France: 100€ Inflation Indemnity

Authors: Joël Grangé and Florence Aubonnet

In order to help French nationals and residents deal with the economic hardship resulting from high inflation over the last quarter of 2021, the government has implemented an inflation allowance, i.e. an exceptional aid of €100 for the most vulnerable, to be financed by the State. The employer is required to pay the inflation allowance to eligible staff in December 2021 or by January 2022 at the latest.

This inflation allowance will be paid out to individuals who received average earnings of less than €2,000 net per month, before income tax, from 1 January 2021 to 31 October 2021, i.e. an average of €2,600 gross per month for the period. The amount of the allowance is €100 regardless of the duration of the contract, or if the contract is full time or part time. It is also due to employees who are absent from work (sick leave, maternity leave, etc.). The allowance is also owed to employees who have left the company prior to the date of the allowance payment, if they were employed in October 2021.

The allowance needs to appear on a dedicated line of the pay slip under the heading “Inflation allowance – exceptional state aid”. Recipients of minimum income or social benefits and replacement income (e.g. combined employment-retirement) who are also working will receive the inflation allowance from their employer (and not from the social welfare organisation.) In order to be reimbursed, Employers will include the total amount paid in their next monthly declaration to the URSSAF (French social security authority). The allowance amount will then be deducted from the total monthly salary charges and contributions owed.

STATE-FUNDED SALARY MAINTENANCE SCHEME PROLONGED UNTIL 31/12/2022

In order to avoid mass layoffs and reduced salaries during the Covid pandemic, French employers who were forced to reduce employees’ working time or put them on garden leave received state subsidies to ensure that employees continued to receive at least 70% of their salaries. This temporary system was due to expire on 31 December 2021.

It has now been extended until 31 December 2022. Moreover, the scheme has been extended to include senior managers subject to the part-time closure of their company (i.e. not in case of reduced working hours as this category was exempt from working hour legislation). Certain measures of the scheme have also been integrated into the Labour Code so that it will be possible to have recourse to this system should other similar circumstances render it necessary in the future without having to vote another temporary law.

NEW QUOTAS ON WOMEN IN SENIOR MANAGEMENT

The Rixain bill which aims to ensure women’s financial autonomy, equal opportunity in the workplace and namely increase the percentage of women at senior management level was published on 26 December. Some measures will apply in 2022. Other measures appear less urgent but may require an important and rapid change on in succession planning and hiring practices in order to ensure compliance.

From March 2022, companies with 50 employees or more, that were already obliged to publish their “equality index score”, will now have to publish each year the detail each of the indicators relating to pay gaps used to calculate the score. A decree will soon be published to indicate the minimum level expected for each indicator. If the company’s results are below these levels, the company will have to define and publish what actions will be taken to improve their results. This information will be made public via the Ministry of Labour’s website.

In addition to the “equality index score” indicators, companies with over 1000 employees will need to publish each year the percentage of men and women who are “cadre dirigeant” (specific status under French law which usually corresponds to C-suite and D-suite executives) and members of the company’s governing bodies. The aim is to reach 30% women by 2026. Companies with low female representation at this level should begin succession planning and changes in hiring practices in order to meet this objective.

Company agreements on homeworking will also need to cover specifically the situation of pregnant employees.

From March 2023, the new indicators for companies with over 1000 employees will be made public via the Ministry of Labour’s website.

By March 2026, at least 30% of “cadre dirigeant” and members of the company’s governing bodies in companies with over 1000 employees must be women. Companies not having reached this goal will have to negotiate appropriate and relevant corrective measures during the mandatory negotiations on professional equality, or, failing that, this action plan will be set unilaterally by the company, after consultation of the CSE (Works Council). The Labour authorities will be able to make observations on the proposed measures.

By March 2029, at least 40% of “cadre dirigeant” and members of the company’s governing bodies in companies with over 1000 employees must be women. Companies not having reached this goal will again have to negotiate on corrective measures as described above but will have to reach the objective by 2031 at the latest. Otherwise, they will be subject to a penalty of up to 1% of their total wage bill.

CASE LAW

A SETTLEMENT AGREEMENT FOLLOWING AN EMPLOYEE’S REPORT OF SEXUAL HARASSMENT IS INVALID

The French Supreme Court ruled that when an employee has reported being subject to sexual harassment, the settlement agreement signed by the employee is invalid if the employer has not taken any measures to protect the employee.

In this decision dated 4 November 2021, the court held that the employee had signed the settlement agreement under duress because she did not have any other choice in order to protect her health.

For memory, employers in France must take measures to prevent sexual harassment. This includes policies, training and in some cases naming a “sexual harassment” contact person. Also, all claims of sexual harassment must be investigated.

