"Purchasing Power" law: main provisions to improve employees' purchasing power
The "Purchasing Power" law (loi "Pouvoir d'achat") of 16 August 2022 n°2022-1158 provides for numerous measures modifying French labour law. Here is a summary of the main provisions meant to improve employees' purchasing power.
1. Value-sharing bonus
The "Purchasing Power" law (loi "Pouvoir d'achat") of 16 August 2022 replaces the exceptional purchasing power bonus (prime exceptionnelle de pouvoir d'achat "PEPA") with the value-sharing bonus (prime de partage de la valeur "PPV").
Based on the principle of the PEPA, the PPV is an incentive for employers to pay an additional bonus to employees. The PPV is optional, there is no obligation for the employer to pay it.
Since 1 July 2022, companies may, on the basis of a collective agreement negotiated at company or group level or by unilateral decision after consultation of the Social and Economic Committee (CSE), pay a value-sharing bonus to employees in one or more instalments, with a maximum of one payment per quarter. In the case of multiple employment contracts with several employers, the bonus is to be attached to the employee's main contract.
For temporary workers on secondment, the user company informs the temporary work agency of the payment of the PPV. The temporary work company in turn informs its CSE, where one exists. The temporary work company pays the PPV in accordance with the procedures laid down by the collective agreement or by unilateral decision.
This bonus is exempt from all social security contributions up to EUR 3,000 per employee and per calendar year.
This exemption limit is increased to EUR 6,000 if:
The PPV must be mentioned on the pay slip for each beneficiary employee and declared via the DSN in the "Bonus, gratuity and allowance" block.
2. New flat-rate deduction on overtime
The "Purchasing Power" law provides for a flat-rate deduction of employer's contributions on overtime worked by employees from 1 October 2022 in companies with at least 20 employees and less than 250 employees. This provision also concerns overtime worked beyond 218 days by employees on an annual day package but does not concern overtime worked by part-time employees.
A Decree will specify the amount of this flat-rate deduction as well as the deduction methods applicable to overtime worked by employees affiliated to the general scheme but not governed by the general law on working hours (e.g. home workers, childminders, caretakers).
For employees covered by an annual fixed-term contract in days the renunciation of a day of rest will be valued at 7 times the amount for an overtime hour. The modalities for renouncing rest days remain unchanged: the renunciation requires a written document and must generate an increase in salary of at least 10%.
The lump-sum deduction will be deducted from the amount of employer's contributions due for overtime increases and will be cumulative with other exemptions from employer's contributions that the company may claim.
3. New case for unlocking mandatory and optional profit-sharing
The "Purchasing Power" law provides for the possibility for employees to request the release, in one go, of sums from mandatory an optional profit-sharing schemes allocated to an employee savings plan before 1 January 2022, including the employer's contribution thereto and supplementary profit-sharing or incentive schemes in order to finance the purchase of one or more goods or the provision of one or more services. The Ministry of Labour specified in a Q&A of 13 September 2022 that the released sums may not be reinvested (e.g. in rental property, investments, passbooks), nor may they be used to close a loan in advance or to pay taxes. However, the payment of school tuition fees falls within the scope of this scheme.
This request for exceptional release can be made from 18 August to 31 December 2022 by any mean proposed by the scheme managing organisation or on plain paper. The Ministry of Labour has specified that there cannot be several requests to the same managing organization . However, the employee may apply to several managing organization, within the overall limit of €10,000 net. It is recommended to indicate in the application for release:
The amounts released in this context are limited to €10,000 net of social security contributions.
This new case of release does not apply to sums invested in a retirement savings plan ("plan d'épargne retraitre") or in funds of solidarity-based companies ("fonds d'entreprises solidaires"). This release is made subject to the signing of an in-house company agreement for savings allocated to the acquisition of company shares or to an employee shareholding company mutual fund or to an employee shareholding open-ended investment company. This in-house company agreement must be filed on the Télé Accords platform: Portal - Ministry of Labour (travail-emploi.gouv.fr).
For groups of companies that have set up a mandatory profit-sharing scheme or a joint savings plan, an in house agreement may allow for the exceptional release of funds for the benefit of all group employees. It is therefore not necessary to conclude an agreement for each company belonging to the group. The Ministry of Labour recommends that the negotiations of such an agreement be concluded by the end of November 2022 at the latest in order to allow employees to make their request before 31 December 2022.
