January and 31 March 2022, even if they have reached the maximum authorisation period of six months in a year.

The law on various health vigilance provisions (La loi portant diverses dispositions de vigilance sanitaire) of 10 November, which notably allows the health pass to be maintained until 31 July 2022, extends until 31 July 2022 the possibility of modulating the hourly rate of the allowance and the partial activity allowance to deal with the consequences of the health crisis linked to COVID-19.

A decree of 29 September 2021 raises to €7.47 the minimum hourly rate of the short-working allowance paid to the employer from 1 October 2021. It also provides for a specific floor of €8.30 for companies that continue to benefit from an increased rate of short-working allowance due to the COVID-19-related health crisis. This same minimum allowance of €8.30 also benefits employers who have implemented long-term short-working (APLD) in their company.

According to the DARES-ACEMO survey, recourse to partial unemployment fell again in August: 480,000 employees were effectively in partial activity in August 2021 (i.e. 2.4% of private sector employees), after 600,000 in July, for a number of hours unemployed corresponding to 180,000 employees working full time during the month (see sources).

The government is empowered, by the law of 31 May 2021 (see source section), to issue orders until 30 September 2021, in order to adapt and extend the exceptional measures taken to limit the consequences of the health crisis on employment in several areas, such as short-working scheme and long-term short-working scheme (APLD).

Postponed month after month since January 2021 due to the persistence of the effects and restrictions linked to the health crisis, the reduction in the level of short-time working allowance financed by the State must begin in June 2021 as provided for in two decrees of 28 May 2021. This reduction will not lead to the application of the common law rates as of 1 June. In accordance with the government's announcements, the reduction in compensation for employees and employers will be done in stages, and in a more gradual manner in companies in "protected sectors" or undergoing administrative closures.

Allowance paid to the employer

• The rate of the allowance paid to the employer currently in force is maintained until 30 April 2021: 60% of the employee's previous gross salary, up to a limit of 60% of 4.5 Minimum wage (SMIC), with a floor of €8.11 (excluding protected sectors and companies receiving the public and closed by administrative decision, which benefit from an increase).
• From 1 May 2021, the hourly allowance paid to the employer will be 36% of the employee's previous gross salary, up to a limit of 36% of 4.5 SMIC, with a floor of €7.30.

For employees on an apprenticeship or "professionalisation" contract, the rate of the allowance is equal to the rate of the allowance paid to the employee.

Particularities of short-time working for protected sectors most in difficulty

Employers belonging to the so-called protected sectors are considered to be in the greatest difficulty if they suffer a drop in turnover of at least 80%.

This assessment is made each month:

• either in relation to the turnover recorded for the same month in 2020;
• or in relation to the turnover recorded for the same month in 2019;
• or, if the company was created after 30 January 2020, in relation to the average monthly turnover achieved between the creation of the company and 31 January 2021.

For these companies, between 1 May 2021 and 30 June 2021 the rate of allowance applicable in respect of hours of unemployment is set at 70% of hourly pay, up to a limit of 70% of 4.5 Minimum wage (SMIC), with an hourly floor of €8.11. The hourly rate of the partial activity allowance is maintained at 70% of the employee's previous gross remuneration with an hourly floor of €8.11. There is therefore no remaining cost for these employers.

Particularities for businesses that receive the public and are totally or partially closed by administrative decision

The employers concerned are:

• Employers whose main activity involving the reception of the public is interrupted, partially or totally, due to the spread of the COVID-19 epidemic and the measures taken to limit this spread, excluding voluntary closures;
• Employers whose establishment is located in the catchment area of a ski resort and which suffers at least a 50% drop in turnover during the period of closure of cable cars and ski lifts compared either to the turnover preceding the closure of the lifts or to the turnover of the same month in 2019.
• In the event of new lockdown on a geographical basis, employers whose establishment is located in one of the territories concerned by the lockdown and who suffer a drop in turnover of at least 60% for each month of the geographical lockdown period.
• Either in relation to the turnover recorded during the month preceding the implementation of these measures;
• Or in relation to the turnover recorded for the same month in 2019.

By way of derogation, until 31 June 2021, the short-time working allowance is equal to 70% of the employee's previous gross remuneration, within the limit of 70% of 4.5 SMIC. The hourly floor of €8.11 applies. The short-time working allowance is maintained at 70% of the employee's previous gross remuneration, up to 70% of 4.5 SMIC.

The hourly floor of €8.11 applies. There is therefore no remaining cost for these employers.

The possibility of modulating the partial activity allowance rate for the benefit of the companies most affected by the COVID-19 health crisis was extended until the end of 2021 by an order dated 10 February 2021. A second order of the same day also provides that the "protected sectors" that have suffered a very sharp drop in turnover will benefit from an increased rate of support from 1 March to 30 June 2021.

