Amendments to Labour Code | "Omnibus" Law of April 8th 2018

The “omnibus” law of April 8th 2018, effective since April 15th 2018 (hereinafter the “Law”), amends many provisions of the Labour Code in order to strengthen the protection of employees. The main changes are as follows:

Full maintenance of salary in case of incapacity for work due to illness

Article L. 121-6 of the Labour Code sets out the rules which are to apply when determining the salary to be paid during a period of incapacity.

A distinction is made between employees who had their work schedule at the time of the occurrence of the illness and those who did not. While the first category of employee is paid as if they had worked according to the predefined work schedule during sick days, the second category is paid a daily allowance corresponding to the average daily salary of the last 6 months. Employees paid by performance or by the task and those with less than 12 months' seniority are entitled to a daily allowance corresponding to the average daily salary calculated over the last 12 months or during the period of actual occupation. The Law also specifies that non-periodic benefits, including incidental work, overtime and bonuses are not taken into account.

Increase of students working time

The weekly duration of a fixed-term contract entered into between an employer and a student is increased from 10 to 15 hours on average, over a period of 1 month or 4 weeks (article L. 122-1 (5) of the Labour Code). This maximum working time of 15 hours per week does not apply to salaried activities carried out during school holidays.

Right to compensation for an employee resigning due to gross misconduct of his employer

Taking into account the case law of the Constitutional Court (Constitutional Court, July 8th 2016, No. 00124), Articles L. 124-6 and L. 124-7 of the Labour Code introduce the principle that an employee who has resigned with immediate effect for gross misconduct by the employer is entitled to the same compensation as an employee whose dismissal with immediate effect has been declared abusive by the Labour Court, namely compensation in lieu of notice and, where applicable, severance pay.

Reimbursement of unemployment benefits

The Labour Code is amended in order to provide that if the resignation of the employee results from the employer’s serious misconduct (such as non-payment of salaries), the employer must reimburse to the Employment Fund the unemployment benefits paid to the employee for the period covered by the salaries or allowances that the employer is required to pay pursuant to the judgment.

On the contrary, if the dismissal is justified or the resignation for fault of the employer is declared unjustified by the Labour Court, the employee must reimburse the unemployment benefits paid.

A new article L. 521-4 bis is inserted in the Labour Code providing that in cases where the action brought by the employee due to i) a dismissal for serious reasons, ii) a resignation motivated by an act of sexual harassment or iii) for serious reasons arising from the employer's act or fault, is not completed as a result of the employee’s withdrawal, the employee is required to reimburse to the Employment Funds the unemployment benefits provisionally paid to him.

If this withdrawal results from a settlement agreement entered into between the employee and the employer, half of the unemployment benefits are to be reimbursed by the employee and the other half by the employer.

Improvement of the employee's situation in the event of bankruptcy or liquidation of his employer

The Law also amends the conditions for opening the indemnity in lieu of notice for an employee whose salary is guaranteed by the Employment Fund because of the bankruptcy or liquidation of his employer (Articles L.125-1§1, L.631-1 and L.631-3 of the Labour Code). From now on, the starting point of the notice period giving entitlement to compensation in lieu of notice depends on the day on which bankruptcy or liquidation is declared:

Where bankruptcy or judicial liquidation has been declared before the 15th day of the month, the period of notice shall begin to run from the 15th day of the month in which the bankruptcy or liquidation was declared;
Where bankruptcy or judicial liquidation has been declared after the 15th day of the month, the period of notice shall begin to run from the 1st day of the month following the pronouncement of bankruptcy or liquidation.

Temporary re-employment assistance

The Law introduces new articles L. 541-7 to L. 541-13 concerning temporary re-employment assistance (“aide temporaire au réemploi”). It is now provided that the temporary re-employment assistance guarantees the employee, taking into account the new salary received, an annual maximum salary equal to 90% of the previous salary for the first 48 months of the new hiring. For the calculation of temporary re-employment assistance, the previous remuneration is capped at 350% of the minimum social wage for an unqualified employee aged 18.

Changes in conditions for obtaining the tax credit in the event of hiring unemployed persons

The conditions for obtaining the income tax credit in case of hiring unemployed persons by an employer have been modified. Entitlement to the income tax credit is now subject to the condition that the hired individual has been registered with the ADEM for at least 6 months (instead of 3 months). In addition, the length of the income tax credit has been reduced from 36 months to 12 months. Finally, the monthly tax credit per unemployed person has been reduced from 15% to 10% of the gross monthly remuneration deductible as an operating expense.