New French Measures Affecting Employees and Employers Following Yellow Vest Demonstrations: Exemptions for 2018 Exceptional Bonus and 2019 Overtime
January 7, 2019
Authored by: Sarah Delon-Bouquet
French Parliament passed a bill last December 21, 2018 introducing urgent economic and social measures to improve employees’ purchasing power.
One measure concerns the payment of an exceptional bonus of up to 1,000 euros net, exempted from social contributions and income tax, to employees earning up to 3 times the yearly minimum wage. Another is an exemption from certain social contributions and from income tax for any overtime worked as from January 1, 2019.
The exceptional bonus measure concerns those employees that earn up to three times the minimum wage and is capped at 1,000 euros. The bonus must be paid between December 11 and March 31, 2019. Existing bonuses or those provided by employment agreements, company practices, collective or company labor agreements, and planned salary increases cannot benefit from the exemptions.
The amount of this bonus may only vary according to the level of remuneration, employee classification, effective presence during 2018 and working time. If an employer decides to grant a bonus to all of its employees, only those having earned up to € 53,945 in 2018 will benefit from the exemptions. As a reminder, social contributions amount to up to 25% for employees and 42% for employers. An employee without a spouse or children who earns up to three times the minimum wage, would pay up to 14% of income tax.
This bonus needs to be provided for by a company collective agreement or an agreement entered into with the personnel representatives. It may alternatively be unilaterally determined by the employer if the employer so decides prior to January 31, 2019, provided the personnel representatives are informed thereof prior to March 31, 2019.
As regards overtime, any overtime and complementary hours carried out as from 2019 will benefit from an employee pension social contribution exemption and an income tax exemption capped at 5,000 euros per year. This measure which was to be introduced in September 2019 will be effective as from January 1, 2019.
If you have a business in France, you can consider and implement these measures in 2019.
Finally, note that the French hourly minimum wage has increased by 1.5% and amounts to € 10.03 gross since January 1, 2019.
Bryan Cave Leighton Paisner LLP has a team of knowledgeable lawyers and other professionals prepared to help employers assess their obligations. If you or your organization would like more information on these new measures or other employment issues, please contact an attorney in the Employment and Labor practice group.