The costs related to unlocking will be charged to employees and deducted from the unlocked amounts. These costs may be paid by the employer, either as part of the agreement authorising the exceptional release, or by mutual agreement between the company and the account holder, after informing the employees.
It is the responsibility of each employer to inform employees of the derogatory unlocking option as well as of its social and fiscal regime within a period of two months from the promulgation of this law, i.e. before 16 October 2022. The information may be provided by any means.
Finally, the exceptional release does not affect the exemptions from social security contributions and income tax already applied when the mandatory and optional profit-sharing payments are allocated to a company savings plan ("Plan d'Epargne Entreprise").
4. New procedures for setting up an optional profit-sharing scheme
From now on, optional profit-sharing can be set up by unilateral decision of the employer in companies with less than 50 employees not covered by a profit-sharing agreement negotiated at the industry level subject to the following conditions:
Moreover, the optional profit-sharing scheme is now set up for a period of between 1 and 5 years (compared to 1 to 3 years currently).
For optional profit-sharing agreements and regulations filed as from 1 January 2023, the labor administration ("Dreets") will have a limited period of 3 months (instead of 4 months) from the date of filing to request the withdrawal or amendment of clauses that are contrary to legal provisions.
Finally, the approval procedure for industry-level agreements setting up an employee savings scheme (e.g.mandatory and optional profit-sharing, company savings plan) has been reduced from 6 to a maximum of 4 months from filing. This period may be extended once for a period equivalent to half the initial period, i.e. 6 months in total.
5. New limit for the use of meal vouchers
Since 1st September 2022, the social and tax exemption limit for the employer's contribution to the financing of meal vouchers has been raised from €5.69 to €5.92. As a reminder, the employer must pay between 50% and 60% of the value of the meal voucher. Thus, the value of the meal voucher entitling to maximum exemption is comprised between €9.87 (60% employer's contribution) and €11.84 (50% employer's contribution).
The "Purchasing Power" law provides that meal vouchers can be used to purchase food products, whether or not they are directly consumable, until 31 December 2023.
Today, the limit for using a meal voucher is €19 per day. The Government has announced that this limit will be increased to €25 per day as from 1 October 2022.
1. Value-sharing bonus
The "Purchasing Power" law (loi "Pouvoir d'achat") of 16 August 2022 replaces the exceptional purchasing power bonus (prime exceptionnelle de pouvoir d'achat "PEPA") with the value-sharing bonus (prime de partage de la valeur "PPV").
Based on the principle of the PEPA, the PPV is an incentive for employers to pay an additional bonus to employees. The PPV is optional, there is no obligation for the employer to pay it.
Since 1 July 2022, companies may, on the basis of a collective agreement negotiated at company or group level or by unilateral decision after consultation of the Social and Economic Committee (CSE), pay a value-sharing bonus to employees in one or more instalments, with a maximum of one payment per quarter. In the case of multiple employment contracts with several employers, the bonus is to be attached to the employee's main contract.
For temporary workers on secondment, the user company informs the temporary work agency of the payment of the PPV. The temporary work company in turn informs its CSE, where one exists. The temporary work company pays the PPV in accordance with the procedures laid down by the collective agreement or by unilateral decision.
This bonus is exempt from all social security contributions up to EUR 3,000 per employee and per calendar year.
This exemption limit is increased to EUR 6,000 if:
- (i) the company has a mandatory profit-sharing scheme ("Participation") and has also set up an optional profit-sharing plan ("Intéressement").
- or if (ii) the company which is not subject to the obligation to set up participation has set up mandatory or optional profit-sharing.
The PPV must be mentioned on the pay slip for each beneficiary employee and declared via the DSN in the "Bonus, gratuity and allowance" block.
2. New flat-rate deduction on overtime
The "Purchasing Power" law provides for a flat-rate deduction of employer's contributions on overtime worked by employees from 1 October 2022 in companies with at least 20 employees and less than 250 employees. This provision also concerns overtime worked beyond 218 days by employees on an annual day package but does not concern overtime worked by part-time employees.
A Decree will specify the amount of this flat-rate deduction as well as the deduction methods applicable to overtime worked by employees affiliated to the general scheme but not governed by the general law on working hours (e.g. home workers, childminders, caretakers).
For employees covered by an annual fixed-term contract in days the renunciation of a day of rest will be valued at 7 times the amount for an overtime hour. The modalities for renouncing rest days remain unchanged: the renunciation requires a written document and must generate an increase in salary of at least 10%.
