Employment Law – Partial activity

In connection with the health crisis linked to the Covid-19 pandemic, supporting measures intended for companies have been announced by the French Minister of Economy and Finances, starting with a reinforcement of the partial activity mechanism.

This mechanism has been modified through the decree n°2020-325 passed on 25 March 2020, the order passed by the Government on 27 March 2020, which were clarified on some points by a Q&A published by the French Minister of Employment and Labor (lastly updated on 3 April 2020).

These new rules are applicable for all partial activity requests established by Companies since 1 March 2020.

The following elements are to be highlighted:

• The 2-day time period allowing Companies to invoke an implicit agreement by the Administration regarding their partial activity request is extended to all cases of applications (and no longer to the only requests based on exceptional circumstances), but only until 31 December 2020;
• The “prior” condition of the consultation of the Social and Economic Committee (CSE) is from now on excluded only in case of partial activity resulting from a damage or from exceptional circumstances;
  A company may establish one single joint application for several sites on the electronic application which should be up and running in the course of April 2020;
• The partial activity allowance paid by the State to companies shall be equal, for all unworked hours since 1st March 2020, to the amount of the indemnity paid to the employees, within the limit of 70% of 4.5 gross SMIC (French minimum wage);
• In order not to penalize companies, they have a period of 30 days to file their application of partial activity for exceptional circumstances, with retroactive effect;
• The maximum period for partial activity is extended from 6 to 12 months, the hours that may give rise to an indemnification being from now on capped at 1607 hours a year;
  Employees subject to an organization of their working time computed in days (“forfait-jours”) are from now on eligible for partial activity in the form of a reduction in their working time.

Formalities

Application for the partial activity scheme must imperatively be submitted online on the dedicated portal: https://activitepartielle.emploi.gouv.fr/aparts/

Considering the exceptional circumstances, companies benefit from a period of 30 days to proceed with their application for partial activity; the authorization shall be retroactive.

It is consequently not necessary to wait for the authority’s authorization to place the employees on partial activity.

This 30-day period only applies to applications based on the ground of “exceptional circumstances” (or a damage).

Failing any answer from the Direccte (Labour Administration authority) within a period of 2 days as from the receipt of the application, the company concerned may avail itself of an implicit authorization to place the employees on partial activity, with retroactive effective.

This 2-day period shall apply regardless of the ground of application for partial activity (and not only upon an application based on “exceptional circumstances”) and up until 31 December 2020.

The partial activity applies to protected employees without having to obtain his/her consent provided it affects all the employees of the company, the site, the department or the workshop where the protected employee works.

The Social and Economic Committee (CSE) must only be consulted on the recourse to partial activity in companies employing at least 50 employees. Besides and as an exception, even in companies without CSE, the partial activity request can be granted if they commit to organize the proper elections as soon as possible.

When the application for partial activity is based on an exceptional circumstance (example: Covid-19) or upon the occurrence of a damage, the opinion of the CSE may only be sought after the implementation of the mechanism and then transmitted to the Direccte within 2 months at the latest following the application for partial activity.

Reasons in support of the application for partial activity authorization

As regards companies concerned by the closure order dated 14 March 2020, the recourse to partial activity shall naturally be granted without any difficulty.

For all other companies, it will on the other hand be indispensable to give specific reasons to their application for partial activity; as recently announced, the Direccte will conduct strict controls in order to avoid that companies massively resort to the partial activity scheme while they could in practice continue to operate subject to a mere adaption of their organization.

In practical terms, it will consequently be necessary, in the application for authorization:

• to state that the application is linked to the coronavirus (“exceptional circumstance” as provided for under 5° of article R. 5122-1 of the French labor Code),
• to detail the ground for the application and the concrete consequences on the situation of the company’s business activity:
  – Disruption in the company’s functioning due to the massive absence of employees who are essential to the activity (sickness, absence for childcare, etc.) by providing proof, in particular through an organization chart, of the impact of the absent employees on the company’s functioning,
  – Decrease in activity linked to the coronavirus (cancellation of orders, etc.),
  – Suspension of export or import activities due to the closure of borders,
  – Supply difficulties in raw materials or energy (lack of ores, metals, electronic components, rubber, etc.).

It will also be possible to resort to partial activity to implement a work organization complying with the protective measures recommended by the Government. For example, it will be possible to reduce the working time of employees assigned to a workshop or a warehouse and to organize their presence by shift to facilitate compliance with the distancing measures.

It should finally be noted that the Direccte recommend declaring a relatively long period of partial activity, for example until 30 June 2020, considering the lack of visibility as to the pandemic duration.

This option should avoid companies being compelled to ask for extension of partial activity and accordingly avoid them to be obliged to undertake commitments in favor of the employees (keeping workers in employment, specific training measures, etc.), since such commitment must be taken by any company which apply a second time for partial activity within a 36-month period.

