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• Value-sharing bonus: the reform comes to an end

The two decrees implementing the law, which had been awaited for several months, were finally published on 30 June and 6 July 2024, bringing to a close the new system of value sharing in the event of an exceptional increase in net taxable profit introduced by the law of 29 November 2023. Three questions and answers have been added to this publication, clarifying certain issues. As a reminder, the law of 29 November 2023 transposing the ANI relating to the sharing of value within the company allows employers to pay employees, in respect of the same calendar year, one or two bonuses known as ‘value-sharing bonuses’ (PPV) exempt from all social security contributions, as well as other taxes, contributions and participations due on the salary. Implementation decree no. 2024-644 of 29 June 2024, published on 30 June 2024 and effective from 1 July 2024, specifies the deadline and procedures for informing employees and allocating the value-sharing bonus to an employee savings plan or a company pension savings plan. As a reminder, before the reform, the PPV was only paid in cash. From now on, employee beneficiaries will have the choice of receiving it or placing it in an employee savings plan, in which the funds are frozen for 5 years, with the advantage in this case of benefiting from exemption from tax and social security contributions (several conditions must be met in order to benefit, which we can explain in more detail if required). Applications must be made by employees within a maximum of 15 days of receiving the document informing them of the amount allocated to them and which they can request to be paid. If the company has an employee savings plan or a company pension savings plan, each sum paid out under the PPV must be the subject of a separate pay slip indicating, in particular, the amount of the bonus awarded to the person concerned and, if applicable, the deduction made for CSG and CRDS. This publication follows the publication online on 6 and 17 June 2024 by the Ministry of Labour of two questions/answers: one concerning companies with 50 or more employees required to set up a profit-sharing scheme, and the other concerning companies with fewer than 50 employees, which have the option of negotiating schemes that differ from the statutory profit-sharing scheme. A number of important points have been clarified, including the criteria for defining an exceptional increase in profits, the frequency of negotiations, the procedures for concluding the agreement and the level at which negotiations must take place. With regard to the definition of an exceptional increase in net taxable profit, the Ministry of Labour states that the list of criteria used to define an increase in net taxable profit, provided for in article L. 3346-1 of the French Labour Code, is only indicative (size of company, sector of activity, etc.). Other similar criteria may be negotiated in addition or instead by the social partners. These criteria may be set out in the preamble to the agreement where they exist, in order to prevent disputes. Companies that already have a profit-sharing or incentive agreement in force at the time of promulgation of the law are reminded of the obligation to enter into specific negotiations before 30 June 2024 on the definition of an exceptional increase in net taxable profit and on the arrangements for sharing the value with employees. However, no details are provided on the penalties for failure to negotiate. Decree no. 2024-690 of 5 July 2024, published on 6 July 2024 and in force from 7 July 2024, sets out the methods for calculating the threshold of eleven employees, above which companies not covered by the obligation to set up a profit-sharing scheme and making regular profits must, on an experimental basis and for a period of five years, for financial years after 31 December 2024, implement a value-sharing scheme. A new QA commenting on this scheme was published by the Ministry of Labour on 8 July 2024.  

• Calculation of termination payments in the event of part-time work on a therapeutic basis: reversal of case law on the salary base used as a reference for the calculation

Cass. Soc. 12 June 2024, FS-B, no. 23-13.975 In principle, compensation for termination of the employment contract is calculated on the basis of the reference monthly salary received by the employee prior to the termination of his employment contract. However, the Court of Cassation has ruled that if, during these periods, the employee is off work due to illness, the reference salary to be taken into consideration is that prior to the period of off work (Cass. Soc. 23 May 2017, no. 15-22.223). Until then, this principle did not apply to employees who had worked part-time on a therapeutic basis prior to the termination of their employment contract: the compensation of an employee who had returned to work part-time on a therapeutic basis had to be calculated on the basis of the wages actually received by the employee during that period (Cass. Soc. 26 January 2011, no. 09-66.453). In its ruling of 12 June 2024, the Court of Cassation reversed its position: In this case, an employee hired as a human resources manager was off work for several months. She returned to work on a part-time therapeutic basis, during which she was paid 50% of her full-time salary. The employee was then dismissed for gross misconduct. The Versailles Court of Appeal ruled that the employee had been working part-time on a therapeutic basis for a long period of time, which had not been imposed by her employer, and that the period during which she had been working part-time on a therapeutic basis should therefore be taken as the reference salary. However, the Court of Cassation overturned the Court of Appeal’s decision on the grounds that when an employee is working part-time on a therapeutic basis at the time of dismissal, the basis for calculating statutory or contractual redundancy pay is, depending on the formula most advantageous to the employee, that of the last 12 or 3 months preceding the part-time work on a therapeutic basis and the period of sick leave, if any, that preceded it. This decision confirms that employers are prohibited from taking any discriminatory measures based on the employee’s state of health, and follows on from a decision handed down on 20 September 2023, in which the Court of Cassation ruled that part-time work on a therapeutic basis should be taken into account when calculating the basis for the employee profit-sharing scheme (Cass. Soc. 20 September 2023, no. 22-12.293).  

• Publication on 6 July 2024 of the decree on the procedures for employer-initiated medical check-ups

Article L. 1226-1 of the French Labor Code authorizes the employer to organize a medical examination of an employee on sick leave, in return for the employee’s continued salary, in order to verify that the employee is at home during restricted hours, and that his or her state of health justifies the work stoppage prescribed. This article stipulates that a decree shall determine the forms and conditions of the medical examination. However, this decree was never adopted. The Court of Cassation, which had nevertheless ruled that the absence of a decree was no obstacle to the exercise of the counter-medical examination, took it upon itself to define the terms and conditions of this control. Decree no. 2024-692 of July 5, 2024, published on July 6 and in force since July 7, 2024, inserts three new articles into the Labor Code (art. R. 1226-10 to R. 1226-12), thus codifying the case law of the Cour de cassation. Essentially, they stipulate that the employee must inform the employer, at the start of the work stoppage and whenever there is a change, of his or her place of rest if this is different from his or her home, and, if he or she has a work stoppage marked “sortie libre” (“free leave”), of the times at which the follow-up examination can take place. The follow-up examination is carried out by a doctor appointed by the employer. The doctor’s decision is based on whether the work stoppage is justified, including its duration. The second visit is carried out at any time during the period of sick leave, at the doctor’s discretion, either at the employee’s home or at the place notified, by going there, without any notice being required, or at the doctor’s office, on being summoned by the latter by any means conferring a certain date on the summons. At the end of his mission, the doctor informs the employer either of the justified or unjustified nature of the work stoppage, or of the impossibility of carrying out the inspection for a reason attributable to the employee. However, the decree does not specify the consequences of unjustified sick leave. According to the jurisprudence of the Cour de cassation, the employee must return to work. If he refuses and decides to follow the prescriptions of his attending physician, he is not at fault, but is deprived of continued pay from the date of the follow-up examination (Cass. soc. 10-10-1995 no. 91-45.242; 28-11-2000 no. 98-41.308).