France: New obligations for companies regarding profit sharing

A new « profit-sharing » bill should be discussed and adopted by Parliament this summer. Leading from a National Interprofessional Agreement, it aims to more closely associate workers to their employers’ economic performance including small and mid-size businesses.

The bill namely includes the following:

• companies with less than 50 employees could decide, on a voluntary basis, to implement branch or company-level profit-sharing schemes which could derogate, including negatively, from the legal profit-sharing calculation formula ;
• from 1 January 2025, companies employing between 11 and 49 staff will be required to implement a profit-sharing scheme if they are profitable (net profit before tax is equal to at least 1% of sales for three consecutive years). Companies having already implemented a profit-sharing scheme and sole proprietors will be exempt ;
• companies with 50 staff or more and who have one or more trade union delegates will be required to engage in mandatory collective bargaining in case of exceptional profit increase. Namely, companies already subject to the obligation to implement profit-sharing schemes at the date of the publication of the law will be required, by 30 June 2024, at the latest, to enter into negotiations to define what constitutes an exceptional increase in profits and how it will be shared with employees.

Key Action Points for Human Resources and In-house Counsel

• Review your existing profit-sharing schemes as well as any other existing value-sharing bonus schemes (« prime de partage de la valeur”).