no st quarter 2015 Contents

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1 no st quarter 2015 Contents Changes as of 1 January Higher AGEFIPH contribution: tolerance expires 14 Entry into force of the Compte Pénibilité account for employees in difficult working conditions 16 The CPF replaces the DIF 18 In brief... 20

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3 Changes as of 1 January 2015 Monthly social security ceiling From 1 January 2015, the social security ceiling rose to 3,170 per month which represents an annual ceiling of 38,040. The ceilings for the following reference periods are set out below: quarterly ceiling: 9,510, fortnightly ceiling: 1,585, weekly ceiling: 732, daily ceiling 174, hourly ceiling 24. These amounts apply to salaries paid on or after 1 January However, employers with nine employees or fewer who are authorised to apply the social security contribution ceilings in force during the period corresponding to the work performed must continue to apply the ceiling for 2014 to December 2014 salaries paid within the first 15 days of January Minimum wage and guaranteed minimum income Minimum wage from 1 January 2015 The hourly minimum wage rose from 9.53 to 9.61, gross. For an employee paid on a monthly basis and subject to the legal working time (35-hour week), the gross monthly minimum wage is set at 1, per month (versus 1,445.38). The gross monthly minimum wage for a 39-hour week is set at: 1, with a 10% salary increase from the 36th to the 39th hour, 1, with a 25% salary increase from the 36th to the 39th hour. This increase on 1 January corresponds to the automatic increase provided by law with no aid from the French government. The increase in the minimum wage has an impact on: the calculation of the Fillon reduction (reduction of employer contributions for low wages) and the assessment base of the competitiveness and employment tax credit (CICE), the minimum salary and contribution base for apprentices, the minimum salary under a professional training contract. Guaranteed minimum wage The minimum guaranteed wage rose from 3.51 to 3.52 on 1 January Social security contributions Family allowance contributions As announced in the previous Social security policy update, from 1 January 2015, employers qualifying for the Fillon reduction will be entitled to the payment of a family allowance contribution at the reduced rate of 3.45% for their employees whose salaries do not exceed 1.6 times the minimum annual wage. The minimum wage will be determined in the same way as the Fillon reduction. The minimum wage will be determined in the same way as the Fillon reduction. However, when the salary exceeds 1.6 times the minimum wage, the family allowance contribution will be subject to the standard rate of 5.25%. State pension contributions In compensation for the reduced family allowance contribution, the employer's contribution to uncapped pension benefits will continue to rise to 1.80% on the same date while the employee's contribution to these benefits will rise from 0.25% to 0.30%. The employee's contribution to capped pension benefits will rise from 6.80% to 6.85% and the employer's contribution from 8.45% to 8.50%. Supplementary pension contributions Arrco fund rate increases From 1 January 2015, the contractual rates for contributions to the Arrco pension fund rose to 6.20% for bracket 1 and 16.20% for bracket 2. As the base contribution rate (taux d appel) will not change, the effective rates will, from the same date, be 7.75% for bracket 1 and 20.25% for bracket 2 rounded to two decimal points (see table below). French Social Security update 1 quarter 2015 Number 83 1

4 Changes as of 1 January 2015 These increases are not applicable to companies that apply a rate that, across all salary brackets, is equal to or greater than the above rates. Effective date Monthly salary bracket Overall rate Employer contribution Employee contribution From 1 January 2015 Bracket 1 from 0 to 3,170 Bracket 2 from 3,170 to 9,510 7,75 % 4,65 % 3,10 % 20,25 % 12,15 % 8,10 % Agirc fund rate increases Similarly, on 1 January 2015, the contractual rates for contributions to the Agirc pension fund for salary brackets B and C rose to 16.44%. As the base contribution rate will not change, the effective rate will, from the same date, be 20.55% rounded to two decimal points (see table below). These increases are not applicable to companies that apply a rate that, across all salary brackets, is equal to or greater than the rates below. Minimum points guarantee The minimum points guarantee (garantie minimale de points GMP) allows managerial employees earning less than a given cut-off salary to benefit from a top-up on their supplementary pension scheme. As in previous years, until the definitive values are decided and published, from 1 January onwards companies must apply the GMP provisionally set at based on a monthly cut-off salary for a full-time employee of 3,492.82, corresponding to a ceiling of 3,170 plus falling within salary bracket B. In any event, this additional base amount corresponding to the GMP base is not subject to the other contributions collected by the Agirc fund (contributions to the Agence pour l'emploi des cadres (APEC), the agency for the employment of managers, Contribution Exceptionnelle et Temporaire (CET), the temporary contribution implemented to compensate for a decline in contributions following the discontinuation of certain stateguaranteed pension schemes, and contributions to the Association pour la gestion du fonds de financement (AGFF), the body that manages funds for workers retiring before the legal retirement age). Effective date Monthly salary bracket Overall rate Employer contribution Employee contribution From 1 January 2015 Bracket B from 3170 to Bracket C from to ,55 % 12,75 % 7,80 % 20 % See breakdown adopted pursuant to company agreement + 0,55 % 0,19 % 0,36 % 2 Number 83 1 quarter 2015 French Social Security update

