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Workforce Flexibility and Government Incentives in times of Covid-19 - France

Short-Term Work State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

In the context of the Covid-19, several regulations provide an employer with possibility for flexible workforce planning.

Teleworking may be imposed by employers. The government asked companies that are likely to organize teleworking in relation to their business to make systematic and widespread use of it.

Partial activity scheme allows employers, in certain circumstances such as this pandemic, to close down all or part of the business or to reduce the working hours of the employees concerned (see more details below).

Compensated leave: the employer should declare the work stoppage of its employees who are forced to stay at home due to the confinement order. The stoppage will be compensated by the social security system from Day 1 without a waiting period under certain conditions related to the employee's situation: having one or more children under 16 years old, not having teleworking solution, being the only parent who can keep the child etc.)

Unpaid leave/Days off: a draft bill contemplates the possibility for employer to impose employees to take their unpaid leave/days off - not yet applicable.

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

Teleworking: the employer must inform and consult the Works Council (now referred to as the Social and Economic Committee, "SEC") in case of a significant change in the organization of the working conditions. In the current context, the government encourages the use of videoconferencing. However, if urgency requires it, the employer may implement this measure of teleworking before consulting the SEC.

Partial activity scheme: in principle, the implementation of a partial activity scheme requires a prior information and consultation of the SEC. However, given the current circumstances and the urgency, it is possible to consult the SEC remotely or afterwards (see below for more details on partial activity).

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

Yes, as mentioned above, there is the partial activity scheme, the recourse to which will be facilitated by the government. The government seems to be facilitating access to the partial activity to a greater number of employees and companies. The conditions for the recourse of this scheme in the context of Covid-19 are still under discussions before the French Parliament and may be subject to change.

Partial unemployment

The French Government transformed the former partial activity system.

The employer shall still pay the employee an allowance equivalent to 70% of his hourly pay multiplied by the unemployment hours within the limit of 35 hours per week (or lower were applicable). The reimbusement made to employers of the given allowance is no longer based on a lump-sum capped at €7,74 per compensable unemployed hours but on the full partial activity allowance paid to employees placed under partial activity up to 4,5 times the minimum wage for growth (SMIC). The French Government is also entitled to take exceptional and temporary measures to limit the termination of employment contracts and to mitigate the effects of the downturn in activity by facilitating and strengthening the use ofpartial activity for all companies, irrespective of their size, in particular by temporarily adapting the social scheme applicable to allowances paid in this context and extending it to new categories of beneficiaries.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

The partial activity scheme benefits to companies which are obliged to reduce the working time of their employees or close down all or part of their business because of exceptional circumstances (economic situation, tightness of supply, exceptional accident or bad weather etc.). The Covid-19 has been deemed as a valid ""exceptional circumstance"" bit he French administration. However, the administration will assess the situation on a case by case basis and may refuse the benefit of the partial activity scheme if it considers that it does not have an exceptional impact on the company. As indicated above, some categories of employees were excluded from the benefit of the partial activity. However, a draft decree released on March 17 indicates that the scope of the partial activity will be extended to most of the employees.

  • Gov't paid sick leave

Paid for employees with sick dependents & extra sick

The conditions for the legal maintenance of wages have been improved by the recent publication of another ordinance

  • Gov't loans

3-5yrs of (a) €10m for SMEs and (b) €30m for MCs, depending on number of employees and turnover amount

  • Gov't guarantees

Max 90% of loans (3-7yrs) or overdrafts (12-18m), depending on number of employees and turnover amount

  • Credit mediation

Gov't support to reschedule debt w/ banks Also providing mediation between SMEs and clients/suppliers.

  • Force majeure

No delay penalties

  • Start up support

€4bn support announced to help start ups but no eligibility criteria announced at this stage

  • Govt' loans for new/innovative companies

State-guaranteed treasury loan of up to 25% of annual turnover or 2 years of payroll for newly created or innovative companies. No repayment will be required in the first year; the company may choose to amortize the loan over a maximum period of five years. Scheme enabling the State to guarantee 300 billion in cash loans. The guarantee may cover 70 to 90% of the amount of the loan, depending on the size of the company

  • Export credits

Setting up of reinsurance for short-term export credits with the "Cap Francexport" public reinsurance scheme, launched in October 2018, will be extended to support French exporters. The cap on outstanding amounts reinsured by the State has been doubled to €2bn, and eligibility has been extended to more destination countries.

  • Credit insurance

Public reinsurance on outstanding credit insurance up to €10bn, which will help companies to keep the credit insurance cover they need in order to maintain their activity.

  • Utilities and rent payment deferral

For VSEs and SMEs, water, gas or electricity bills and rents will be postponed for the time of the crisis.

  • Early corporate tax / VAT credit claims

Early repayment of corporate tax claims refundable in 2020 and accelerated processing of VAT credit claims

  • Tax/social contrib. deferral

March payments deferred w/o penalty. Social contribution deferred for April and March.

  • Sick leave

No waiting period for sick leave if Covid related.

No waiting period for derogatory Covid "sick leave" (for child care or vulenable employee).

  • Paid leave and other resting days

Paid leave can be enforced by employer within the limit of 6 working days provided a collective agreement applies (at branch sector level or in house collective agreement).

Resting days (autonomous employees resting days, working time reduction days...) within the limit of 10 working days can be enforced upon unilateral employer decision under related Covid economic justifications.

  • Procedural deadline

Procedural deadline arranged during the crisis.

  • Employees representation

Information and consultation procedures with employee representatives are facilitated (videoconference).Negotiation and execution of collective agreement are also facilitated.

  • Mandatory and voluntary saving plan

Premium payment conditions are modified.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

As mentioned above, the implementation of the partial activity scheme is subject to the information and consultation of the SEC. Given the circumstances, this information and consultation process may be done remotely or afterwards.

In addition, the authorization request which must usually be sent to the Labor Authority ("Direccte") before applying partial activity to the employees concerned, can now occur a bit later through the website: https://activitepartielle.emploi.gouv.fr/.

Indeed, as the website is saturated, the Ministry of Labor has announced that a period of 30 days is granted for companies to declare their partial activity, with retroactive effect to March 1, 2020.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 09 April 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.