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​New Legislation | In depth look: the loi Pacte and its effect on company staff thresholds

Published on : 19/10/2018 19 October Oct 10 2018
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Newsletter / New legislation

After reforming French labour law, President Macron’s government speeds ahead with new bills to help favour economic development and modernization of the French system. Finding inspiration other legal systems, the next step for the government is the “Loi Pacte”, a vast legal project intended to help companies innovate and create new jobs. 2019 will be another year of change for companies doing business in France.
 
One of the main goals of this law is to simplify company thresholds, that is to say the thresholds that determine which obligations apply, based on the companies’ size. The new thresholds are set at 11, 50, and 250 employees. The obligations concern a wide number of labour, social security, and fiscal payments and entitlements such as the possibility to implement profit sharing as of 50 employees, compensatory rest for overtime hours, and contribution to certain public funds, the obligation to have a company handbook, mandatory installations on company premises, etc.
 
Let’s take a closer look:
 
New definition for workforce calculation
 
The bill seeks to harmonize the method of calculation of the workforce by providing a single rule in the Social Security Code. In order to calculate the annual workforce, the average number of persons employed each month in the previous calendar year should be taken into account in all cases.
 
Crossing a 5-year workforce threshold
 
Crossing a staff headcount threshold leads to new reporting requirements for a company or changes in its relations with employee representative bodies. However, employment contracts are not directly affected by a change of threshold. Exemptions from contributions or the payment of taxes attached to contracts would, however, be affected.
 
There are already systems of freezing and smoothing over time to allow them to prepare for these new obligations.
 
The effects of the upward trend in the number of employees resulting in the crossing of a threshold would be adjusted by the project.

In fact, for this crossing to be taken into account, the threshold should have been reached or exceeded during five consecutive calendar years. In other words, the employer would not have to apply the rules subject to such a threshold until it has been crossed for at least five consecutive years. On the other hand, the downward crossing of a staffing threshold over a year would always have the effect of immediately exonerating the employer of the obligation in question. In the latter case (downsizing below the threshold), it should be reached again for 5 consecutive years to regenerate the corresponding obligation.

This is a measure intended to protect companies whose workforce fluctuates, and to lift any potential hiring obstacles.

These new rules for determining the number of employees and crossing the threshold over 5 years would not only apply to the Social Security Code but would also concern in particular the number of employees taken into account for:
  • access to holiday vouchers;
  • the payment of transport;
  • the employment obligation of disabled workers;
  • social exemptions on the contributions of apprentices;
Modification of certain existing headcount thresholds

The bill modifies several staff headcount thresholds and raises many thresholds from 20 to 50 employees.
 
The Labour Code is also affected. The main innovation: the obligation to establish rules of procedure (“règlement intérieur” would only start with 50 employees instead of 20.
                                                                             
A company exceeding a certain threshold is obligated to make available to trade union sections a room common to all sections. This threshold previously set at 200 employees would be increased to 250 employees. Below this threshold, the company is not required to make a room available.
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