5 Changes as of 1 January 2015 Supplementary pension for lawyers The optional supplementary pension for lawyers will gradually become mandatory, with contribution rates and brackets increasing over 15 years as from 1 January This information has been known since the approval of the amendment to the regulations of the Caisse Nationale des Barreaux Français (CNBF), the pension fund for lawyers, by decree of 20 June 2014.These increases are not applicable to companies that apply a rate that, across all salary brackets, is equal to or greater than the rates below. The supplementary pension plan for lawyers was financed until 31 December 2014 by: a universal mandatory contribution (2 brackets, 2 contribution rates), a mandatory contribution, as an irrevocable option (on the second income bracket), which was broken down into three categories, at the lawyer's choice. From 1 January 2015, business income subject to contributions is divided into five brackets determined every year by decision of the annual general meeting of the CNBF, which sets the base contribution rate applicable to each bracket (CNBF regulations, article 2 as amended). The contractual rates for contributions are set at: 6% for the first bracket; 11.6% for the second bracket; 13.7% for the third bracket; 15.8% for the fourth bracket; 17.9% for the fifth bracket. Meanwhile, the rates and brackets for 2015, which is the first year of the transitional period, are as follows: Income bracket Bracket 1 (2014: from 1 to Contribution 46,674) categories Bracket 2 (2014: from to 83348) Bracket 3 (2014: from to ) Bracket 4 (2014: from to ) Bracket 5 (2014: from to ) Category 1 3 % 6 % 6,70 % 7,40 % 8,10 % Category 2 3,75 % 7,40 % 8,45 % 9,50 % 10,55 % Category 3 4,50 % 8,80 % 10,20 % 11,60 % 13 % Category 4 5,25 % 10,20 % 11,95 % 13,70 % 15,45 % Category 5 6 % 11,60 % 13,70 % 15,80 % 17,90 % (*) Increase (optional) for contributions in category 5 + 2,5 % * The breakdown of these contribution rates corresponds to 60% for the employer contribution and 40% for the employee contribution. From 1 January 2015, staff lawyers hired in 2015 will automatically be recorded in category 1 unless they want to be placed in a higher category and pay higher contributions, subject to the employer's agreement. Staff lawyers who are employees on 31 December 2014, will be automatically placed in the category corresponding as closely as possible to their previous situation, unless decided and agreed otherwise with their employer (see table below). At 31 December 2014 No previous category At 1 January 2015 Category 1 Category 1 Category 1 Category 2 Category 2 Category 3 Category 4 French Social Security update 1 quarter 2015 Number 83 3

6 Changes as of 1 January 2015 The new Fillon reduction As announced in Social security policy update Q4 2014, the application and calculation methods of the Fillon reduction changed on 1 January While the remuneration paid for breaks, dressing, undressing and showering must be included in the calculation of the Fillon reduction (until now it could be excluded from the comparison with 1.6 times the minimum wage), the idea of removing the distinction based on the company's headcount (fewer or more than 20 employees) has been abandoned. To pursue the goal of reducing employer social security contributions for minimum wage earners to have "zero contributions to the URSSAF" (the entity in charge of collecting social security contributions) for minimum wage earners, the decree of 29 December 2014 laid down the conditions and methods of calculation so that the maximum rates reach points for employers subject to a 1% contribution to the fonds national d'aide au logement (FNAL), the national housing aid fund, and points for employers subject to a 0.5% FNAL contribution. The Fillon reduction is limited to the amount of contributions that are actually due. It is offset first against the social security contribution and family allowance contribution, then against the FNAL contribution, the specific 'solidarity' contribution (contribution solidarité autonomie, CSA), and finally against the contribution for accidents at work and occupational diseases (up to 1% of the salary). The increase is maintained The plan to scrap the increase from 1 January 2015 has also been abandoned. Therefore the increase of the Fillon reduction is maintained for: employees subject to a system of equivalent hours paid at a higher rate pursuant to a collective bargaining agreement or industry-wide agreement in force on 1 January 2010; temporary employees to whom the employer must pay paid-holiday benefits; employees whose paid-holiday benefits and related contributions are paid through compensation funds. In addition, the Fillon reduction still applies to special pension schemes for seamen, minors and notary clerks and employees, subject to specific conditions. Formula for companies with fewer than 20 employees Rate = /0.6 x [1.6 x (annual minimum wage/gross annual salary) - 1] Formula for companies with 20 employees or more Rate = /0.6 x [1.6 x (annual minimum wage/gross annual salary) - 1] Payroll tax Reminder: modified tax base The 2013 social security finance act (Loi de financement de la Sécurité Sociale) modified the payroll tax base, which no longer corresponds to the social security contributions base but is now identical to the base for the CSG, a tax introduced to supplement social security funding, defined in article L of the social security code (Code de sécurité sociale). Payroll tax applies to items of salary that are not included in the social security contributions base but are subject to the social contribution taxes (CSG and CDRS). These items include profitsharing, incentive arrangements, topup payments made by the employer to a company savings plan, employer contributions to a benefits and pension scheme, severance payments, etc. This change does not result in the application of the 1.75% discount for business expenses. Exclusion of senior managers' salaries A relatively recent case law (Administrative Court of Appeal of Nancy, 25 July 2014) ruled in favour of a literal interpretation of the provisions resulting in the exclusion of the amounts paid to a sole manager (gérant) of a one-person limited liability company (EURL) from the payroll tax base as these amounts did not constitute salaries within the meaning of either labour law or social security law in France. Although this decision was rendered in accordance with the previous regulations, the reasoning is still valid since the payroll tax base corresponding to the CSG social contribution tax base refers to the sums paid as salaries to the employees. 4 Number 83 1 quarter 2015 French Social Security update

