pwce news letter fr + uk actu sociale #94 nov 2017 · contribution of €72.61, divided between the...

no. 94Changes as of 1 January 2018 2Difficult working conditions: amendments introduced by the Macron order 5New statutory severance pay 9Quick overview of the other Macron orders 10In brief 13

4th quarter 2017

French social security updatePayroll and social benefits

Changes as of 1 January 2018 The 2018 Social Security Finance Bill (projet de Loi de Financement de la Sécurité Sociale) was presented to the Council of Ministers in October. Here is an overview of some of the key measures.

Social security ceiling

The annual social security ceiling for 2018 is set to be increased to €39,732 (from €39,228 in 2017).

The monthly social security ceiling would therefore be raised to €3,311 in 2018 (from €3,269 in 2017).

Hourly minimum wage

From 1 January 2018, the hourly minimum wage is set to be increased from €9.76 to €9.88.

AGIRC-ARRCO supplementary pension plans

Calculating contributions and ceilings

An AGIRC-ARRCO circular issued on 27 October 2017 provides the clarification that we had been expecting since the publication of the decree of 21 November 2016 scrapping deferred salary payments and the decree of 9 May 2017 making significant changes to the regulations on calculating and declaring headcount.

In summary, the circular provides details on the methods for calculating supplementary pension contributions from 1 January 2018 so that they are consistent with the methods for calculating social security contributions, as required under the monthly electronic payroll return (déclaration sociale nominative – DSN) system.

The circular reiterates and explains the following:• the end of deferred salary

payments, providing an examplethat is identical to the examplegiven in French social securityupdate no. 93 with respect to theceiling applicable to social securitycontributions in 2017;

• the rules on the period to whichamounts paid after an employmentcontract has been terminated orpursuant to a court decision relate(in this respect, the circular is veryclear because it abolishes one-offpayments, even in the event of acourt decision and regardless ofthe period to which the additionalremuneration relates);

• the social security ceiling for anemployee who arrives or leavesduring a given month, which willnow be prorated based on theactual number of calendar daysin said month rather than beingdivided by thirty;

• the social security ceiling for anemployee whose employmentcontract is suspended, whichwas hitherto only prorated ifsaid employee was absent for theentire payroll period between twopayment dates, which will now beprorated.

GMP contribution

The board of directors of AGIRC has decided to increase the amount of the minimum points guarantee (garantie minimale de points – GMP) (circular AGIRC 2017-10 DT of 16 October 2017) for 2018.

This contribution, which guarantees a minimum of 120 supplementary pension plan points per year for all managerial employees and those with equivalent status whose salary is lower than the social security ceiling or falls between this ceiling and a cut-off salary, will be increased to an annual amount of €872.52 from 1 January 2018 (compared with €844.56 in 2017), i.e., a monthly

Changes as of 1 January 2018 2Difficult working conditions: amendments introduced by the Macron order 5New statutory severance pay 9Quick overview of the other Macron orders 10In brief 13

French social security update | 94 | Payroll and social benefits 4th quarter 2017 2

contribution of €72.61, divided between the employer (€45.11) and the employee (€27.60).

GMP base

In light of the assumption that the annual social security ceiling will be set at €39,732 for 2018, the GMP calculation base for salary bracket B should increase to an annual minimum amount of €4,254.84 (for full-time employees present the entire year), provided that the AGIRC supplementary pension contribution rate does not also increase.

The cut-off salary below which the GMP contribution is applied will be €39,732 + €4,245.84 falling within salary bracket B, i.e., €43,977.84 per year.

Increase in the CSG

The rate of the CSG supplementary social security contribution tax will rise by 1.7 points. This increase will concern employment income (salaried and non-salaried), replacement income, property income, investment income and gambling losses/winnings.

The contribution paid on employment income and replacement income will therefore increase from 7.5% to 9.2%, but the deductible portion of the CSG will rise from 5.1% to 6.8%. The non deductible portion of the CSG will remain unchanged at 2.4%, as will the rate of the CRDS social security contribution tax which currently stands at 0.5%.

The increase in the CSG will not affect unemployment benefits, social security daily allowances or pensions qualifying for the reduced CSG rate which remains unchanged at 6.2% in the former two cases and at 3.8% in the latter.

Abolition of employee contributions to health and unemployment insurance

Under the 2018 Social Security Finance Bill, the employee contribution to unemployment insurance – which currently stands at 2.40% – will be abolished in two stages, pursuant to a decision of the French government. From 1 January 2018, it will be decreased by 1.45% to 0.95%, before being abolished from 1 October 2018.