The short-time working scheme has been progressively adapted to the health and economic situation. The main changes are the following:

• An Ordinance of 24 June provides that the rate of partial activity allowances will be set by decree and may be increased for sectors particularly affected by the health crisis. These new rates will be applicable as of 1 June 2020 and until a date that the decree is expected to set at 30 September 2020. The increased rate applies in sectors relating to tourism, hotels, restaurants, sports, culture, air transport and events. Sectors whose activity depends on the above and which are experiencing a very sharp drop in turnover will also benefit. The same will apply to employers whose main activity involves receiving the public and is interrupted due to the epidemic. A decree allow for basic coverage of 85% of the compensation paid and an increased coverage covering these compensation payments in full.
• The terms and conditions for implementing the partial activity system are secured and simplified by a decree of 26 June 2020. This decree allows companies with at least 50 establishments to submit a single request for partial activity (for several employees). It also confirms that prior consultation of the Social and Economic Committee (CSE) in the event of recourse to the system is only required for companies with at least 50 employees.
• Partial activity for childcare without a school certificate. Since June 2, 2020, parents looking after a child under 16 years of age can only maintain or partially activate their childcare activities upon presentation of a certificate from the childcare establishment, according to the Ministry of Labour. It is therefore no longer sufficient for the employee, as has been the case since 1 May, to send his or her employer a certificate on honour that his or her child cannot attend school. The Ministry of Labour specifies that this certificate from the establishment will be likely to be requested in the event of an administrative control.
• A new short-time working scheme will start on 1 October 2020 and provides for an obligation to remain in employment for the duration of the partial activity. The scheme will last three months, renewable, and may not exceed six months (maximum duration of the current scheme). The employees concerned will receive 100% of their net salary at the level of the minimum wage (Smic) at 72% for 1.3 Smic (compared to 84% since the crisis). For high salaries, a ceiling is set at 60% of 4.5 SMIC. Already reduced on 1 June, the State and Unédic allowance will amount to 60% of the compensation paid to employees, with a floor set at 90% of the minimum wage. As a reminder, the State's contribution was 100% of the allowance until 4.5 Smic at the end of March, before being reduced to 85% on 1 June.
• A second partial activity scheme came into force on 1 July (see FR-2020-27/1030). Known as "long-term", it concerns companies facing a lasting decline in their activity, such as the aeronautics industry, in order to guarantee a high level of protection. It is for a renewable period of six months and can be mobilised for a maximum of two years, with 100% of the net salary being maintained for employees at the minimum wage and up to 84% for salaries above 1.15 minimum wage, with a ceiling of 70% above 4.5 minimum wage. The State pay 80% of the compensation paid and 85% for agreements signed before 1 October. Its triggering requires a company or branch agreement and validation by the Direccte, and will be based on a diagnosis and forecast of activity and shared employment.

France’s National Assembly and Senate are close to the final adoption (by 10 June) of the emergency bill that contains new provisions for other urgent measures as well as for the United Kingdom’s withdrawal from the European Union. The agreement reached between the two Chambers on 02 June, which has yet to be formally adopted, empowers the Government to further adapt the short time working scheme to take account of the needs of a gradual recovery and to create a special provision for companies permanently affected by the crisis although not likely to fail.

New short time working provision based on collective bargaining and ‘quid pro quos’. A new mechanism that provides long-term support for companies in return for a set of commitments, particularly in terms of maintaining employment, is thus being planned. Both the level of compensation for employees whose activity is reduced and the level of State reimbursement have yet to be established by decree, but the idea is to increase the State element if the company, that has had to make recourse short time working to persevere through the crisis, negotiates or enters into a collective sector agreement, which not only defines the terms of the short time working, but also provides for company commitment in return, and in particular in terms of maintaining employment. This mechanism, known as ‘short time working to maintain employment’, is aimed at ‘companies faced with a lasting reduction in activity and whose survival is not compromised’, under a set of certain conditions and cases that are still to be determined. The agreement and documents implementing the sector agreement with this framework will have to be approved by the labor administration.

Short time working to be adapted from 01 June for six months to facilitate the recovery. The extraordinary short time working scheme was initially set up amid the health crisis, and has been amended several times. It may be amended once more in order to adapt it to the economic recovery and the situation of certain sectors and employees. Once adopted, the bill authorized the government to issue a new ordinance to adapt short time working rules ‘to the specificities of the companies according to the economic impact of the health crisis, their sector of activity and the categories of employees concerned (...).' Monetizing leave periods. The text also allows a collective agreement to allow for employees who have suffered a reduction in their remuneration due to being placed on short time working, to voluntarily supplement their income by monetizing rest days or paid holidays, for up to a maximum of 5 days. The agreed text also provides that employees under short time working conditions must also benefit from the maintenance of their collective guarantees and that, as an exception, the periods between 1 March 2020 and 31 December 2020, during which contributing workers received the short time working allowances, would be taken into account for the purposes of enabling the right to a retirement pension. Planet Labor, 03 June 2020, No.11981

On 1st June 2020, the financial cover for partial activity (short-time work) will be changed from 70% to 60%. Even if ‘compensation paid to the employee remains unchanged’ (70% of gross salary, i.e. 84% of net salary and at least the net minimum wage), the level covered by the State and the unemployment agency will be lowered so that companies will now be reimbursed up to 60% of gross salary, capped at 4.5x minimum wage, instead of 70%. Sectors subject to special legislative or regulatory restrictions due to the health crisis will continue to benefit from 100% cover. This measure still has to be made the subject of a decree, which will be issued following adoption of a bill treating several health crisis related provisions that is currently under Parliamentary discussion. Source: Planet Labour.