7 Changes as of 1 January 2015 Given that the French tax authorities did not agree with this decision, a ruling is expected from the Conseil d'etat, France's highest administrative court rate schedule The payroll tax rate schedule for 2015 is as follows: a rate of 4.25% will apply to the portion of annual salaries below 7,705, a rate of 8.50% to the portion of annual salaries between 7,705 and 15,385, a rate of % to the portion of annual salaries between 15,385 and 151,965, and a rate of 20% to the portion of annual salaries above 151,965. Payroll tax reduction for nonprofit organisations Until 31 December 2013, non-profit organisations, trade associations and member-unions, charitable foundations, religious congregations, state-approved associations and mutual insurance companies governed by the mutual insurance code (Code de la mutualité), with fewer than 30 employees, received a discount of 6,002 on the payroll tax amount normally due. On 1 January 2014, this discount was reduced to 20,161 on the grounds that such organisations will be ineligible for the competitiveness and employment tax credit (CICE) because they are not subject to corporation tax. From 1 January 2015, this deduction is set at 20,262. Contributions to remain unchanged AGS On 10 December 2014, the board of directors of France's wage guarantee scheme, AGS, decided to keep the contribution rate, unchanged since 1 April 2011, at 0.30% as of 1 January Sickness insurance contribution for the Alsace-Moselle local insurance scheme On 24 November 2014, the management body of the Alsace-Moselle local insurance scheme decided, for the third consecutive year, to maintain the supplementary sickness insurance contribution paid by employees at 1.50% as of 1 January For employees covered by the local Alsace-Moselle insurance scheme, the overall contribution will remain at 2.25% (i.e., 1.50% for the additional local contribution and 0.75% for the contribution to the national health insurance scheme). French Social Security update 1 quarter 2015 Number 83 5

8 Changes as of 1 January 2015 The CET and AGFF The agreement signed by social partners on 18 March 2011 provided for an extension of two levies: (i) the Contribution Exceptionnelle et Temporaire (CET), a temporary levy to compensate for a decline in contributions following the discontinuation of certain stateguaranteed pension schemes, extended until 31 December 2015; and (ii) contributions to the Association pour la gestion du fonds de financement (AGFF), the body that helps finance pensions for workers retiring before the legal retirement age, extended until 31 December The current rates and assessment bases of both levies are unchanged. A single FNAL contribution Currently, companies pay two types of contributions to the fonds national d'aide au logement (FNAL), the national housing aid fund. The amended Social Security Finance Act for 2014 provided that the two would be merged into a single contribution as from 1 January 2015 with the following rates: 0.10% on salaries up to the social security ceiling for companies with fewer than 20 employees; 0.50% on the entire salaries for other companies. In practice, the new provisions changes nothing because the URSSAF already applies the single contribution (at a rate of 0.50%) to its statements under type code 236. The contribution rate to OPPBTP The contribution rate of companies affiliated with the OPPBTP, the professional organisation for the prevention of accidents in construction and public works, remains set at 0.11% of the amount of salaries paid by the employer in 2015 (decree of 23 December 2014, published in the Official Journal dated 30 December, p ). This contribution is payable each quarter based on the hours worked during the quarter preceding the date of collection by the paid-leave funds, under the same conditions as those applicable to annual leave contributions. Employer health care contributions Reminder: amounts added back to the full net taxable salary Until the Finance Act for 2014, the contributions paid by companies to finance additional health coverage (mandatory group policy) were exempt from personal income tax for the employee under certain limits, such as employer contributions to welfare schemes covering death, disability and invalidity. The Finance Act for 2014 simply removed the tax exemption for health care contributions paid by the employer and lowered the exemption limits applicable to other welfare contributions. Employer contributions financing additional health coverage must be added back to the employee's full net taxable salary. In return, the tax authorities stated in the tax bulletin (BOFIP) that the employee's gross salary before deduction of deductible contributions, plus the employer's health care contributions, were included in the calculation basis for the calculation of the exemption limits of the other welfare contributions (employee and employer welfare contributions and employee health care contribution). Paid leave fund and payment of contributions The Social Security Finance Act for 2013 required that companies, instead of paidleave funds, assume the responsibility for the FNAL contribution payment and the transport payment, both calculated on the amount of paid leave. In practice, this means that the employers of the employees concerned had to pay these contributions in the form of an increase of the FNAL contribution and transportation payment for which they were liable in respect of the salaries paid to their employees. This increase is applicable to the contribution base and was set by decree at 11.5%. In addition, the Social Security Finance Act for 2015 provided for an extension of this measure to all levies and social security contributions collected by the URSSAF, i.e., social security contributions, social contribution taxes (CSG/CRDS), and the specific 'solidarity' contribution. These new rules will apply to entitlements to paid holidays subsequent to 1 April However, an extension was granted to employers who choose to apply the new measure, or continue to pay their contributions through their paid leave fund. This period will end on a date set by decree for each sector concerned, and no later than 1 April Number 83 1 quarter 2015 French Social Security update