In addition, the employee contribution to health insurance – which currently stands at 0.75%– will be abolished from 1 January2018. We are expecting a regulatoryprovision to this effect.

These measures are a result of the French government’s desire to boost employees’ purchasing power by cutting social security contributions by some 3.15%.

Competitiveness and employment tax credit (CICE)

Under the 2018 Social Security Finance Bill, the competitiveness and employment tax credit (crédit d’impôt pour la compétitivité et l’emploi – CICE) – which is scheduled to be abolished in 2019 – will be transformed into a reduction in employer contributions. From 1 January 2019, employer contributions on salaries representing less than 2.5 times the minimum wage will be decreased by 6%. The CICE will be maintained in 2018, but at a reduced rate of 6% (versus 7% currently).



Fillon reduction

With respect to salaries representing less than 1.6 times the minimum wage, the French government is planning to gradually reduce employer contributions to (i) health insurance, (ii) the family allowance fund, (iii) the national housing fund (fonds national d’aide au logement – FNAL), (iv) the supplementarypension scheme (AGIRC ARRCO) and(v) unemployment insurance, therebyextending the scope of the previous general reduction in social security contributions, more commonly known as the Fillon reduction.

This measure is set to enter into force on 1 January 2019. Consequently, in 2019 companies would benefit from these reductions, in addition to the reduction in the CICE calculated with respect to 2018.

Tax treatment of income from employee savings plans

From 1 January 2018, any income earned in an employee savings plan (company savings plan [plan d’épargne entreprise – PEE], collective pension plan [plan d’épargne pour la retraite collectif – PERCO], etc.) will be taxed at the rate in force when the income is earned rather than at the rate in force when it is recognised. However, for any income earned or recognised before 1 January 2018, the “historical rates” mechanism will continue to apply.

Start date of an occupational disease

Members of the French parliament wanted to amend the date considered to constitute the start date of an occupational disease.

Currently, an occupational disease is considered as such from the date on which the victim is informed by way of a medical certificate of the potential link between their disease and their work.

Under the legislation proposed by members of the French parliament, an occupational illness would start on the most recent of the following two dates:• the date on which the disease is

first medically diagnosed (i.e., thedate of the first examination by adoctor during which the diseaseis identified);

• the date two years priorto the declaration of theoccupational disease.

In other words, even if the disease was diagnosed many years ago, the date from which compensation would be due may not extend back more than two years prior to the date on which the occupational illness was declared. The amendment would apply to occupational diseases notified from 1 July 2018.

Tax treatment of free shares

The 2018 Social Security Finance Bill further amends the tax treatment of free share grants. Under an amendment tabled by members of the French parliament, the rate of the employer contribution with respect to free shares would be reduced from 30% to 20%.

It was only recently increased to 30% by the 2017 Finance Act (Loi de Finances), after having already been decreased to 20% by the 2015 Macron Law. The new reduced rate of 20% would apply to free shares granted after the publication of the 2018 Social Security Finance Act (Loi de Financement de la Sécurité Sociale).

Simplification of payslips

As already mentioned in French social security update no. 88 for the second quarter of 2016, the legislation governing the simplification of payslips has been published.

It entered into force on 1 January 2017 for employers with 300 employees or more and will enter into force on 1 January 2018 for employers with fewer than 300 employees.Therefore, all employers must now prepare simplified payslips. •



Difficult working conditions: amendments introduced by the Macron order

Contributions

Before 1 October 2017 (i.e., before the Macron order of 22 September 2017 transforming the name of the difficult working conditions account from Compte Personnel de Prévention de la Pénibilité to Compte Personnel de Prévention), all employers falling within the scope of the measure had to pay a general contribution of 0.01% of salaries paid to employees with an employment contract (regardless of whether said contract was a permanent or fixed-term contract or a full-time or part-time contract).

From 1 October 2017 until 31 December 2017, the general contribution will remain unchanged.

However, the additional contribution will only be payable by employers who expose at least one of their employees to six risk factors, i.e.:

• work in hyperbaric chamber;• extreme temperatures;• noise;• night work;• shift work;• repetitive work.

As of 1 January 2018, the general contribution and the additional contribution will be abolished.



Declaration of exposed employees

The requirement to declare employees exposed to risk factors has also been amended.

From 1 January 2017 to 30 September 2017, all employees exposed to the ten risk factors set out in article L4161-1 of the French Labour Code (Code du travail) as amended by the order of 22 September 2017 had to be declared, i.e.:

• “Significant physical constraints: – manual handling of heavy loads; – awkward postures, such as those

putting stress on joints; – mechanical vibration.

