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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”).

Among the exceptional measures included in this law, the most symbolic one is without doubt the measure allowing employers to pay an exceptional bonus exempted from income tax and social security contributions. In addition to this measure, the partial tax and social exemption of salaries for overtime hours and the increase of the activity allowance should also be mentioned.

Exceptional bonus paid by employers by 31 March 2019: social contributions and tax exemptions subject to requirements

In his speech dated 10 December 2018, President Emmanuel Macron announced that he would ask "all employers to pay a year’s end bonus to their employees" and added that this bonus would be exempted from tax and social contributions. 

This announcement was later confirmed by the law dated 24 December 2018, which yet sets out several requirements for the exemption of this exceptional bonus. The payment of this bonus remains purely optional for employers.
Employers contemplating to pay this exceptional bonus to employees should therefore ensure that they meet all the requirements set out by this law in order to benefit from the preferential tax and social treatment and to avoid any risk of readjustment by the Social Security Authority.


In order to benefit from the preferential tax and social treatment for this exceptional bonus, employers must meet the following requirements:

(i) Requirements as regards setting up the exceptional bonus:

The decision to pay an exceptional bonus may result from a collective bargaining agreement (at the company or at the group level) or from a unilateral decision.

1. The company-wide (or group-wide) collective bargaining agreement may be: 
  • 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.
2. If the exceptional bonus results from a unilateral decision, this decision should be adopted

by 31 January 2019 at the latest. Staff representatives should be informed of this decision
by 31 March 2019 at the latest.

Regardless of the option selected by the employer, the collective agreement or the unilateral decision setting up this exceptional bonus should determine the amount of the bonus and, where applicable, the compensation threshold below which employees are eligible for this bonus as well as modulation criteria so as to adapt the amount of the bonus depending on the situation of the beneficiary. Employers may also provide for a different amount of bonus for different sites.

(ii) Requirements as regards beneficiaries

The exceptional bonus may be granted to all employees or only to employees whose compensation is lower than a specific threshold. Employers are not allowed to exclude employees on the basis of another criterion than the amount of their salary.

In addition, the preferential tax and social treatment will only apply to bonuses paid to employees who meet the following requirements:

• Their employment contract was in force as of 31 December 2018, or at the date of payment of this bonus if earlier;
• Their annual remuneration in 2018, for a full year and on a full-time basis, was lower than three times the annual minimum wage, that is € 53,944. This threshold should be prorated for part-time employees as well as for employees who did not work for the full year.

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.

(iii) Requirements as regards bonus

To ensure that the preferential tax and social treatment applies, the bonus should comply with the following requirements:

• This exceptional bonus cannot exceed € 1,000 per employee. The collective bargaining agreement or the unilateral decision setting up this bonus may provide that the amount of the bonus will vary according to specific criteria such as the amount of the remuneration, the employee’s status (executive or non-executive), the working time or the attendance in 2018. However, the application of these criteria cannot result in an employee being deprived of this bonus insofar as his/her remuneration is actually lower than the eligibility threshold (if any).

In practice, the employer may decide to pay an exceptional bonus exceeding € 1,000 per employee. In such case, the portion of the bonus exceeding € 1,000 will not be exempted from income tax and social contributions.

• This exceptional bonus may be paid in several instalments but should, in any event, be fully paid between 11 December 2018 and 31 March 2019. Any bonus paid after this date will be fully subject to income tax and social security contributions.

• The bonus should replace salary increases or bonuses provided for by a salary agreement, the employment contract or customs in force in the company or any other mandatory remuneration element. This bonus should therefore appear on a specific line on the employee’s pay slip and should not be included to another bonus usually paid to the employee.


Provided that all the above mentioned requirements are met, the bonus will be fully exempted from income tax and social contributions, whether due by the employer or by the employee.
In addition, the payment of this bonus should not be taken into account for the calculation of the “activity bonus”, which is a public allowance for employees whose income is lower than a threshold.


More than ninety large companies, such as Total, Orange and EDF, have already announced that they will pay an exceptional bonus to their employees. Amounts vary from € 150 to € 1,500.

While several companies have decided to pay this bonus to all employees, the market practice appears to limit the eligibility to this exceptional bonus to employees whose remuneration is lower than determined threshold, usually lower than the statutory threshold (€ 53,944). Some companies also decided to provide for a different amount depending on various criteria.

Partial exemption from income tax and social contributions for overtime

This measure, initially scheduled for September 2019, was brought forward to 1 January 2019.
From now on, all salaries (including statutory increase) due for overtime or additional hours paid as from 1 January 2019 will be exempted from income tax, up to € 5,000 per year.

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.​