9 Ce qui change au 1 er janvier 2015 Accommodation allowances When an employer provides accommodation, it may choose to value this benefit in kind (except in the case of managers) based either on the rental value of the accommodation or on a monthly flat rate calculated based on the number of rooms and the employee's salary with reference to the monthly social security ceiling. Valuation based on rental value The value of the benefit in kind can be estimated based on the accommodation's rental value by referring to the value used to calculate the local residence tax (registered rental value), which is revised annually using a formula. The actual amount of the associated costs (water, electricity, gas, heating and parking) paid by the employer are added to the accommodation's valuation. The other expenses paid by the employer but which are usually incurred by the occupant such as the local residence tax or insurance cover constitute a cash benefit subject to contributions. Flat-rate valuation The 2015 rate schedule is as follows: Value of the benefit in kind for accommodation with: Monthly salary One main room Several rooms Less than 1,585 67,30 35,90 per room From 1,585 to 1,902 78,60 50,50 per room From 1,902 to 2,219 89,70 67,30 per room From 2,219 to 2, ,80 84,00 per room From 2,853 to 3, ,40 106,40 per room From 3,874 to 4, ,70 128,80 per room From 4,121 to 4, ,10 156,80 per room More than 4, ,60 179,40 per room This rate schedule corresponds to a monthly valuation. The weekly valuation is equal to one quarter of the monthly amount rounded to the nearest ten cents. These valuations cover complete weeks or months, regardless of the number of working days. French Social Security update 1 quarter 2015 Number 83 7

10 Changes as of 1 January 2015 Meal allowances The flat rate of this benefit in kind is set at 4.65 per meal ( 9.30 for one day with two meals) from 1 January For employees taking their meals in a canteen, the employer's contribution is not considered as a benefit in kind and is not included in the contribution base, provided that the employee's contribution is at least equal to half of the flat rate per meal, i.e., 2.32 in Hotels, cafés, restaurants and casinos From 1 January 2015, meal allowances for employees working in these sectors, rose to: 3.52 (1 x the guaranteed minimum) per meal 7.04 (2 x the guaranteed minimum) per day. Business expenses Fixed allowances for business expenses are excluded from the social security contribution base if used for their intended purpose. This condition is deemed satisfied if the allowance amount does not exceed certain limits. They are adjusted on 1 January of each year. The new exemption limits apply to salaries and earnings paid from 1 January 2015, and relate to periods of employment from that date. 8 Number 83 1 quarter 2015 French Social Security update Meals A fixed allowance of 6.20 (comparable to the former meal allowance) is paid when meals have to be provided at the workplace due to special conditions of organisation or work schedules (work in teams, in shifts, at night, continuous shift schedule, staggered working hours, etc.). A fixed meal allowance of 8.80 is paid in the case of travel outside the company premises or on a construction site, or when working conditions prohibit employees (or those with equivalent status) to return home or to their place of work for meals (comparable to meals previously provided at the construction site), unless it can be shown that meals have to be taken in a restaurant because of the circumstances or standard business practice. A fixed meal allowance of (comparable to the former restaurant allowance for management and non-management staff) is paid in case of business travel and also to employees (or those with equivalent status) that are unable to return home or to their place of work.- Travel allowance For travel in metropolitan France and when employees (or those with equivalent status) cannot return home every day, a fixed travel allowance applies for the portion that does not exceed: During the first three months of travel: for allowances provided to compensate for additional meal expenses in the case of business travel in France, per day for allowances provided to compensate for additional expenses for accommodation and breakfast for travel to Paris and in the Hautsde- Seine, Seine-Saint-Denis, and Val-de-Marne départements, per day in the other départements of metropolitan France. From the 3rd to the 24th month of travel: for allowances provided to compensate for additional meal expenses in the case of business travel in France, per day for allowances provided to compensate for additional expenses for accommodation and breakfast for travel to Paris and in the Hautsde- Seine, Seine-Saint-Denis, and Val-de-Marne départements, per day in the other départements of metropolitan France. From the 24th to the 72th month of travel: for allowances provided to compensate for additional meal expenses in the case of business travel in France, per day for allowances provided to compensate for additional expenses for accommodation and breakfast for travel to Paris and in the Hautsde-Seine, Seine-Saint-Denis, and Val-de-Marne départements, per day in the other départements of metropolitan France.

11 Changes as of 1 January 2015 Job relocation Costs incurred by employees when relocating for their job may be deducted from the social security contribution base under certain conditions. Fixed allowances apply up to: per day for a period not exceeding 9 months for allowances provided to compensate for the costs of temporary accommodation and additional costs for meals, while waiting for permanent housing, 1, (plus per dependant up to 1,800.20) for allowances provided to compensate for costs related to moving into new housing. Regarding allowances provided to compensate for moving expenses incurred by the employee, the employer has to substantiate the expenses incurred. Paris region Employers in the Paris region must pay 50% of their employees' cost for transport between their usual residence and their place of work using public transport. The Paris region public transport authority, STIF, decided to increase fares by approximately 2.9% from 1 January 2015, and to set a single charge of 70 a month for the Pass Navigo transport pass from 1 September 2015 onwards. Rate of the transport contribution in the Paris region In consideration for the single charge for Pass Navigo the transport pass, effective 1 January 2015, the second amended Finance Act for 2014 provided an increase of the transport contribution rates, subject to agreement by the Paris region public transport authority, as follows: 2.85% for Paris and the Hauts-de- Seine (versus 2.70% currently); 1.91% for towns in the Seine-Saint-Denis and Val-de-Marne départements, as listed by decree (versus 1.80% currently). The transport contribution rate will remain at 1.50% in other towns. However, these new rates cannot be applied from 1 January 2015 because Acoss, the central agency for social security funds in France, was not notified two months in advance. Entry into force has been postponed until 1 July French Social Security update 1 quarter 2015 Number 83 9

