Payroll measures under the law establishing emergency economic and social measures

Newsletter - January 2019

French law no. 2018-1213 establishing emergency economic and social measures was passed on 24 December 2018.
Companies may now pay their employees a special purchasing power premium and overtime is exempt from tax and social security contributions within a certain limit.

A bonus exempt from tax and social security contributions

The special purchasing power bonus is exempt:
– from all social security contributions (employer and employee contributions) due under legislative or collective bargaining provisions: social security contributions, CSG/CRDS (generalised social contribution/social security debt reduction contribution), Agirc-Arrco compulsory supplementary pensions, unemployment insurance, etc.
– from the construction participation (Art. 235 bis of the French General Tax Code), apprenticeship tax (Art. 1599 ter A of the French General Tax Code), from the supplementary apprenticeship contribution (Art. 1609 quinvicies of the French General Tax Code) and from all contributions due in respect of professional training (Art. L6131-1 of the French Labour Code) and
– from income tax,
within the limit of €1,000 per employee.

Bonus payment conditions/span>

The exemption applies to exceptional bonuses paid by employers who are subject to the Unédic unemployment insurance scheme. It only applies to bonuses paid to a company’s employees who:
– in 2018, earn less than three times the minimum wage calculated over one year on the basis of the legal working time (€9.88 x 151.67 hours x 12 months x 3 = €53,946 gross) for companies paying their staff on the basis of 151.67 hours,
– are bound by an employment contract as at 31 December 2018.

The bonus must be paid between 11 December 2018 and 31 March 2019. It must not replace wages (such as a pay rise or a contractual bonus for example): it must represent special additional pay.


Adjustments of the amount of the bonus (which may be less than €1,000) and the determination of the scope of eligible beneficiaries may be specified so that the bonus is not paid to all the staff according to criteria such as their salary, classification, working time or attendance time.

The measures must be set out in a company- or group-wide agreement, or in an employer’s unilateral decision (DUE).

The company- or group-wide agreement must be entered into in one of the manners defined for profit-sharing agreements:

– by a collective labour convention or agreement,
– by an agreement between the employer and the company’s trade union representatives,
– by an agreement made within the social and economic committee or works council,
– following the ratification, by a majority of 2/3 of staff, of a draft agreement proposed by the employer.
If the employer chooses to implement the bonus via a DUE, the decision must be made by 31 January 2019.

Overtime and additional hours exempt from tax and social security contribution

This measure applies to employees working in the private sector, in the public sector and agricultural staff.

Overtime and additional hours worked on or after 1 January 2019 are exempt from income tax within an annual limit of €5,000 per employee (Art. 81 quater of the French General Tax Code). However, the exempt hours will continue to be included in the beneficiary’s reference tax revenue (Art. 1417 IV-1° of the French General Tax Code).

The relevant employee contributions are the basic retirement pension contributions, but the lawmaker intends to extend the exemption to compulsory supplementary pension contributions. A forthcoming decree will set the contribution reduction rate necessary for the system to apply.

Note that the flat-rate deduction of €1.5 per hour of overtime on employer contributions for companies with less than 20 employees remains applicable.

We are entirely available if you have any further queries about the issues discussed in this newsletter or about any other accounting, tax, social security or law related topic.

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