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Many companies have already taken advantage of short-time work, for example, as part of the government’s COVID-19 relief measures.
The aim of this company support scheme is to limit redundancies and retain the company’s skills so that it can cope when business picks up again.
This mechanism is now incorporated into many human resources management scenarios and remains relevant well beyond the health crisis. Understanding its implications makes it possible to optimize administrative management during times of crisis or reduced activity.
Short-time working enables companies to reduce or even interrupt employee activity, but the new decree raises a number of administrative questions.
Here are the answers to the 6 questions you may have about this device.
1. What is short-time work?
Also known as temporary layoffs or reduced working hours, this is a program that allows a company to reduce or suspend its employees’ work.
Article R5122-1 of the French Labor Code provides a framework for this system, setting out the valid reasons why a company may resort to short-time working:
- Economic conditions
- Difficulties in sourcing raw materials or energy
- Exceptional damage or bad weather
- Company transformation, restructuring or modernization
- Any other exceptional circumstances
In practice, the use of reduced-hour work allows companies to maintain a contractual relationship with employees while adjusting payroll costs to market conditions. This protects both the company and its employees.
2. How does short-time work work?
The request for short-time working must be made by the employer, and must comply with the grounds laid down in the French Labor Code.
To implement partial unemployment, you, as an employer, must submit the application online through the government portal.
You have 30 days in which to make the request from the moment you put your employees on short-time working. This request can be granted for a period equivalent to 12 months.
Once approved, this application triggers regular reporting to the government, within a highly regulated process, particularly with regard to the calculation of benefits.
In other words, if you apply on April 20, 2020, authorization may be granted until April 20, 2021.
When partial activity is in place, the employer receives an allowance from the Agence de services et de paiement (ASP) representing 70% of the employee’s gross remuneration (around 84% of his net salary).
This allowance is limited to a salary of 4.5 SMIC and a minimum of €8.03 per hour.
To illustrate this point, here are three examples of calculations for partial unemployment benefits, provided by the government:
Example 1:
An employee earns 10.15 euros gross per hour (1 SMIC gross) for a 42-hour week. His company’s activity was completely interrupted for three weeks.
70% of 10.15 is equal to 7.1 euros, which would be the amount of the partial activity allowance. However, this amount is less than the minimum threshold of 8.03 euros.
Since the decree stipulates that the minimum allowance is set at 8.03 euros, the hourly amount of the allowance paid to the employer will be 8.03 euros.
Partial activity takes into account the number of hours not worked, up to a maximum of 35 hours per week. 7 hours a week (42-35=7) will therefore not count towards the allowance if the employee is completely unemployed.
The employer will receive an allowance of : 8.03 x 35 x 3 = 843.15 euros.
The employer must pay the employee an equivalent indemnity. It will not be subject to social security contributions. There will be no out-of-pocket expenses.
Example 2:
An employee earns 30.45 euros gross per hour (3 SMIC gross) for a 20-hour weekly contract. His company’s activity was completely interrupted for a week.
70% of 30.45 is equal to 21.31 euros.
Partial activity takes into account the number of hours not worked, up to a limit of 35 hours per week or the contractual number of hours. 20 hours will therefore be counted towards the allowance.
The employer will receive an allowance of : 21.31 x 20 = 426.2 euros.
The employer must pay the employee an equivalent indemnity, subject to CSG and CRDS (6.7%). There will be no out-of-pocket expenses.
Example 3:
An employee earns 50.75 euros gross per hour (5 SMIC gross) for a 35-hour week. His company’s activity was completely interrupted for two weeks.
70% of 50.75 is equal to 35.52 euros.
The result is greater than 31.98 euros (representing 70% of 4.5 times the gross hourly minimum wage).
Partial activity takes into account the number of hours not worked, up to a limit of 35 hours per week or the contractual number of hours. 70 hours will therefore be counted towards the allowance.
The employer will receive an allowance of : 31.98 x 35 x 2 = 2238.6 euros.
The employer must pay the employee compensation of : 35.52 x 35 x 2 = 2,486.4 euros.
This allowance will be subject to CSG and CRDS (6.7%).
The employer will have to pay: 2486.4 – 2238.6 = 247.8 euros.
These examples provide a better understanding of how partial unemployment benefits are calculated and the financial impact on the employer.
3. Who is eligible for short-time work?
All the company’s employees may be affected by partial activity, regardless of their type of contract, seniority or working hours.
However, executives and corporate officers are not affected.
Service companies, consulting firms, and software companies are often affected by fluctuations in workload that may require them to implement temporary short-time work.
The employer must request it, and does not need the employee’s agreement.
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Short-time working and fixed working days?
Forfait jours employees benefit from short-time working under the same conditions as other employees. This means compensation of 70% of the gross hourly wage, which cannot be less than €8.03 per hour.
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Short-time working and apprentices?
As apprentices are paid less than the minimum wage, they receive their full salary in the form of compensation.
The same conditions apply to professionalization contracts with a salary equal to or higher than the SMIC (minimum wage) as for salaried employees.
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Short-time working and temporary workers?
Temporary workers have the same rights as employees on short-time working if the company they are working for has also put its employees on short-time working.
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Short-time working and fixed-term contracts?
Fixed-term contracts for increased activity are not included in the short-time working scheme. However, for the others, they will benefit from the same rights for the duration of their contract.
4. What social security provisions apply to partial-time work benefits?
Partial activity allowances are subject to CSG and CRDS. For non-residents of France for tax purposes, short-time working is subject to a 2.80% health contribution.
Employees affiliated to the compulsory supplementary health insurance schemes of Haut-Rhin, Bas-Rhin and Moselle are liable for the 1.50% health contribution.
5. How do I implement temporary layoffs in my internal process?
Now that you’ve taken the necessary steps with the government, you need to integrate the short-time working process into your internal procedures.
Here are the steps to follow:
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Communicating with employees
Once you have identified the employees in your company who will be affected by short-time working, you must notify them by means of a company communiqué.
On the one hand, this will enable you to keep your employees informed about the company’s situation, and reassure them about the decisions you are taking.
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Short-time working conditions
Depending on your company’s situation, you have the choice of implementing partial activity or temporarily suspending business activity.
In any case, you must inform your employees of the conditions of short-time working (duration, salary, etc.).
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Administrative procedures
Don’t forget, you have 30 days from the date you announce the short-time working scheme to your employees to submit your application online.
Internally, HR will be hard-pressed to manage all these new measures, particularly in terms of administration.
Having a good tool to support them in HR management is an asset, especially during this period.
How can you effectively manage short-time work within your company?
Excel files, incompatible software, and the proliferation of software all have their limitations when it comes to managing your human resources.
Managing short-time work at your digital services firm, consulting firm, or engineering consulting firm can quickly become a headache if you don’t have the right tools. Why not make your life easier with an industry-specific ERP system designed for your organization?
VSActivity, our SaaS ERP software, supports service companies and consulting firms in all their administrative management processes.
In fact, it’s important to digitize your business management so you can focus on value-added tasks and your core business.
- Automate your processes by adapting them to unexpected situations: with this ERP system, you can track time spent on managing short-time work, apply social security contribution exemptions, and manage government reimbursements.
- Optimize your entire HR management process: The application covers a wide range of HR functions (payroll processing, remote work requests, etc.)
- Centralize your data: this enables efficient, error-free HR management.
- Stay connected anywhere, anytime: Its SaaS model provides secure access for all employees, making remote work possible.
Request a free demo with one of our consultants and discover how VSActivity can help you optimize your HR processes, even during periods of furloughs.