• Aggressive physical environment: – hazardous chemicals, including

dust and fumes; – work in hyperbaric chamber; – extreme temperatures; – noise.

• Certain working patterns: – night work, under

the conditions set out in articles L3122-2 to L3122-5;

– shift work; – repetitive work requiring

employees to make frequently repeated high-speed movements with all or part of an upper limb.”

From 1 October 2017, only employees exposed to the risk factors set out in paragraphs 2 (sub-paragraphs b, c and d) and 3 of article L4161-1 of the French Labour Code as amended by the order of 22 September 2017 will have to be declared, i.e.:

• “2° Aggressive physicalenvironment:

– work in hyperbaric chamber; – extreme temperatures; – noise.

• 3° Certain working patterns: – night work, under

the conditions set out in articles L3122-2 to L3122-5;

– shift work; – repetitive work requiring

employees to make frequently repeated high-speed movements with all or part of an upper limb.”

• Employees exposedto the following risk factors nolonger have to be declared:

– “1° Significant physical constraints: - manual handling of heavy loads; - awkward postures, such as those

putting stress on joints; - mechanical vibration.

• Aggressive physical environment: – hazardous chemicals, including

dust and fumes.”

However, it looks as though implementing these amendments will not be straightforward, in particular for employers who wait until the end of the year to measure – either in number of hours or in number of interventions – the potential exposure of their employees to the risk factors.



Article D4161-2 of the French Labour Code, which referred to the previous version of article L4161-1 of said Code, defined the risk factors and their exposure limits as follows.

The occupational risk factors and exposure limits set out in article L4161-1 are thus as follows:

Significant physical constraints

OCCUPATIONAL RISK FACTORSLIMIT

Action or situation Minimum intensity Minimum

a) Manual handling of heavy loads, as defined in article R4541-2

Lift or carry 15 kg per load

600 hours per year Push or pull 250 kg per load

Employee moves with the load or pulls/pushes the load on the ground or lifts/carries the load above shoulder height 10 kg per load

Total heavy loads handled 7.5 tons per day 120 days per year

b) Awkward postures, such as those putting stress on joints Employee holds arms in the air above shoulder height or squats or kneels or twists torso at a 30 degree angle or bends torso at a 45 degree angle 900 hours per year

c) Mechanical vibration, as set out in article R4441-1 Vibrations transmitted to hands and arms Exposure of 2.5 m/s2 over a reference period of 8 hours

450 hours per year Vibrations transmitted to the whole body Exposure of 0.5 m/s2 over a reference period of 8 hours



Aggressive physical environment

Certain working patterns

OCCUPATIONAL RISK FACTORS OCCUPATIONAL RISK FACTORS

Action or situation Minimum intensity Minimum duration

a) Hazardous chemicals, as set out in articles R4412-3 and R4412-60, including dust and fumes

Exposure to a hazardous chemical listed in one or several of the hazard classes/categories defined in Annex 1 of Regulation (EC) no. 1272/2008 and set out in a decree of the French Labour Minister

For each of the hazardous chemicals, the limit is determined by applying an evaluation grid which takes into account the following criteria: (i) type of penetration, (ii) class of emission or contact of the chemical in question, (iii) method of use or manufacture, (iv) collective or individual protection measures in place and (v) duration of exposure. The evaluation grid is defined in a decree of the French Labour Minister and the French Health Minister

b) Work in hyperbaric chamber, as defined in article R4461-1 Interventions or projects 1,200 hectopascal 60 interventions or projects per year

c) Extreme temperatures Less than or equal to 5 °C or more than or equal to 30 °C 900 hours per year

d) Noise, as set out in article R4431-1 Exposure to a noise level of at least 81 decibels (A) over a reference period of 8 hours 600 hours per year

Exposure to a peak sound pressure level of at least 135 decibels (C) 120 times per year

OCCUPATIONAL RISK FACTORS OCCUPATIONAL RISK FACTORS

Action or situation Minimum intensity Minimum duration

a) Night work under the conditions set out in articles L3122-2 to L3122-5 1 hour of work between midnight and 5 a.m. 120 nights per year

b) Shift work Shift work requiring at least 1 hour of work between midnight and 5 a.m. 50 nights per year

c) Repetitive work requiring employees to make frequently repeated high-speed movements with all or part of an upper limb

Cycle time of less than or equal to 30 seconds: 15 or more technical actions 900 hours per year

Cycle time of more than 30 seconds, variable cycle time or no cycle time: 30 or more technical actions per minute



New statutory severance paySeveral amendments to statutory severance pay regulations were introduced at the end of September, the first by way of an order dated 22 September 2017 (which was published in the Official Journal on 23 September 2017) and the others by way of a decree dated 25 September 2017 (which was published in the Official Journal on 26 September 2017).

