Clarification of the value-sharing bonus by BOSS
1 January 2023
It is recalled that the value-sharing bonus (PPV) is an optional scheme created by law 2022-1158 of 16 August 2022 “purchasing power” which perpetuates the former exceptional purchasing power bonus.
As a reminder, the PPV, set up in accordance with the terms and conditions of a profit-sharing agreement or by unilateral decision after consultation of the CSE if it exists, can be paid to all employees from 1st July 2022.
This bonus is exempt from social security contributions up to a limit of EUR 3,000 per beneficiary and per calendar year, which may be increased to EUR 6,000 under certain conditions. The exemptions from CSG-CRDS, income tax and payroll tax This bonus, subject to the same ceilings, is temporary and subject to a salary ceiling: it is reserved for bonuses paid between1st July 2022 and 31 December 2023 to employees who, during the 12 months preceding their payment, received remuneration of less than 3 times the annual value of the SMIC.
The PPV was the subject of an instruction on the BOSS website on 10 October 2022, which was updated on 21 December. This update makes it possible to provide useful administrative clarifications, it being specified that these relate essentially to the application of the modulation criteria.
- Administrative clarification of the modulation rules
> Clarification of the date of assessment of the modulation criteria
Article 1, III-2° of the above-mentioned law provides that the amount of the premium may vary between beneficiaries according to :
- the classification level,
- seniority in the company,
- the duration of actual presence,
- the working time stipulated in the employment contract.
Originally, the instruction provided that all these criteria were assessed over the 12 months preceding the payment of the bonus, thus creating practical problems.
It is now specified that (Instruction 3.3):
- the criteria of actual presence, remuneration or working time provided for in the contract must be assessed over the 12 sliding months preceding the payment of the PPV;
- and that the other criteria, namely the level of classification and seniority in the company, should be assessed at the time of payment of the bonus.
> Relaxation of the presence requirement
The instruction specifies that the length of the employee’s presence in the company can be assessed, as desired (Instruction 3.4):
- depending on the employee’s actual presence in the company,
- under the same conditions as for the calculation of the SMIC taken into account for the general reduction in employers’ contributions, i.e. in proportion to the duration of work and using the same rules for taking absences into account.
In any event, regardless of the option chosen, the instruction mentions that the parental leave provided for in Chapter V of Title II of Book II of the first part of the Labour Code is still treated as a period of actual presence. These periods cannot therefore be taken into account to reduce the amount of PPV.
It is also important to note in this respect that the instruction did not originally provide for the possibility of assessing presence on the basis of actual presence in the company. Consequently, if this criterion is chosen to modulate the bonus, the agreement or unilateral decision should specify how it is to be assessed.
> The seniority criterion may not lead to pay differentials
Through two examples, the instruction establishes a limitation of the modulation possibilities.
The first example cited relates to a bonus set up in the company for a maximum amount of 2,500 euros and for which the agreement provides that its amount is modulated in particular according to the seniority of the employees, it being specified that when the employees have at least 10 years’ seniority, they receive a bonus of 2,500 euros and when they have less than 10 years’ seniority, they receive a bonus of 50 euros.
Through this example, the administration indicates that the modulation modalities according to the seniority of the employees in the company fixed by the agreement lead to disproportionate differences in the amount of PPV before combination with other modulation criteria such as the presence criterion. The instruction concludes that this is not the intention of the legislator and that, in the absence of compliance, these PPVs will not benefit from the exemption.
Conversely, in the context of a second example, the instruction specifies that the modulation methods set by the agreement would comply with the rules set by the legislator in the following case:
A PPV set up in the company for a maximum amount of 1,500 euros, for which the agreement would provide that its amount would be modulated according to the length of time employees have actually been with the company in relation to the date of payment, it being specified that employees who have been with the company for at least 12 months would receive 100% of the bonus, those who have been with the company for at least 6 months would receive 50% of the bonus, and those who have been with the company for less than 6 months would receive 25% of the bonus.
While the instruction provides useful clarifications through these examples, which are probably dictated by taking into account the opinion of the Council of State, which had warned of the risk of setting modulation criteria without a framework, it is nonetheless noted that there is no definition of the notions of ” disproportionate deviation” than “legislative intent“.
In this sense, no indication of differences in the amounts allowed after application of the seniority criterion is givenand the Administration nor does it comment on the application of the of this new rule of proportionality of differences to the other modulation criteria, nor even on the possibility or impossibility of achieving a PPV equal to zero due to these criteria.
This lack of precision creates real legal uncertainty. In this respect, this legal uncertainty appears to be all the more important for PPVs paid before the update of the instruction, since those that did not take these new contributions into account could potentially be called into question…
- Administrative clarification regarding employees of an employers’ group
The instruction also specifies that employees of employer groups placed at the disposal of user companies benefit from the PPV under the same conditions as employees of temporary employment agencies.
As a reminder, with regard to temporary workers, the instruction specifies that the user company which pays the PPV to its employees must communicate to the temporary work company :
- the unilateral decision or agreement establishing it,
- the identity of the temporary employees concerned,
- the amount of PPV for each of them,
- and the date of payment of the VPP to its permanent employees.
Even if the presence condition is assessed at the level of the user company, the PPV can be paid in a staggered manner by the temporary employment company, even after 31 December 2023, but before 29 February 2024 in order to qualify for the exemptions (Instruction 2.11) – the exemptions from CSG-CRDS, income tax and payroll tax are targeted here.