Inflation compensation

Newsletter - November 2021

In order to preserve the purchasing power of French people whose income is below a certain threshold, the Government has announced the allocation of an exceptional aid of 100 euros, which will be paid in a single instalment to eligible people. The implementation provisions of this measure are included in the second rectifying finance law for 2021.


Eligibility conditions

The compensation will be paid to employees:

  • with an employment contract in October 2021,
  • at least 16 years of age,
  • residing in France,
  • earning less than €20,000 net over the period from 1 January 2021 to 31 October 2021, before income tax, i.e. an average of €2,600 gross per month.

It is stipulated that:

  • employees whose employment contract has been suspended with or without continued remuneration are eligible, with the exception of employees on full parental leave who will receive the compensation through the CAF,
  • employees working in October who have accumulated fewer than 20 hours with a single employer are excluded from the payment of the compensation by that employer.

This compensation is also available to self-employed persons, jobseekers, civil servants, disabled persons and pensioners, provided that their resources are below the average threshold of €2,000 net per month.


Payment provisions

The compensation will be paid to beneficiaries by the people who owe them income from work, replacement income or social benefits (employers, pension funds, Pôle emploi, etc.)

Employees with multiple employers can only receive the compensation once. It is paid by the main employer, i.e. the one with which the contract is in force at the time of payment, or failing that, with whom the employee has had the longest working relationship. The employee is responsible for identifying the main employer, and the employer cannot be held liable for any double payment of the compensation.


Social and fiscal treatment

The compensation will not be subject to social security contributions or income tax.


Payment date

The compensation will be paid to employees in December 2021 and no later than January 2022. It will appear on a dedicated line of the pay slip under the heading “Inflation compensation – exceptional State aid”.


Reimbursement of the compensation

Companies will be fully reimbursed for the compensation that they pay out.

To this end, they must declare the amount paid to the social security contribution collection agency to which they belong (URSSAF or MSA) and deduct the amount paid from the contributions due for the same period.

If the compensation amount exceeds the amount of contributions owing, the collection agency will provide a refund.


We draw your attention to the fact that these measures are subject to change with the publication of the second rectifying finance law for 2021, which should be published at the beginning of December 2021.

The monthly newsletter is distributed free of charge to the firm’s clients via email. This document is designed to provide information and may not reflect the most recent legal developments. Clients and readers should not take action or refrain from taking action on the basis of information contained in this newsletter without seeking professional advice.

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