Unemployment Insurance Reform

Newsletter - December 2019

Three decrees, dated 26 July 2019 and 30 October 2019, introduced several measures to reform unemployment insurance. Several of these measures came into force on 1 November 2019.

Changes concerning employees

Among the significant measures that have applied since 1 November, we note that:

– the employee is now entitled to unemployment benefits after working 130 days (equivalent to 910 hours or six months of work) over the last 24 months (up from four months over the last 28 months prior to 1 November);
– it will be possible to acquire new unemployment entitlements (“rechargement”) after six months of work (compared with one month beforehand);
– employees who are paid more than € 4,500 gross per month will have their benefit reduced by 30% starting at the seventh month of compensation (though they will not receive less than € 2,261 net per month).

Unemployment insurance available to people who resign

Until 1 November 2019, only employees who lost their jobs involuntarily could receive unemployment benefits. Thus, in the event of dismissal, for personal reasons (serious misconduct, professional incompetence, etc.), for economic reasons, or in the event of conventional termination of the employment contract, the employee was covered.

The reform changes the rules that apply concerning the compensation of the employee who resigns. From now on, each employee will be eligible for unemployment insurance if the following conditions are met:

– The employee must prove that s/he has had an employment agreement lasting at least 1,300 days worked over the 60 months prior to the end of the agreement (i.e., five years of service);
– Before resigning, the employee asked for advice on professional development with the purpose of setting up an occupational retraining plan (with the employment centre (“Pôle-Emploi”), the executive employment centre (“APEC”), a local assignment, etc.);
– A CPIR (regional inter-professional joint committees) certifies that the plan is real and genuine.

Therefore, employees who resign do not automatically obtain assistance to return to employment (“ARE”).

Unemployment insurance extended to self-employed workers

Until this reform, self-employed workers who lost their jobs could not claim assistance to return to employment (“ARE”). From now on, they may be eligible for the self-employed workers benefit (“ATI”) under Article L.5424-25 of the Labour Code. To be eligible, the self-employed worker must:

– provide evidence of non-salaried work for a minimum uninterrupted period of two (2) years in one and the same business;
– have received income of at least € 10,000 per year over the previous two years.

The entitlement to the ATI becomes effective as of the end of the non-salaried work, which must be within twelve (12) months before the day before registration as a job-seeker or, as appropriate, the first day of the month during which the application for the ATI was filed.

Any application for ATI is necessarily preceded by a compulsory preliminary examination of the conditions for entitlement to ARE (assistance to return to employment) when registering as a jobseeker. If the information provided in the registration enables the Pôle Emploi to deem the candidate potentially eligible for the ATI, then once the notice of rejection of an ARE entitlement is issued, the ATI application is sent to the self-employed worker to be filled out. The daily value of the ATI is set at € 26.30 – or an average of € 800 per month over the year – subject to means-testing for resources other than income from work. The ATI is subject to the CSG/CRDS supplemental taxes and to income tax via deduction at source.

The adjustment ratio applied to the employer’s contribution

Starting on 1 March 2021, the employer’s portion of the unemployment insurance contribution will be adjusted up or down for companies with eleven or more employees that belong to certain business sectors. The companies concerned will be those that generate an atypical loss profile for unemployment insurance.

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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