12 Changes as of 1 January 2015 Exemption limits Internship allowances Since the Act of 10 July 2014 (see. Social security policy update no. 81), expectations had been high for the decree setting the new mandatory allowance to be paid to interns placed under a contract of at least two months, consecutive or not, during the same academic year. For contracts signed on or after 1 September 2015, the mandatory allowance was supposed to be raised to 15% of the hourly social security ceiling per hour of internship. However, given the ministerial promises, a decree was expected to set the allowance at 13.75% of the hourly social security ceiling. The increase was due to be announced on 1 September The decree was finally issued on 27 November It provides that the allowance payable to interns entering into a contract on or after 1 December 2014 for a period of at least two months, consecutive or not, during the same academic year will rise to 13.75% of the hourly social security ceiling. The decree also sets the exemption threshold of the allowance. The amounts are set out in the table below: Furthermore, the Ministry of Education announced that the article D of the French education code (Code de l'éducation), amended pursuant to the decree of 27 November 2014, should be used to calculate the amount of the minimum allowance (and therefore its exemption limit), i.e., based on 154 hours of work, rather than hours, for interns whose working hours are based on the legal duration and who entered into a contract on or after 1 December These provisions clearly show that those who drafted them are far removed from those who apply them. Obtaining and signing an internship contract may take a long time and there are many students who are glad to have found a position as a intern several weeks or months before starting work for the host company. However, most payroll software only takes into account "the starting date" of employment. Hence the question: how to process the payslips of interns whose starting dates do not correspond to the date of signature of their internship contract? The labour administration has already indicated that the "date of signature" corresponds to the date on which the contracts were entered into. Hopefully, it will reconsider its interpretation to grant the benefit of the provisions concerning the different exemption thresholds of the internship allowances, basing them on the starting date of the internship in the company, not on the date of signature of the internship contract. Employers' share of meal voucher costs On 1 January 2015, the exemption limit applicable to meal vouchers rose from 5.33 to Moreover, given that the employer's contribution to meal vouchers must be between 50% and 60% of the voucher's value without exceeding 5.36, the maximum value of the meal voucher must be between 8.93 (for 60% contributions) and (for 50% contributions). Works council vouchers Following the increase in the social security ceiling to 3,170 per month on 1 January 2015, the exemption limit applicable to purchase and gift vouchers issued by the works council, or by the company if it does not have a works council, is set at per employee per calendar year. Date of contract signature Rate Amount of the social security ceiling Minimum allowance per hour Minimum allowance for a full-time position Until 30 November ,5 % 23 2, ,05 for 151,67 hrs ,01 for 151,67 hrs Between 1 December 2014 to 31 December ,75 % 23 3, ,03 for 154 hrs 24 3,30 508,20 for 154 hrs Between 1 January 2015 and 31 August ,75 % 24 3,30 508,20 for 154 hrs Between 1 September 2015 and 31 December % 24 3,60 554,40 for 154 hrs 10 Number 83 1 quarter 2015 French Social Security update

13 Changes as of 1 January 2015 Wage attachment 2015 rate schedule The rate schedule is adjusted every year. The new rate schedule came into force on 1 January /20 if the salary is lower or equal to 3,720, 1/10 if the salary ranges between 3,720 and 7,270, 1/5 if the salary ranges between 7,270 and 10,840, 1/4 if the salary ranges between 10,840 and 14,390, 1/3 if the salary ranges between 14,390 and 17,950, 2/3 if the salary ranges between 17,950 and 21,570, the entire amount if the salary is higher than 21,570. Each bracket is increased by 1,410 per person per year for the debtor subject to attachment or the assignor (spouse, partner, and ascendant whose personal income is below the active solidarity income (RSA), i.e., per month on 1 Januar y 2015; dependants qualifying for family allowances). Monthly rate schedule 1/20 if the salary is lower or equal to 310, 1/10 if the salary ranges between 310 and , 1/5 if the salary ranges between and , 1/4 if the salary ranges between and 1,199.16, 1/3 if the salary ranges between 1, and 1,495.83, 2/3 if the salary ranges between 1, and 1,797.50, the entire amount if the salary is higher than 1, Each bracket is increased by per person per month for the debtor subject to attachment or the assignor (spouse, partner, and ascendant whose personal income is below the active solidarity income (RSA); dependants qualifying for family allowances). Amount of salary which cannot be attached and increase of RSA In any case, the employee subject to the attachment must be left with an amount equal to the active solidarity income (RSA) for a single person. This amount corresponds to the portion of salary which cannot be attached, and which rose from to on 1 January Rate 1 Brackets according to the period to which the payments relate (in euros) Year Quarter Month Week Day or part of day 0% up to 14,431 up to 3,608 up to 1,203 up to 278 up to 46 12% between 14,431 and 41,867 between 3,608 and 10,467 between 1,203 and 3,489 between 278 and 805 between 46 and % above 41,867 above 10,467 above 3,489 above 805 above 134 (1) The rates of 12% and 20% are reduced to 8% and 14.4% in the French overseas départements French Social Security update 1 quarter 2015 Number 83 11