The lump-sum deduction will be deducted from the amount of employer's contributions due for overtime increases and will be cumulative with other exemptions from employer's contributions that the company may claim.
3. New case for unlocking mandatory and optional profit-sharing
The "Purchasing Power" law provides for the possibility for employees to request the release, in one go, of sums from mandatory an optional profit-sharing schemes allocated to an employee savings plan before 1 January 2022, including the employer's contribution thereto and supplementary profit-sharing or incentive schemes in order to finance the purchase of one or more goods or the provision of one or more services. The Ministry of Labour specified in a Q&A of 13 September 2022 that the released sums may not be reinvested (e.g. in rental property, investments, passbooks), nor may they be used to close a loan in advance or to pay taxes. However, the payment of school tuition fees falls within the scope of this scheme.
This request for exceptional release can be made from 18 August to 31 December 2022 by any mean proposed by the scheme managing organisation or on plain paper. The Ministry of Labour has specified that there cannot be several requests to the same managing organization . However, the employee may apply to several managing organization, within the overall limit of €10,000 net. It is recommended to indicate in the application for release:
- The amount to be unlocked,
- The investment vehicles to be released in priority, unless the assets do not exceed €10,000 net,
- The date and signature.
The amounts released in this context are limited to €10,000 net of social security contributions.
This new case of release does not apply to sums invested in a retirement savings plan ("plan d'épargne retraitre") or in funds of solidarity-based companies ("fonds d'entreprises solidaires"). This release is made subject to the signing of an in-house company agreement for savings allocated to the acquisition of company shares or to an employee shareholding company mutual fund or to an employee shareholding open-ended investment company. This in-house company agreement must be filed on the Télé Accords platform: Portal - Ministry of Labour (travail-emploi.gouv.fr).
For groups of companies that have set up a mandatory profit-sharing scheme or a joint savings plan, an in house agreement may allow for the exceptional release of funds for the benefit of all group employees. It is therefore not necessary to conclude an agreement for each company belonging to the group. The Ministry of Labour recommends that the negotiations of such an agreement be concluded by the end of November 2022 at the latest in order to allow employees to make their request before 31 December 2022.
The costs related to unlocking will be charged to employees and deducted from the unlocked amounts. These costs may be paid by the employer, either as part of the agreement authorising the exceptional release, or by mutual agreement between the company and the account holder, after informing the employees.
It is the responsibility of each employer to inform employees of the derogatory unlocking option as well as of its social and fiscal regime within a period of two months from the promulgation of this law, i.e. before 16 October 2022. The information may be provided by any means.
Finally, the exceptional release does not affect the exemptions from social security contributions and income tax already applied when the mandatory and optional profit-sharing payments are allocated to a company savings plan ("Plan d'Epargne Entreprise").
4. New procedures for setting up an optional profit-sharing scheme
From now on, optional profit-sharing can be set up by unilateral decision of the employer in companies with less than 50 employees not covered by a profit-sharing agreement negotiated at the industry level subject to the following conditions:
- (i) they do not have a trade union delegate nor a CSE
- (ii) or in the event of negotiations with the trade union delegate or the social and economic committee, if a statement of disagreement has been drawn up setting out the parties' respective proposals.
Moreover, the optional profit-sharing scheme is now set up for a period of between 1 and 5 years (compared to 1 to 3 years currently).
For optional profit-sharing agreements and regulations filed as from 1 January 2023, the labor administration ("Dreets") will have a limited period of 3 months (instead of 4 months) from the date of filing to request the withdrawal or amendment of clauses that are contrary to legal provisions.
Finally, the approval procedure for industry-level agreements setting up an employee savings scheme (e.g.mandatory and optional profit-sharing, company savings plan) has been reduced from 6 to a maximum of 4 months from filing. This period may be extended once for a period equivalent to half the initial period, i.e. 6 months in total.
5. New limit for the use of meal vouchers
Since 1st September 2022, the social and tax exemption limit for the employer's contribution to the financing of meal vouchers has been raised from €5.69 to €5.92. As a reminder, the employer must pay between 50% and 60% of the value of the meal voucher. Thus, the value of the meal voucher entitling to maximum exemption is comprised between €9.87 (60% employer's contribution) and €11.84 (50% employer's contribution).
The "Purchasing Power" law provides that meal vouchers can be used to purchase food products, whether or not they are directly consumable, until 31 December 2023.
Today, the limit for using a meal voucher is €19 per day. The Government has announced that this limit will be increased to €25 per day as from 1 October 2022.