Seniority condition

The first amendment (introduced by the order) concerns the seniority required to be eligible for severance pay. For dismissals notified from the day following the publication of the order in the Official Journal (i.e., from 24 September 2017), it has been decreased from one year to eight successive months of service with the same employer.

Statutory severance pay schedule

The amount of severance pay has also been amended. It has been increased from one-fifth of one month’s salary per year of seniority plus two-fifteenths of one month’s salary for each year beyond ten years to one-quarter of one month’s salary for each of the first ten years of seniority and one-third of one month’s salary for each year beyond ten years.

In reality, the amendment only affects the calculation of the amount of severance pay due for the first ten years of seniority, as one-fifth of one month’s salary plus two-fifteenths of one month’s salary equal the one-third of one month’s salary due for each year beyond ten years.

The amendment applies to dismissals notified from the day following the publication of the decree in the Official Journal (i.e., from 27 September 2017).

For authorised contractual terminations, the date on which the agreement is sent to the authorities for authorisation will determine whether the amount of severance pay is calculated using the old or the new schedule.

Calculating seniority

The decree specifies that eight full months of seniority are required to be eligible for severance pay. However, it does not stipulate whether calendar months or an equivalent number of months (i.e., “rolling” months) should be used. In the absence of this information, there is nothing to stop an employer from narrowly interpreting the decree and refusing severance pay to an employee who has eight rolling months of seniority but not eight full calendar months. •



Quick overview of the other Macron ordersLots of other amendments have been introduced by the Macron orders which were published at the end of September 2017.Many of them contain provisions that will require decrees or negotiations before they can be implemented, while others – such as the amendments made to statutory severance pay – are immediately applicable.

E-working

One of the orders amends the process by which companies implement e-working:• by way of a collective agreement or

charter for regular e-working;• by simple agreement between

the employee and the employerfor one-off e-working, i.e., inexceptional circumstances (e.g., atransport strike or family event).

Failing an agreement or charter, regular e-working is no longer possible.

The new article L1222-9 of the French Labour Code clearly and precisely establishes that any accident which occurs at the place where the e-worker performs their duties isdeemed to constitute a workplaceaccident within the meaning of theFrench Social Security Code.

Employers should therefore be extremely vigilant and declare all accidents which occur when their employees are e-working, even if this means subsequently contesting whether any such accident is in fact a workplace accident, rather than presuming that there is no link between the accident and the work that was being performed by the e-worker and disregarding their obligations with respect to declaring workplace accidents.



DAMAGES FOR DISMISSAL WITHOUT GENUINE AND PROPER CAUSE

Seniority of employee in the company (in full years)

Minimum amount of damages (in months of gross salary)

Maximum amount of damages (in months of gross salary)

0 Sans objet 1

1 1 2

2 3 3,5

3 3 4

4 3 5

5 3 6

6 3 7

7 3 8

8 3 8

9 3 9

10 3 10

11 3 10,5

12 3 11

13 3 11,5

14 3 12

15 3 13

16 3 13,5

17 3 14

18 3 14,5

19 3 15

20 3 15,5

21 3 16

22 3 16,5

23 3 17

24 3 17,5

25 3 18

26 3 18,5

27 3 19

28 3 19,5

29 3 20

30 and above 3 20

New damages schedule

One of the orders introduces a provision that the French President has championed for many years: a cap on the amount of damages awarded by the Industrial Tribunal in the event of dismissal without genuine and proper cause.

The new schedule applies to legal proceedings with respect to dismissals notified after 23 September 2017.



Repeal of the generation contract

Order 2017-1387 of 22 September 2017 (which was published in the Official Journal on 23 September 2017) repeals the generation contract scheme, which is no longer applicable from 24 September 2017. Under the scheme, employers had to retain an older employee and hire a younger one (under 26 years), in return for financial support. The support granted prior to the repeal of the scheme is maintained and will continue to be paid to employers until its expiry.

Unfitness to work – Amendments

Scope of the redeployment obligation

Order 2017-1387 of 22 September 2017 (which was published in the Official Journal on 23 September 2017) also redefines employers’ redeployment obligation with respect to employees who have been declared unfit to work.

