On December 10th, 2018, the French President, Emmanuel Macron, announced several measures in order to support the employee’s buying power.
The measures will be added in a law that should be adopted before the end of the year.
Without further delay, here are the most important measures (that can evolve with the draft law review). It should be mentioned that the increase of the minimum wage (“SMIC”) of € 100 will be achieved through the increase of the bonus of activity.
Exceptional bonus of buying power
The employer will have the opportunity to pay employees an exceptional bonus of buying power net of social security contributions and net of income tax. The main features are as follow:
• The bonus is optional for the employer ;
• It cannot be substituted to a part of the remuneration provided by agreement, contract or by common practice: the bonus must come in addition to what is usually paid ;
• The bonus can be paid between December 11th ,2018 and March 31th, 2019 ;
• It can be granted to all the employees or only for the employees whose wage is below a ceiling freely defined by the company ;
• The bonus must be paid to all the employees present at December 31th, 2018 or present at the date of payment of the bonus (if it is paid between December 11th ,2018 and March 31th, 2019) ;
• The amount can be adjusted depending on the remuneration level, the working hours specified in the contract and the duration of the actual presence in 2018 ;
• The bonus is exempt of all social charges (including CSG and CRDS) and income tax in the limit of € 1,000. The exemption is only for the employees for whom the employer contributes to the unemployment insurance. Moreover, the total wage in 2018 must be lower than the total of 3 annual minimum wages (“SMIC”). The latter is calculated in the same conditions than the Fillon’s relief (working hours of the contract + overtime/additional hours without mark-up) ;
The amount of the bonus, the potential ceiling, the calculation procedures are provided by:
• The corporate agreement signed before March 31th, 2019 ;
• Or by a unilateral decision made by the employer taken before January 31th, 2019, after information given to the staff representatives if they exist in the company (before March 31th, 2019).
Overtime/Additional hours : exempt of social charges and income tax
The overtime/additional hours (for part-time employee) completed as from January 1st, 2019, will be exempt from most of the social charges. They are still subject to CSG/CRDS and contingency contributions. Moreover it will be exempt of income tax to a limit of € 5,000 per year.
Increase in the minimum wage (“SMIC”)
It was announced an increase of the minimum wage (“SMIC”) of € 100. The increase of the minimum wage (“SMIC”) will be achieved through the increase of the bonus of activity.
It will come in addition to the automatic revalorization of the minimum wage (“SMIC”) of 1.5% made every year.
The CSG for the pensions
The additional 1.7% of CSG will not be applied in 2019 on the pensioners if their reference tax income (“revenu fiscal de reference”) of the penultimate year is lower than € 22,580 for the first part of the family quotient, marked-up of € 6,028 for every supplementary half-part (which means €22,580 for a single person and €28,608 for a married couple). Those concerned will benefit from a regularization.
For further information and in order to set up those measures, contact us !