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France: Government releases Legislative Proposal regarding Wealth/Purchasing Power

Author: Florence Bacquet 

In an effort to offset the consequences inflation has had on wealth/purchasing power, the newly formed Government has prepared a legislative proposal, the contents of which has recently been made public. If it were to become law as it currently stands, several social measures and changes to current procedures would be implemented. Listed below are some of the notable labour law-related measures the proposal contains.

> An increase in the exceptional purchasing power bonus

This bonus may be paid to employees who earn up to three times minimum wage. It is currently not taxed or subject to social security contributions, these exemptions being normally capped at 1000 euros or exceptionally 2000 euros where a company has under 50 employees or has implemented an employee incentive scheme regardless of its workforce.

These exemption thresholds would be tripled as early as the 1st of August 2022. Therefore, employers could potentially very soon pay some employees a 6000-euro bonus tax and social contribution free.

> Less stringent rules surrounding profit-sharing and employee savings schemes

As of the 1st of January 2023, it may be possible:

  • for companies that employ less than 50 employees to unilaterally set up a scheme,
  • to have a 5-year-long profit-sharing agreement (as opposed to 3 years currently),
  • to complete the applicable procedure online and access up-to-date profit-sharing templates.

The bill would also reduce the timeframe during which the legality of employee savings schemes may be investigated to 3 months.

> Professional branches may have to open negotiations regarding low wages

Where branch-level negotiations have been inadequate insofar as they have not raised collective bargaining agreement minimum wage to the level of statutory minimum wage, the Ministry of Labour may intervene and force a merger between branches.

> A favourable transportation premium for 2022 and 2023

Exemption caps on payments made by employers to employees to cover fuel costs for their journeys from home to their workplace as well as fixed rate subscriptions and transportation bonuses would be temporarily raised, whilst more employees could potentially benefit from such bonuses.

> A 4% increase in retirement and welfare benefits in July

This increase would apply to a variety of schemes and pensions, including the standard retirement and disability pensions, family benefits and the minimum income scheme.

> A decrease in independent workers’ social contributions

This measure aims to align independent workers’ and employees’ contributory efforts.

> A possibility for coal-fired plants to hire workers under fixed-term employment contracts or mission contracts

The aim of this measure would be to limit the risk of an electricity shortage by having coal-fired plants operate at an increased rate.

Key Action Points for Human Resources and In-house Counsel

Although there is, as of yet, no strict timeframe for the coming into force of these proposed measures, if indeed they come into force at all, the government’s intention is that these changes be implemented swiftly. Some level of change in applicable procedures may therefore be expected and will require getting ready for.