Emergency Economic and Social Measures in Response to "Yellow Vest" Protests
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The "yellow vests" protests prompted the French government to propose strong and symbolic measures to improve employee’s purchasing power. This resulted in the adoption, in just five days, of the law no. 2018-1213 dated 24 December 2018 pertaining to emergency economic and social measures as well as in the publication of the decree no. 2018-1197 dated 21 December 2018 pertaining to the exceptional increase of the activity allowance (“prime d’activité”).
Exceptional bonus paid by employers by 31 March 2019: social contributions and tax exemptions subject to requirements
- A regular collective bargaining agreement;
- A collective agreement signed by the employer and the delegates of representative trade unions in the company;
- An agreement signed with the works council; or
- An agreement approved by two thirds of the employees.
• The Social Security Authority indicated that apprentices who meet the aforementioned requirements should also receive this exceptional bonus. As regards temporary workers, the user company may decide to pay the exceptional bonus to them too. In that case, temporary workers should receive the same bonus as permanent employees.
Partial exemption from income tax and social contributions for overtime
In addition, salaries for overtime or additional hours are exempted from contributions due by employees to the State pension scheme, up to 11.31 %. However, there is no change as regards the rate of social contributions due by employers. This measure is thus in the sole interest of employees and is neutral for employers.
Increase of the activity allowance (“prime d’activité”)
In addition to the law dated 24 December 2018, Decree no. 2018-1197 dated 21 December 2018 provides for an increase of the maximum amount of the activity allowance.
The activity allowance (“prime d’activité”) is an additional income paid by the French State to individuals residing and carrying out a professional activity in France and whose income is lower than a threshold, which varies depending on the family situation. Its amount is determined on the basis of remuneration and family situation.
Moreover, as a consequence of the annual increase, the minimum wage now amounts to €10.03 per hour, or € 1,521.22 per month.
As a result of these two measures, the monthly income of employees paid at the minimum wage will increase by € 100.
This ePublication is for general guidance only and does not constitute definitive advice.