The bill on urgent economic and social measures following the announcements made by the French President on 10 December 2018 in response to the protests by the “yellow vests” (in French “gilets jaunes”) has already been adopted and published on 26 December such that the measures can apply as from 1 January 2019.
The main provision is the possibility for employers to pay their employees an exceptional bonus (“prime exceptionnelle de pouvoir d’achat”] which is tax-free and not subject to social charges and contributions.
Should the bonus be paid to every employee?
The bonus could be either granted to every employee or granted to only those whose salary level is below a certain ceiling.
In any event, the exemption from social charges and taxes is only applicable to employees whose remuneration is lower than the amount set out by the law (three times the minimum statutory wage calculated over a year [cf. below])
Only employees who are in employment with the company at 31 December 2018 or on the date of payment if the latter is prior to 31 December could be entitled to such a bonus.
What are the conditions to be able to benefit from such a bonus?
The exemption from social charges and taxes only concerns employees who have received an amount of salary which is lower than three times the minimum statutory salary calculated over the year 2018 i.e. 9.88 x 151.67 x 12 x 3 = 53946€.
The maximum amount of bonus which is free of social charges and taxes is 1000€ per employee.
The amount of bonus granted can vary depending on the beneficiaries and according to criteria such as the level of remuneration, the level of classification, the actual duration of employment with the employer during year 2018 or the working time set out in the employment contract.
The bonus cannot replace any other increase in salary or bonuses set out by an employee agreement, contract of employment or by customary practice within the company.
When should the bonus be paid?
The bonus should be paid between 11 December 2018 and at the latest on 31 March 2019.
What are the steps to be taken to put in place such a bonus?
The bonus could be implemented either by a unilateral decision of the employer or by a company-wide agreement (in French “accord d’entreprise”).
The unilateral decision or the company-wide agreement should determine the amount of the bonus as well as if necessary, the ceiling which limits the scope of beneficiaries and the variation in the amount of bonus granted depending on the criteria retained.
If the decision is taken unilaterally by the employer, it should be taken before 31 January 2019 and the employer should inform the staff representatives accordingly at the latest on 31 March 2019.
In addition, the new law also sets out that the payment of overtime performed from 1 January 2019 would be free of tax within an annual limit of 5000€ and sets out a reduction of employee social charges and contributions.