PAID LEAVE: WHO BEARS THE BURDEN OF PROOF?

A recent decision by the French Supreme Court offers a reminder on employers’ obligations in enabling employees to take their paid leave entitlements and the importance of documenting this.

After the termination of his employment contract, an employee working as a sports instructor, claimed compensation for paid holidays which he argued he had not taken. The employer, on the other hand, argued that the employee had already taken his paid leave from 9 to 30 June 2014, as was mentioned on his pay slip. The employee provided certificates from two of his colleagues stating, among other things, that he was present at the stadium on 28 June. The employee’s claims were dismissed by the Court of Appeal which considered that the documents did not provide “sufficient evidence of work during this period”, as the two certificates stating that the employee was present at the stadium on 28 June, i.e. on a weekend, could just as well relate to a voluntary participation to follow his team.

The Supreme Court struck down the appellate decision, criticising the court of appeal for having reversed the burden of proof in terms of taking paid leave and reiterated that it is the employer who must prove that paid leave was actually taken, and not the employee. In the event of a dispute, employers cannot simply show that they have paid their employee (by producing pay slips). They must also prove that they have taken the necessary measures to ensure that employees actually take their paid leave.

LOOKING FORWARD

THE NEW WHISTLEBLOWER’S LAW

The new law on whistleblowers’ protection will no doubt be one of the main topics of early 2022. As well transposing into French law the 2019 European Directive, French Parliament has taken this opportunity to review the rules on whistleblowing generally.

The law, which is expected to be published in February 2022, will now allow employees to make whistleblowing reports directly to external authorities whereas they first had to raise them internally until now. HR grievances such as sexual and moral harassment as well as discrimination claims will fall within the scope of the whistleblowing law. This means that the heightened protection of whistleblowers will apply. For example, non-respect of the strict confidentiality rules can lead to up to 2 years’ imprisonment and a 30 000€ fine and any measures taken to obstruct a report can result in punitive damages and a 60 000€ fine. This is in addition of the invalidity of any retaliation actions which can also result in criminal penalties.

Companies should therefore ensure they have put in place a whistleblowing policy if they have not yet done so (mandatory for all companies with over 50 employees). For those who already have a system in place, they should see how their policy needs to be updated and also how to make their system more attractive to employees to avoid all concerns being raised systematically with external authorities. Finally, HR teams need to be trained on how to handle complaints in line with the new law.

FRANCE’S PRESIDENCY OF THE EUROPEAN COUNCIL

On 9 December, President Macron announced that France’s program for its presidency of the European Council would concentrate on 3 themes: digital, the environment and employment. Of course, the European legislative calendar is already set but countries holding the presidency have often tried to accelerate or delay certain initiatives.

It is therefore likely that the proposed Directives on minimum salaries and pay transparency will be pushed up the agenda. While the Directive on minimum wages is unlikely to impact French law, the Directive on Pay Transparency would require employers to provide candidates with information on initial pay level and will not be allowed to ask candidates about their pay history. Also, employees would have the right to request information from their employer on the average pay levels, broken down by gender, for categories of employees doing the same work or work of equal value. Employers with at least 250 employees would be obliged to publish detailed information on the pay gap between female and male employees in their organisation which goes further than the already existing equality index under French law. In case of a gender pay gap of over 5%, the employer would have to carry out a pay assessment in cooperation with their works council. Fines and the right to class actions would also need to be transposed into French law.

EMPLOYMENT TOPICS TO BE DISCUSSED DURING THE NEXT FRENCH PRESIDENTIAL ELECTIONS

During each French presidential election, there is always a key employment topic. In 2007, it was Nicolas Sarkozy’s “work more to earn more”, in 2012, it was François Holland’s “generation contract” aimed at the young and seniors and in 2017, Emmanuel Macron’s program included the damages cap in employment litigation, the updating of the French Labour Code and the possibility for resigning employees to claim unemployment benefits.

In 2022, we predict that the debate will center around purchasing power (reduction in social contributions, increase of the minimum wage etc.), working time (increase or decrease of the 35-hour week), the employment of seniors (retirement age, pension benefits, incentives to employ persons aged over 50, etc.) and the state unemployment fund as the current framework expires in November 2022.

CNIL RECRUITMENT GUIDELINES

The CNIL, France’s data protection agency, is due to issue new guidelines on how companies should handle personal data within their recruitment process. It is expected that these guidelines will set new and heightened obligations on companies namely with regards how they document their data privacy policy and how they inform candidates of their rights. Given the high penalties linked to non-compliance with data privacy rules, companies should plan to review their policies and processes when this new guide is published.