14 Changes as of 1 January 2015 This obligation also applies to publicsector employers having paid at least 100,000 to the URSSAF in contributions in respect of Contributions must be paid by bank transfer. This threshold will be lowered to 50,000 on 1 January Withholding tax rate schedule Increase of the CICE in the overseas départements Companies located in France's overseas départements benefit from a competitiveness and employment tax credit (CICE) rate of 7.5% for salaries paid in 2015 (versus 6%), and then 9%. The same applies to the research tax credit, or CIR. The rate on the portion of eligible expenses of up to 100 million rose from 30% to 50% from 1 January 2015 and the rate of innovation tax credit from 20% to 40%. Obligation to declare and pay electronically Reminder From 1 January 2015, private employers having paid at least 20,000 to the URSSAF in contributions in respect of 2014 must submit their declarations and payments electronically. The payment of contributions must be made by bank transfer or electronically if the employer paid contributions of less than 7 million. Above this amount, the payment is made only by bank transfer (decree no of 17 June 2014). Flat rate contribution per calendar day of activity based on actual salary From 1 January 2015 to 31 December 2015 Calculated on a daily basis in euros Salary lower than ,94 Salary between 175 and ,56 Salary between 348 and ,18 Salary between 522 and ,06 Salary between 696 and ,68 Salary between 870 and 1, ,50 Salary between 1,044 and 1, ,16 Salary between 1,218 and 1, ,08 Salary higher than 1,740 actual salary Pending the decree which sets the annual withholding tax rate schedule, the tax authorities have published an update of the 2014 rate schedule to apply to salaries paid in Flat-rate basis for part-time trainers There is a specific calculation of social security contributions for employees who provide training for a period not exceeding 30 calendar days per year and per training session or educational organisation. As an exception to this flat-rate calculation, the social security contributions may be calculated on the amount of salaries actually paid to the employee concerned, by mutual agreement between the employer and the employee. The calculation on a flat-rate basis does not apply to unemployment insurance or wage insurance (AGS). The calculation base of unemployment insurance contributions and AGS comprises gross salaries. The salary in excess of four times the annual social security ceiling is excluded from the calculation base of unemployment insurance contributions and AGS. 12 Number 83 1 quarter 2015 French Social Security update

15 Changes as of 1 January 2015 Furthermore, with regard to the CSG/ CRDS social contribution taxes, the 1.75% deduction for business expenses does not apply when calculation on a flat rate basis is used. Finally, in 2015, a maximum discount rate of 30% may be applied to actual salaries equal to or greater than 1.5 times the social security ceiling. A new tax to finance employer and employee unions Act no of 5 March 2014 on vocational training provided for the establishment of a fund to finance employer and employee unions. The resources of this fund include a contribution to be paid by all private employers (private companies and employees of public sector companies under private-law contracts) without any distinction in respect of the number of employees. The rate of employer contribution was set by the decree of 30 December 2014 at 0.016% of gross salaries paid pursuant to article L242-1 of the French social security code (Code de la sécurité sociale). It will be payable on the basis of salaries paid on or after 1 January 2015 and be collected by the URSSAF (code CTP 027). Method for calculating daily allowances On this topic, please refer to Social security policy update no. 82. A circular from the social security administration of 30 December 2014 provides for the new calculation of daily allowances applicable to absences from work effective from 1 January 2015; it also specifies their effective date. Increase of the additional contribution on top-up pension plans The Social Security Finance Act for 2015 decided to increase the additional contribution on pension annuities paid under top-up pension plans, which rose from 30% to 45% for all pension annuities above eight times the annual social security ceiling. This contribution is declared and paid on behalf of the company by the payor of the annuity. Removal of the dividend premium The Social Security Finance Act for 2015 repealed Article 1 of the amended Social Security Finance Act of 28 July 2011, which established the "dividend" premium. However, given that this premium is based on the dividend payout decision of the Annual General Meeting, the French authorities stated that the "dividend" premium will apply in the case where the distribution decision is prior to 1 January Any company required to pay a premium on profit sharing because it decided to distribute higher dividends than the average dividends paid in respect of the two previous years will have to pay the premium in As such, it will be entitled to the same exemptions from charges and taxes as those applicable until now (exemption of up to 1,200 per year per employee with the exception of the CSG/CRDS social contribution taxes and other social security contributions). The decree also provides that the contribution must be transferred before the end of first half 2015 to the fund, which will distribute it among beneficiary employer and employee unions in French Social Security update 1 quarter 2015 Number 83 13

