The Main Changes Brought About By The Reform Of The French Unemployment Insurance System

Author:Ms Sara Bellahouel
Profession:Soulier Avocats
 
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In the wake of the reform of the French Labor Code implemented by the so-called Macron Ordinances of September 22, 20171 and the reform of the apprenticeship and vocational training system introduced by the Law on professional future of September 5, 20182, the reform of unemployment insurance is an additional part of the "major transformation" of the French labor market that has been carried out by Emmanuel Macron over the past two years.

In accordance with the announcement made last February, the Government re-took the leadership on this thorny issue after unsuccessful negotiations with the social partners, with the aim of achieving "full employment" 3. During a press conference on June 18, 2019, Prime Minister Édouard Philippe and Minister of Labor Muriel Pénicaud unveiled the key features of this reform which will be set out in a Decree to be published by the end of the summer.

Brief presentation of the main contemplated measures.

  1. COMPANIES: FINANCIAL SANCTIONS TO LIMIT THE USE OF SHORT-TERM CONTRACTS

    A bonus/penalty system for companies on short-term contracts

    The Government plans to introduce a bonus/penalty system on employers' unemployment insurance contributions based on the number of employees working under a fixed-term contract and temporary workers, which should be applicable from January 1, 2021, depending on how each company will behave during 2020.

    However, this system would only apply to companies with more than 11 employees in one of the following 7 business sectors identified as having the highest number of termination of employment contracts: manufacture of food, beverages and tobacco products; other specialized, scientific and technical activities; accommodation and catering; water-sanitation production and distribution, waste management and de-pollution; transport and storage; manufacture of rubber and plastic products and other non-metallic products; woodworking, paper and printing industries. It should be noted that the Government reserves the right to extend this measure to all business sectors at a later date.

    The amount of the unemployment insurance contribution, currently at 4.05%, would vary between 3% (for good performers) and 5% (for bad performers) depending on the company's practice.

    A flat-rate tax on fixed-term contracts in specific business sectors (CDD d'usage)

    As from January 1, 2020, a flat-rate tax of 10 euros would be payable by companies for each CDD d'usage (excluding employers of intermittent...

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