Exceptional tax-free bonus
Employers can award an exceptional bonus (called "prime exceptionnelle de pouvoir d’achat") up to a limit of €1,000, exempted from income tax and social security contributions.
Beneficiaries are employees who earn less than three times the statutory national minimum wage per year (i.e. approx. €53,945 / year). This bonus cannot replace salary increases or other type of bonuses. The employers have flexibility to determine the granting conditions (amount of bonus, resource ceiling, conditions of presence, etc.).
This exceptional bonus must be implemented through a collective bargaining agreement (negotiated at the company’s level) or a unilateral decision (easiest way).
- The bonus must be paid on March 31, 2019 at the latest to benefit from the exemptions.
- If the employer opts for a unilateral decision to implement such bonus, such decision will have to be issued before January 31, 2019.
We have worked on a template of unilateral decision for this exceptional bonus and would be happy to share it with you.
New tax exemptions on overtime payment
Overtime hours and performed by employees are exempted from income tax and from the employees’ share of social security contributions (pension insurance contributions). So no financial impact for the employers.
These exemptions apply to a maximum amount of €5,000 gross of overtime payment per year.
- Effective as from January 1, 2019.
Ensure that payroll is aware and applies these new exemptions.
Creation of a new single representative body:
Social and Economic Committee
The Social and Economic Committee is to replace all existing employee representative bodies (employee delegates / works council / health and safety committee) in companies with at least 11 employees and more.
An elected member will have to be appointed as referral for the prevention of the sexual harassment and sexism behaviours at the workplace.
- Effective as from the date of renewal of your existing representative bodies but no later than December 31, 2019.
Use the opportunity of this new election to negotiate an agreement on the committee’s running (number of meeting, matters to be subject to an annual consultation, etc.).
Gender wage gap: new binding measures to be taken
French law has introduced binding measures for eliminating gender pay gaps within companies employing more than 50 employees:
- They must disclose, each year, indicators on the wage gap between women and men (indicators are determined according to a specific method detailed in a Decree issued on January 8, 2019).
- If the result is below a certain threshold, the employer will have to propose a catch-up plan and ensure its effectiveness within 3 years.
Non-compliance with this new regulation and failure to obtain satisfying results incur a financial penalty of up to 1% of the total payroll.
- Employers must disclose their indicators every year before March 1.
- For their first publication, employers are granted a specific delay:
- From 50 to 250 employees: the first publication shall occur before March 1, 2020.
- More than 250 employees: the first publication shall occur before September 1, 2019.
Start collecting the relevant information to be ready for the deadline.
New withholding tax system
Wage tax are now withheld directly by employers through the employees’ payslips for all employees working and living in France. Therefore, employers are responsible for the time declaration and payment of the wage tax insofar as they collect and deduct it directly from the employees’ remuneration and then, remit it to the Tax Authorities.
- Effective as from January 1, 2019.
Macron’s national debate following “Gilets Jaunes” movement
In reaction to the “Gilet Jaunes” crisis, President Macron has launched a national debate open to all French citizens (people over 18 years old), representatives and charities. No major change in employment law is expected to this day but some employment issues will probably be debated.
- Effective from January 15 to March 15, 2019.
Financial exposure in case of litigation before the Labour Court
Some regional Labour Court have recently challenged the validity of the new judicial scale for damages for unfair dismissals. They consider that this scale that provides for a maximum amount for damages in case of unfair dismissals is in breach of international and national regulations, as it does not allow the judges to decide for an adequate and individual compensation.
We expect higher Courts to confirm the judicial scale, but this could be a typical subject to be debated in the framework of the national debate.