Employees concerned

All employees holding an employment contract may be placed on partial activity subject to the following conditions.

As regards employees subject to an organization of their working time computed in days (“forfait jours”), the decree and the order confirm the possibility to reduce the duration of their working time (up until now, they were only eligible for partial activity upon total closure of their department for at least half a day). However, we are still expecting a decree explaining the conversion of days and half-days into hours.

No legal provision excludes senior executives (within the meaning of the French labor Code, i.e. executives entrusted with important responsibilities implying large independence in the organization of their working time, who are empowered to take decisions in a largely autonomous way and who receive a remuneration which is among the highest in the company and who are, in this respect, excluded from the rules governing working time) from the partial activity scheme. That being said, some Direccte may have refused applications for partial activity concerning salesmen and senior executives on the grounds that they were not subject to the collective work schedule. The Q&A dated 19 March 2020 and circulated by the French Minister of Economy and Finances provides that “the senior executives are not eligible for partial activity as they are not submitted to the law governing working time.”

The order from 27 March 2020 however seems to include them in the partial activity mechanism by referring to “employees who are not submitted to legal or conventional provisions regarding working time”, while underlining that the rules for the calculation of the allowance paid by the state to the company and the indemnity paid by the company to the employee have still to be determined by decree.

Corporate officers (mandataires sociaux) are not entitled to benefit from partial activity.

Partial activity, a collective measure

Partial activity must be envisaged collectively for all the employees of a same department or a same work unit / project team, etc.

Accordingly, all employees within the same team concerned by the scheme should either be placed in “total” partial activity (upon closure of the department) or have their working time reduced within the same proportions (with the implementation, as the case may be, of shifts between team employees).

It should be noted that partial activity does not prevent from having employees performing on-call duties where necessary.

What is the amount of the allowance paid to employees placed on partial activity?

The employer is bound to pay to employees placed on partial activity an allowance, the amount of which corresponds to 70% of their gross remuneration brute (i.e. approximately 84% of the net salary), the amount actually received being at least of one net SMIC.

Hours not worked within the context of partial activity shall result in the payment of the allowance within the limit of the statutory working time (35 hours per week) or, when lower, within the limit of the working time applicable within the company or set forth in the employment contract over the period concerned.

Above that, hours not worked in the context of the partial activity shall not entitle to indemnification of the employees.

The employees under an apprenticeship or professionalization contract whom prior remuneration was lower than the SMIC will be granted a partial activity allowance equal to their prior remuneration.

Opposite to the prior rules governing partial activity, when training actions are implemented during the period of partial activity, the hourly allowance paid by the employer is the same as for employees who do not benefit from any kind of training measure during the hours off work.

Calculation basis of the partial activity allowance

The calculation basis of the partial activity allowance is the one retained for the computation of the holiday pay (indemnité de congés payés) (according to the method maintaining salaries).

By way of illustration:

Social security and tax regime of the partial activity allowance

The partial activity allowance is exempted from social security contributions but subject to CSG-CRDS contribution and to income tax.

To date, this favorable tax regime also applies to the supplement paid by the employer either pursuant to a collective bargaining agreement or voluntarily to maintain a net salary higher than 70% of their gross wages for its employees. However, the amount paid to employees to indemnify hours that are not entitled to indemnification under the partial activity mechanism (being hours exceeding the statutory working time) are subject to social security contributions.

Partial activity allowance paid by the French State to companies

The allowance paid by the French State to the employer was so far equal to €7.74 per hour not worked for companies with up until 250 employees (i.e. maximum €1,173,90 repaid) and €7.23 for companies with at least 251 employees (i.e. maximum €1,096.6 repaid).

The decree confirms a significant increase of that allowance.

This allowance shall indeed be equal, for all hours not worked since 1st March 2020, to the amount of the partial activity indemnity paid by the employer to the employees:

• within the limit of a monthly ceiling fixed, per employee, at 70% of 4.5 SMIC.

The decree confirms that this reference to the SMIC shall be understood as a reference to the gross SMIC.

In concrete terms, employers shall thus be fully repaid within the limit of €4,849.27 per month and per employee.

This measure is intended to meet the Government’s announcement to “cover 100% of the allowances paid”. It will meet that objective in the majority of cases.

• and a floor of €8.03 per hour not worked (except for apprentices and employees with a professionalization contract and whom prior remuneration was lower than the SMIC).

In practice, pay slips shall mention the number of hours indemnified in connection with partial activity by stating the rates applied and the sums paid to each of the employees concerned with respect to the relevant period.

When will the new measures become effective?

The decree confirms that its provisions shall apply to requests for indemnification relating to hours not worked since 1st March 2020.

The computer system of the Agence de Services et de Paiement (“ASP”) should be upgraded to take the new amounts into account only as from April.

As a first step, companies should thus be indemnified on the basis of the former amounts. A regularization should be carried out as a second step