Reform of staffing thresholds

Newsletter - January 2020

Two decrees to apply the French Pacte Law (law relating to business growth and transformation), dated 31 December 2019, specified the new procedures for the unified calculation of the staffing thresholds and for rationalising staffing threshold levels (prioritising the thresholds of 11, 50 and 250 employees). Several of these measures came into force on 1 January 2020.

The new procedures for counting staff numbers

Starting on 1 January 2020, the annual staffing number corresponds to the average of the number of persons employed during each of the months of the previous calendar year, rounded to the one-hundredth (French Social Security Code (CSS), Art. L.130-1), excluding those months in which no employee is employed (CSS, Art. R.130-1). In the case of an incomplete month, the count is proportional to the number of days of the month during which the persons were employed. Only those persons who have an employment agreement and those mentioned in Article L.5424-1 of the Labour Code are considered.

We need to note that as an exception:
• The staff number considered for the application of the pricing in respect of the risk of “work-place accidents and occupational diseases” is the number of the last known year (excluding apprentices, professional training contracts and single social contracts (“contrats uniques d’insertion”).
• The staff number for the year when the first job is created for an employee with an employment agreement remains the one that is completed on the last day of the month during which the first hire was made.
• If the employer’s legal situation changes, the staff number to be considered is the number of staff present on the last date of the month during which the transfer of the employment agreements is performed.

Officers of the company that come under the regular system (minority managers of a limited liability company, chairmen and managers of public limited companies and simplified joint-stock companies, in particular) are no longer counted for the calculation of the annual average staff number.

The counting rules for employees on loan, part-time employees and employees with a fixed-term contract (“CDD”) (replacing an absent or suspended employee) do not change.
The new procedures for counting staff numbers are extended to certain labour law requirements (including matters to do with corporate profit-sharing).

The method for neutralising the threshold effects

The Pacte Law introduces a five-year freeze in the application of any requirement imposed on a company that crosses a staffing threshold, either up or down (CSS, Art. L.130-1, II).

• The principle: A company will be deemed to have crossed a staffing threshold upward where the threshold is reached or exceeded for five consecutive calendar years (CSS, Art. L.130-1, II-para.1).

• Exceptions:
Employers that are already subject to a requirement in 2019 are not eligible to benefit from the neutralisation measure on 1 January 2020 for that requirement.
The mechanisms for smoothing staff numbers are retained for those employers that benefited from them as at 31 December 2019.
The neutralisation measure does not apply to newly created companies whose staff numbers are higher than the stated threshold, since the condition of crossing the threshold is not fulfilled.
When a company crosses a staffing threshold downward, for one calendar year, the rule for consideration of the crossing of the threshold upward is reinstated.

Rationalisation of staffing thresholds

The Pacte Law rationalised the staff threshold levels, prioritising the thresholds of 11, 50 and 250 employees. Among those amended are the thresholds required up to and including 31 December 2019 for the following requirements (threshold rises from 20 to 50 employees):
• 0.50% FNAL (national housing assistance fund) contribution.
• Employers’ contribution to the construction effort.
• Company policy.

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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