16 Higher AGEFIPH contribution: tolerance expires Reminder As mentioned in Social security policy update no. 80, any employer (including public-sector industrial and commercial entities) employing at least 20 employees are required to hire disabled staff. There are different ways for employers subject to this obligation to comply with it, including: 1. hiring disabled workers (at least 6% of disabled employees), 2. placing disabled interns (up to 2% of employees), 3. outsourcing to a sheltered and/ or disability-friendly sector, 4. implementing a collective agreement promoting the employability of people with disabilities, 5. paying contributions to AGEFIPH, the agency for promoting employment of disabled workers. However, the law provides for a safeguard: employers fulfilling their obligation by merely paying an AGEFIPH contribution or by placing disabled interns for four years in a row are liable to an increased AGEFIPH contribution, in the fourth year, equal to 1,500 times the hourly minimum wage per missing beneficiary (article L of the labour code (Code du travail)). Until now, non-enforcement of this AGEFIPH contribution has been tolerated because the minimum amount the employer had to spend on services sourced from a sheltered or disability-friendly sector was determined tardily (see ministerial letter of 10 December 2012, available on the AGEFIPH website). No more tolerance This tolerance lasted until From 2015, employers under obligation to employ disabled workers will be subject to the increased AGEFIPH contribution, if they failed during the previous four years, i.e., from 2012 to 2015, to: hire disabled workers, implement a collective agreement promoting the employability of people with disabilities, reach the minimum threshold, excluding taxes,de 400 fois le SMIC horaire pour les sociétés entre 20 et 199 salariés, of 400 times the hourly minimum wage for companies with between 20 and 199 employees, of 500 times the hourly minimum wage for companies with between 200 and 749 employees, of 600 times the hourly minimum wage for companies with over 750 employees, by entering into agreements for subcontracted work or for the sourcing of services from disability-friendly companies, work-from-home centres (CDTDs) or sheltered workshops (ESATs). For example Company A has had a stable workforce of 35 employees since Company A has had to employ two disabled workers [35% x 6 = 2] since payment of the increased AGEFIPH contribution Company A met its obligation to employ two disabled workers by paying the AGEFIPH contribution annually at the minimum wage rate in effect on 31 December: In 2012: two employees x 400 x 9.40 = 7,520 In 2013: two employees x 400 x 9.43 = 7,544 In 2014: two employees x 400 x 9.53 = 7, Increased AGEFIPH contribution to be declared in February 2016 On 31 December 2015, over the four previous years (2012 to 2015), company A has not: hired disabled workers, implemented a collective agreement promoting the employability of people with disabilities, reached the minimum threshold for subcontracted work or provision of services from disability-friendly companies, CDTDs or ESATs, and signed an industry-wide agreement. 14 Number 83 1 quarter 2015 French Social Security update

17 Surcontribution AGEFIPH : finie la tolérance Therefore, company A will have to pay in February 2016 (if the amount of minimum wage does not increase before 31 December 2015) an increased AGEFIPH equal to: two employees x 1,500 x 9.61 = 28,830. One way to avoid being subject to this increased rate is to enter into one or more service or subcontracting agreements, with disability-friendly companies, CDTDs or ESATs over the period concerned. The minimum target level must represent, over four years, a pre-tax an amount higher than 400, 500 or 600 times the hourly minimum wage depending on the company's workforce (article D of the French Labour Code, laid down in decree of 1 August 2012). Company A in this example would have a minimum target level over the last four years of: two employees x 400 x 9.61 = 7,688. Accordingly, companies that are obliged to hire disabled employees and that had benefited until 31 December 2014 from the tolerance permitted by the ministerial letter of 10 December 2012 will have to pay the contribution in February 2016 unless they: hire disabled employees, apply an industry-wide agreement, a group or company-wide agreement relating to the obligation to hire disabled employees, or pay almost all of the amount of their 2015 annual contribution by purchasing services from a sheltered or disabilityfriendly sector. French Social Security update 1 quarter 2015 Number 83 15

18 Entry into force of the Compte Pénibilité account for employees in difficult working conditions Reminder The regulations on the prevention of difficult working conditions already contained the principle of a financial penalty of 1% for employers with 50 employees or more (including public institutions) which did not comply with the obligation to be covered by an agreement or an action plan relating to the prevention of such conditions in the case where 50% of their employees are exposed to risk factors defined by law (article L of the French Social Security Code created by Act no of 9 November 2010). This obligation and penalty were scheduled to come into force on 1 January The only new measure introduced by the provisions adopted by the French government on 9 October 2014 is to lower the threshold of this obligation from 50% to 25% of the number of employees, from 1 January Entry into force of the Compte Pénibilité account The principle of preventing difficult working conditions has been in existence for some time. Act no of 20 January 2014 reforming pensions, presented in Social security policy update no. 79, provided for the creation of the Compte Pénibilité account from 1 January 2015 intended to enable workers who have been subject to difficult working conditions to change to a less arduous job and to retire early. The implementing decrees were still needed to implement this reform. 16 Number 83 1 quarter 2015 French Social Security update The long-awaited decrees were published on 9 October 2014; they include the criteria used to assess the employees' exposure to the first four applicable risk factors, which are: night work, shift work, repetitive work, work in hyperbaric chamber. Six other factors will be taken into account from 1 January 2016: manual handling of heavy loads, awkward postures, such as those puttingstress on joints, mechanical vibration, exposure to hazardous chemicals, extreme temperatures, noise. The employer will have to assess employees' exposure to difficult working conditions and keep a record if certain thresholds are exceeded. Given the complexity of this system, even if the Compte Pénibilité account enters into force on 1 January 2015, information will not be recorded in the account until the following year. Therefore, the French government indicated that employers will not have reporting requirements before 1 July 2015 and the information regarding the employees' exposure to difficult working conditions for 2015 must be provided at the latest by 31 January Employees concerned All employees from the private sector and employees from the public sector employed under private-law contracts may acquire rights under a Compte Pénibilité account if they are exposed to at least one of the risk factors determined by decree and if they meet the assessment criteria laid down by these decrees. Example To be considered as being exposed to difficult working conditions when working at night and to earn four points per year, the employee concerned must have worked at least one hour between midnight and 5:00am for at least 120 days a year. Excluded employees Employees affiliated to a special pension scheme which already provides for a specific system acknowledging and compensating for difficult working conditions do not acquire rights under the Compte Pénibilité account. The schemes concerned are: 1. the Banque de France pension scheme; 2. the pension scheme for employees of 3. the electricity and gas industries; 4. the pension scheme for employees of the Paris National Opera; the pension scheme for employees of the staterun theatre Comédie-Française; 5. the pension scheme for notary clerks and employees; 6. the pension scheme for employees of the Paris public transport authority (RATP); 7. the pension scheme for employees SNCF-French Railways; 8. the pension scheme for seamen; 9. the pension scheme for the of the 10. autonomous port of Strasbourg;

