1. What state-sponsored support is there for employers and their workforce during the global COVID-19 crisis?
The government has established various financial aid programs, such as the deferral of the payment of social contributions, taxes, loans guaranteed by the State, etc. but the most important one was changing the laws on short-time work.
• Short-time work is the partial or complete reduction of working hours with a corresponding reduction in remuneration.
• Employers pay up to 70% of the employees' gross remuneration, which corresponds to 84% of the net remuneration.
• The French Payment Agency reimburses this amount to the employers (with a limit of €6,924 per employee), within 10 days.
• The employee's missing earnings are either spontaneously paid by the employer, or lost.
• The short-time work indemnity is almost not subject to social contributions, this is why the net amount is higher than the gross amount.
• If the employer wants to pay the difference between the full salary and the 70% reimbursed by the State, this delta is not subject to social contributions either, provided an in-house agreement or a unilateral decision of the employer is entered into or drafted.
• The request for short-time work must be made through the administration platform, with a detailed explanation of the reasons for the reduction in work and the processes that the employer is willing to put in place for the remaining level of activity.
• The request can be made up to 30 days after the beginning of the short-time work.
• Some employees may be in full-time short-time work, whilst others may only have a reduction in their working time.
• The administration provides an answer to the short-time work request within 48 hours. If the short-time work is accepted, it automatically applies to employees, an addendum to the employees' contract is not required. The short-time work does not require the prior acceptance of each employee.
• The duration of the short-time period can be up to 12 months, but at the moment, if the short-time work is linked to the health crisis, the first request should last until 30 June 2020. A renewal will be possible after 30 June 2020.
2. What are the main challenges facing employers and how are they responding?
The main challenges are:
• Adapting to the regulatory modifications of the short-time work, with new rules issued at the end of March.
• Understanding the level of reimbursement and the potential beneficiaries of short-time work (top managers, managers under a working time package in days per year, part-time employees, etc.).
• Precisely forecasting the level of activity that will determine the level of short-time work, per group of employees.
• Dealing with a multitude of legally relevant issues at the same time (employees, customers, suppliers, investors, finance partners, leases etc.).
• Changing the structure of work (e.g. remote working instead of office work; flexible working).
• Organising the IT system for all employees working from home (equipment, software, etc.).
• Dealing with infected employees/fear of infection/fear of virus existence given the employer's obligation to protect the employees' health.
• Articulating sick leave for child care and short-time work.
• Monitoring work whilst working from home.
We envisage that employers will need to address the legal and organisational challenges involved post-lockdown in phases:
• Information phase: gathering answers to the completely new challenges and what the legal implications are (such as what to do in case of an infection of employees; which measures can be taken in general; how to deal with business travel; can employees be terminated for operational reasons; questions around remuneration).
• Taking action phase: Changing the organisation of work (work on IT infrastructure; sending employees to the home office etc.), applying for short-time work/financial aids, dealing with the information and consultation of the works council.
• Observation and implementation phase: Observe the daily changing developments, implement changes and follow-up with the staff representatives.
• Preparation phase: Prepare for post-lockdown.
3. How are employers applying the local laws on holidays during lockdown?
We experienced different questions regarding holiday:
• Can employers force employees to take holidays?
o No, except if the employee has already requested to take holidays, as in such case the employer can change the dates of the holidays.
o No, except with an in-house agreement, signed either with unions (if any) or the works council, within the limits of 6 days in a row.
o In practice, it may be at the employee's advantage to take holidays during short-time work, as the employee will be paid an indemnity that corresponds to the full salary, whilst the short-time indemnity is limited to 70% of the gross remuneration. This information may prompt employees to take holiday but it may have a direct impact on the company's cash flow, so some employers are not keen to encourage a lot of employees to take holidays.
• Can employers force employees to take days off?
o Days off correspond to the counterpart to overtime, i.e. time off granted as a compensation to overtime.
o Yes, employers can force employees to take up to 10 days off.
o The decision can be made by the employer without any consultation of the works council or agreement with unions.
• Can employees take holidays during the short-time work?
o Yes, it suspends the short-time work.
o Employees are paid an indemnity corresponding to their full salary.
• If holidays are not taken before the end of the holiday period, are they lost?
o Yes, they are not carried forward as the employee was allowed to take holidays, even during the short-time work/lockdown for employees who work from home.
o However, in practice some employers decide to carry forward untaken holidays as the government position in this respect was unclear for several weeks, so some employees did not take the holiday they were entitled to.
• Can employees withdraw approved holiday?
o No, the employee is bound to approved holiday.
4. What are the main employment law challenges and emerging themes as conditions return to normal?
The main employment law issues and emerging themes arising could be:
• Return to work processes, including consultation with the works council in this respect.
• Extension of the short-time work, limits and conditions.
• Assessment of the administration to check if the conditions of the short-time work were satisfied, risks of sanctions if misuse of the short-time work.
• Potential restructuring where needed, impact of the short-time work on the business case that would justify collective terminations, reluctance of the administration to approve (if required) the dismissal procedure.
• Implementing future measures to be prepared for a potential second infection wave:
o Regulations on notification, access and monitoring systems.
o Technical solutions to deal with infected employees.
• Back-up plan for a second infection wave and a second lock-down in order to be prepared and able to act quicker.