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New Legislation: Short-Time Work

Published on : 02/04/2021 02 April Apr 04 2021
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Newsletter / New legislation

Going business in France requires keeping up to speed with the quickly evolving and growing legislation. Whether it’s Labor Law, Tax, Social Security, or other, we’re here to guide you through the new rules of the game 

Short-time Work (“Activité Partielle”)  is a French public policy tool designed for the prevention of economic redundancies, which enables employers to totally or partially discharge their obligation to give work to their employees and to have all or part of the cost of the compensation paid to employees covered by the State. It is governed by Articles L. 5122-1 et seq. and R. 5122-1 et seq. of the Labour Code. 

During periods of short-time work, the employment contract is suspended but not terminated.
Faced with the scale of the health crisis linked to COVID-19, the French government decided to improve the system, to provide France with the most protective short-time work scheme in Europe during the time of the pandemic. The decree n°2020-325 of 25 March 2020 implemented this reform. It has improved the scheme for all companies and provided for even more favorable indemnification for companies compelled to shut down like restaurants and those operating in so called “protected business sectors”. The protected business sectors, listed in a Decree dated 29 June 2020, supplemented over the time, are those either:
 
- in the sectors of tourism, hotels, restaurants, sports, culture, passenger transport and events, and which are particularly affected by the consequences of the epidemic in terms of the reduction in their activity, particularly because of their dependence on receiving the public; 
 
- or in sectors whose activity depends on those of the previous sectors, and which suffer a very sharp drop in turnover of at least 80% during the period between 15 March and 15 May 2020. 

This scheme is also applicable to employees having to stay at home to take care of their children when schools or their class is closed.

A year into the pandemic, many decrees were published on 31 March 2021 including two outlined below:
 
The first text postpones to 1 May 2021 the reduction of the partial activity allowance rate paid by the employer to the employee to 60% of his or her previous gross remuneration. It means that until this date, the current rate will remain of 70% of the hourly rate (this hourly rate being capped). 
 
As of 1 May 2021, it will become of 60% except for protected businesses and for those of the employees being placed under the short time scheme due to the need to take care of their children or vulnerable dependent. The 60% rate will become applicable to all businesses as of 1 July 2021.
 
The second text extends until 30 April 2021 the favorable indemnification of the employers by the French state as it maintains the 70% rate for protected businesses and 60% for the others.

As of 1 May 2021, this rate will drastically fall down for non- protected businesses as it will be of 36%., this rate being applicable to all companies (“protected” or not) as of 1 July 2021.

  
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