Preserve Employees by Avoiding Redundancies: The Partial Activity Scheme in France
By Santiago Guzmán, FIDAG SARL
Due to the COVID-19 pandemic and to prevent redundancies, numerous measures have been implemented by the French Government.
One of the most known measures is the partial activity scheme, that allows all companies whose activity is or has been reduced due to the COVID-19 and, in particular, those that are subject to an obligation to close down (restaurants, coffee shops, malls, shops, etc.), to benefit from a lump-sum allowance co-financed by the State and the UNEDIC (unemployment agency). Employees that have been placed in partial activity receive a compensatory indemnity from their employer. Through this scheme, the State and the UNEDIC will refund, in most cases fully, the sums paid by the employer to its employees.
How does it work?
- Partial activity scheme can be requested by businesses in exceptional circumstances (such as the COVID-19 pandemic);
- While the employment contract is suspended, the employee receives a compensatory indemnity from his employer. This indemnity must be at least equal to 70% of the prior gross remuneration. It can be increased by the employer;
- A partial activity request must be submitted by the employer online via a dedicated website;
- The employees’ representatives must be consulted about this measure. In the absence of employee representatives, the employer will directly inform his employees about the implementation of the partial activity scheme;
- Once the employer’s request is authorised by the DIRECCTE (labour administration), the employer can claim for the partial activity allowance, paid by the Services and Payment Agency (ASP). From 01 March 2020 to 31 May 2020, the partial activity allowance received by the employer was equal to 70% of the employee’s gross hourly pay. From 01 June 2020, the amount of the allowance has decreased: companies are thus reimbursed 60% of the gross salary, instead of the previous 70%. Sectors subject to particular legislative or regulatory restrictions (tourism, hotels and restaurants, cultural sector) are not concerned by this decrease. This percentage will probably be once again modified in the following months.
This scheme is part of the “whateverit- costs” French government policy to face the COVID-19 crisis. In 2020, the estimated partial activity cost was EUR 27 billion.
Santiago GuzmánGGI member firm
Audit and Accounting, Tax, Advisory and Corporate Finance
T: +33 1 42 80 20 81
FIDAG SARL was created in 1985 and specialises in accounting, auditing, and advice to SMEs where they are engaged in international operations, particularly tax issues, social and labour law, legal problems, accounting.
Santiago Guzmán is an Employment law counsel at Fidag and a former Attorney at Law (Paris and Madrid Bars). He advises international companies in all French labour law-related issues.
Published: Employment Law Newsletter, No.10, Spring 2021 l Photo: francoisartss - stock.adobe.com