France: Partial Activity During Covid-19 Pandemic

France: Partial Activity During Covid-19 Pandemic

On 26 March 2020, a new Decree was published providing new conditions in order for employers to benefit from help for partial activity during the Covid-19 crisis.

To help ease the burden put on employers during the crisis, French President Emmanuel Macron, announced an “exceptional and massive” aid package to help employers and their employees affected by the Covid-19 crisis.

The aid package includes financial help for a Partial Reduction of Activity (“Activité partielle”) scheme, often just referred to as partial activity, which will permit employees to keep at least 70% of their net wage and also prevent them from losing their jobs.

Partial activity is an existing scheme in France that supports businesses facing a decline in business/economic difficulties. The scheme helps by preventing economic layoffs and securing jobs. Partial activity only applies when certain conditions are met and offers employers the opportunity of reducing working time.

The French government has eased the eligibility criteria considerably in order to prevent the loss of jobs during the current pandemic. If the required conditions are met, businesses are strongly encouraged to use partial activity before resorting to redundancy measures.

Businesses must request to be part of the scheme and will receive a response from the Ministry of Work within seven days. Under the new rules set out in the Decree and if approved, employees will receive 85% of their usual net salary during the period they are not working and minimum wage (SMIC) earners will have their whole salary reimbursed. This will be paid by State aid.

The Decree has outlined some new conditions in order to benefit from partial activity and are now enforceable. The most significant changes outlined by Osborne Clark can be found below:

1. The staff representatives should be consulted with but their opinion can be rendered within two months after the request has been filed on the Labor administration’s website – however, staff representatives and employees should be informed beforehand.

2. The request to benefit from this scheme must detail:

  • the reason for the request: for example, exceptional circumstances and the coronavirus;
  • the detailed circumstances and economic situation giving rise to the request; to ensure the request is as strong as possible, it is recommended to provide as much detail as possible regarding the decline of business and/or impossibility to work for the employees, since a posteriori controls from the Labour administration are not excluded.

3. The employer will have to grant an indemnity to employees corresponding at least to 70% of their gross remuneration for every hour not worked, this indemnity will be free from social security charges and must be paid on usual payroll deadlines.

4. The State’s contribution will amount to 85% of the net of the compensation paid by the employer capped to 4,5 x the legal minimum monthly wage (SMIC).

5. The deadline for the administration to respond to the company’s request is reduced to around 7 days (instead of 15 days) – the absence of response is considered as tacit approval.

6. Employees under working time computed in days or hours over the year could be concerned by the partial activity scheme without restriction.

7. The duration of the scheme will be extended from 6 to 12 months if need be. However, the Labor administration recommends companies to limit the duration of partial activity until 30 June 2020 at the latest.

8. Companies benefit from a period of 30 days to file the dematerialized request for partial activity from the effective placement of employees in partial activity (so it is possible for the request to have retroactive effect up to 30 days). The company may have to pay the entire salary to the employees if the request is not accepted by the Labour administration.