French social protection is organised into four levels:
- Social Security provides coverage for: i) illness, maternity, paternity, disability and death; ii) occupational accidents and diseases; iii) old-age benefits; and iv) family allowances. It is composed of various schemes involving the insured according to their professional activities, chiefly:
- the general scheme: it includes workers, students, recipients of certain benefits, and residents;
- special schemes: they cover employees who are not in the general scheme (e.g. civil servants, SNCF and EDF-GDF agents…);
- the schemes for non-agricultural employees: they separately cover the artisans, merchants or manufacturers and liberal professions to the pension insurance, the “sickness” risk is subject to joint management;
- the agricultural scheme: it ensures the welfare of farmers and farm employees. This social security system does not depend on the Ministry of Social Affairs, but on the Ministry of Agriculture.
- Complementary Plans contribute supplementary coverage to the risks afforded by Social Security. Some are mandatory (supplementary pension for private sector employees) and others optional (mutual health organisations, insurance companies, pension funds).
- UNEDIC (National Employment Union Industry and Commerce) administers the unemployment insurance programme.
- State Welfare provides support to the poorest.
Social Security is mainly financed through:
- Social Security contributions:
- the contribution is based on the basic salary paid (mainly indemnities, premiums, and monetary advantages, as well as tips, and under certain conditions benefits in-kind;
- the rate fixed by decree, with a portion paid by the employer and the other portion by the employee (“gross salary” is the total wages with deduction of employer contributions; “net salary” is the gross salary reduced employee contributions);
- the employer pays all due contributions to the administrative body;
- the average employer contribution can account for as much as 45% of the gross salary of the employee, whereas the employee contribution may only count for as much as 20%;
- CSG (“Generalised Social Contribution”) – a specialised tax; and
- various other taxes collected by Social Security (e.g. “forfait social” tax; gross VAT on tobacco, pharmaceuticals, alcohol, health products; tax on company cars, tax on land motor vehicles; tax on salaries; etc.).
Healthcare and Insurances
French law provides for a basic minimum indemnity and protection of employees. Quite often, collective bargaining agreements provide for additional protection or allowances.
Holidays and Annual Leave
Employees are entitled to a minimum of five weeks’ paid holiday a year. In addition, there are approximately ten public holidays every year. The law and CBAs grant additional paid leave for employees who have reached a specific length of service and for family related events. Autonomous executives also benefit from additional days off.
Every employee is entitled to paid vacations by his employer, regardless of his age, seniority or type of contract (indefinite-term or fixed-term). The duration of paid vacations varies according to the acquired rights (legally 2.5 days of paid vacation per month, unless more favourable collective bargaining agreement provisions apply). The vacation dates are subject to the agreement of the employer.
Maternity and Paternity Leave
The pregnant employee benefits from a maternity leave during the period, which is around the expected date of childbirth (there is a prenatal leave and postnatal leave). Its duration is variable, depending on the number of unborn children or already at charge (from 16 to 46 weeks). The Social Security Daily Allowance varies in function of the salary (from EUR 9.39 to EUR 86).
Where the employee is out of work for sickness, subject to compliance with certain formalities (notably for the employee to submit, within 48 hours, the sick slip to the Social Security office and the employer) and satisfies the requirements, the employee is entitled to receive a daily allowance during his leave, after a three-day waiting period. This allowance will be directly paid to the employer in case of subrogation. The daily allowance paid for sick leave is 50% of the basic daily wage (on average, the Social Security Daily Indemnity is of EUR 43.40). After 30 days of sick leave, the daily allowance is increased to 66.66% of the basic daily wage, if the employee has at least three children. After 3 months, the daily allowance will be re-evaluated.
If an employee’s work capacity and income have been reduced by at least 2/3, as a result of an accident or a non-occupational disease, the employee will be considered as an ‘invalid’ and he/she can obtain the payment of a pension disability to compensate for lost wages, by filing a demand before the CPAM (French Health Insurance).
If the accident or illness is work-related, the employee may receive, under certain conditions, a permanent disability pension.
The employee should be affiliated to the Social Security for at least 12 months on the 1st day of the month during which occurred the interruption of work followed by disability, or the recognition of disability status resulting from bodily premature wear.
In addition to the qualifying affiliation period, the employee should either have contributed on a salary at least equal to 2,030 times the minimum wage schedule during the 12 calendar months preceding the work interruption, or have worked at least 600 hours during the 12 months preceding the interruption of work or recognition of disability status.
Invalids are classified into 3 categories, depending on their level of disability, by the medical officer of the primary health insurance fund (CPAM):
- 1st category: invalid who is capable of remunerated employment;
- 2nd category: invalid who is absolutely unable to perform any occupation;
- 3rd category: invalid who is absolutely unable to exercise a profession and is compelled to resort to the assistance of another person to perform ordinary activities of life.
The amount of the disability pension received will depend on the category the person is in. Also, the category that has been determined is not definitive and may evolve.
Pensions: Mandatory and Typically Provided
The French retirement pension system of employees is structured into three components; the first two, the Basic retirement pension and the Complementary retirement pension are mandatory, hence, contributions are imposed on employees and employers, while the third, Additional pension (when implemented by the employee, it is primarily of savings products such as life insurance, the popular retirement savings plan (PERP) or “Madelin contracts” for non-salaried workers) is optional.
Basic retirement pension
The characteristic of the basic diets is that they are extremely fragmented. They number thirty-six structured around the professional status of their contributors (private sector, agriculture, civil servants, independent…) or a particular occupational category (SNCF, RATP, Ministers of Religion, …). For employees of the private sector, the fund is the National Elderly Insurance Fund (CNAV) and the largest pension fund.
Complementary retirement pension
For employees and managers covered for their basic pension of national pensions’ fund (CNAV) or MSA (MSA), the complementary pension is managed by two entities:
- for executives, it is the General Association of Supplementary Pension Institutions of Executives (AGIRC);
- for all employees, it is the Association of supplementary pension schemes (ARRCO).
Both associations formed an economic interest group: GIE AGIRC-ARRCO. An agreement signed in October 2015 provides for the creation in 2019 of a unified complementary regime.
Based on the principle of capitalisation by the employee, who saves for retirement, the additional pension is fairly marginal in terms of membership. It can be implemented by a company or individually. When implemented by the employee, it is primarily of savings products such as life insurance, the popular retirement savings plan (PERP) or “Madelin contracts” for non-salaried workers.