In particular, the order narrows the redeployment obligation to France, meaning that employers belonging to international groups no longer have to seek redeployment opportunities outside France. For the purposes of defining a group, it refers to the definition used with respect to the regulations on group committees (article L2331-1 of the French Labour Code).

The order also states that in the event of unfitness for professional reasons, when the registered office of the dominant company is not located in France, the group corresponds to the group of companies established in France (article L1226-10 of the French Labour Code). This measure therefore extends the redeployment obligation to foreign groups operating in France.

Procedure for contesting the opinion of the occupational doctor

Until 1 January 2017, the procedure for contesting the opinion issued by the occupational doctor consisted in asking the Industrial Tribunal to appoint an expert doctor. However, the low number of expert doctors quickly became a problem and the procedure has therefore been amended under the law authorising the French government to legislate via orders.

The Industrial Tribunal now rules on disputes relating to the opinion, suggestions and conclusions issued by the occupational doctor.

However, the order provides that the new procedure will only apply after the implementing decree has been published, at the latest on 1 January 2018.

Creation of a “collective contractual termination” procedure

Employers will be able to implement the “collective contractual termination” procedure promised by the French government in connection with a voluntary redundancy plan. It will be authorised by the French authorities and is designed as a half measure between collective redundancy (with or without an employment protection plan) and individual contractual termination, which is already widely used in some companies that do not meet the criteria for implementing a collective redundancy plan. However, the French parliament has succeeded in ensuring that the compensation paid in connection with “collective contractual termination” will be totally exempt from income tax, like the compensation paid in connection with an employment protection plan. •



AGIRC-ARRCO registration for new companies

An AGIRC-ARRCO circular issued on 6 October 2017 introduces amendments to the AGIRC-ARRCO registration process.

Until now, new companies had to register with the AGIRC-ARRCO pension schemes in the same social protection group (regardless of whether the collective agreements applying to their sector of activity designated a specific fund) as soon as they were created, even if they did not have any employees. From now on, new companies are formally registered and receive their registration certificate only when they hire their first employee.

In addition, the joint committees have adopted a new list of professions which refers exclusively to the collective bargaining agreement in force in order to determine the profession to which a company belongs.

New form for reporting workplace or commuting accidents

Employers must report a workplace or commuting accident as soon as they become aware of it, regardless of whether it results in sick leave. Pursuant to article R441-3 of the French Social Security Code, the declaration must be made to the victim’s local social security office (caisse primaire d’assurance maladie – CPAM) within 48 hours.

The dedicated form for reporting a workplace or commuting accident was recently amended by a decree published in the Official Journal. The new CERFA 14463*03 replaces the old CERFA 14463*02. As before, the form can be obtained from a CPAM or general social security fund (caisse générale de sécurité sociale).

in brief



It is also available at www.ameli.fr and www.service-public.fr where it can be completed online and/or printed and at www.net-entreprises.fr where it can be submitted electronically.

The decree of 23 December 2015 pursuant to which the previous version of the form for reporting a workplace or commuting accident was introduced has therefore been repealed.

Inclusion of Management Board members’ remuneration in the payroll tax base

On 19 June 2017, the Conseil d’Etat decided that the remuneration of the members of the Management Board of a joint-stock company (société anonyme) with a Management Board and a Supervisory Board who are corporate officers with the same status as the Chairman of the Board or Directors and the Chief Executive officer of a traditional joint-stock company should be included in the payroll tax base (CE decision no. 406064).

The administrative court made this decision based on the position and role of said officers within the company and goes further than article L311-3 of the French Social Security Code, which expressly states that the remuneration of chairmen of boards of directors, chief executive officers and chief operating officers of joint stock companies, minority managers (gérants minoritaires) of limited liability companies (sociétés à responsabilité limitée) and chairmen

and senior managers of simplified joint-stock companies (sociétés par actions simplifiées) should be subject to contributions under the French general social security system.

The Conseil d’Etat considers that, by aligning the payroll tax base with the social security contribution base and then the CSG base, the legislator wanted to include the remuneration of senior managers

(e.g., Management Board members) who are treated in the same way as the people expressly listed in article L311-3 of the French Social Security Code.

This reasoning is not inconsistent with the reasoning provided by the Conseil d’Etat in the two rulings which it handed down on 21 January 2016 (see French social security update no. 88 for the second quarter of 2016). This latest decision simply clarifies its position. However, it could be concluded that the remuneration of senior managers who are not subject to social security contributions because they do not have the status of employee and thus do not qualify for the French general social security system should be excluded from the payroll tax base. •



pwce news letter fr + uk actu sociale #94 nov 2017 · contribution of €72.61, divided between the...

Documents