19 Entry into force of the compte pénibilité account for employees in difficult working conditions Resources To ensure the administrative management, organisation and operation of the Compte Pénibilité account, the Act of 20 January 2014 created a fund with revenue derived from: a contribution payable by employers for their employees falling within the scope of the Compte Pénibilité account as defined in article L of the labour code (Code du travail); an additional contribution payable by employers who exposed at least one of their employees to difficult working conditions, defined in the second paragraph of article L ibid, i.e., as conditions exceeding the limits set by decree; any other revenue authorised by law and regulations. However, a question remained regarding the scope of the first contribution: should it apply to the total wage bill of the employees who are not excluded from the regulations on the Compte Pénibilité account; or could it be applied only to the gross salaries of employees exposed to risk factors identified by decree. The response of the URSSAF was very clear: the first contribution due from 1 January 2017 will be charged at the rate of 0.01% to all gross salaries paid to employees within the scope of the regulations on the prevention of difficult working conditions (i.e., employees not excluded) and it will be paid in accordance with the law, i.e., monthly. The additional contribution will be charged in 2015 and 2016 at a rate of 0.1% on gross salaries paid to employees subject to above-limits exposure. This contribution will be doubled in case of exposure to two or more risk factors. Since the employees concerned must first be identified, the contribution will be collected with a one-year lag (i.e., in early 2016 for the additional contribution of 2015). The rate will rise to 0.2% on 1 January French Social Security update 1 quarter 2015 Number 83 17

20 The CPF replaces the DIF As mentioned in our previous Social security policy update, the Act reforming professional training has two main provisions: the replacement of the individual training entitlement (DIF) by the personal training account (CPF), the merger of the various training contributions to create a single contribution whose rate varies depending on whether the employer has fewer or more than 10 employees (1% or 0.55%). Replacement of the DIF Created in 2004 the DIF had very little success, so the decision was taken to improve it. The DIF has been replaced by the CPF (without retroactive effect) as from 1 January Transfer of the remaining DIF hours to a CPF Hours acquired by employees under the individual training entitlement system and not used by 31 December 2014 will not be lost. Employees must be informed in writing of the accrued number of hours in their DIF on or before 31 January 2015 to enable them to enter this information in a personal training account opened in their name on the website www. moncompteformation.gouv.fr. Employers must inform their employees on or before 31 January 2015 of the unused cumulative training entitlement accrued by them and calculated on 31 December Unlike entitlements credited to the personal training account, the individual training entitlements expire after six years. Therefore, under the legal provisions, the training hours transferred to the personal training account can be used by employees until 31 December Hours credited to the CPF Irrespective of the employees' previous individual training entitlements, and without length-of-service conditions, 24 hours of entitlement to training per year will be credited to the personal training account in proportion to annual working time up to 120 hours, and then 12 hours per year up to 150 hours. This information on the employees' working time will be provided each year by the employer via the social data declaration schedule (DADS) to Caisse des Dépôts et Consignation, which manages employees' personal training accounts. For employees whose activity is totally unrelated to working time (e.g., sales representatives) rules of equivalence are provided by law. Furthermore, if the company is covered by an agreement providing for more favourable provisions in respect of the personal training account for employees who have not worked full-time during the year, it will have to calculate the annual number of hours to be credited to the personal training account of the employees concerned and supply the number of hours as well as the list of beneficiaries to the relevant approved vocational training fund (OPCA). 18 Number 83 1 quarter 2015 French Social Security update

21 The CPF replaces the DIF Given the processing time required, the personal professional account should be credited automatically for the first time at the end of the first quarter 2016 on the basis of annual information provided by companies. Use of the CPF The personal training account should enable employees to follow training courses, on their own initiative, in order to acquire initial skills or to develop their expertise. The social partners at the national and regional level decide which training courses can be taken. Compared with the DIF, the CPF has the major advantage of being a personal entitlement that follows employees throughout their career, including when changing employers. By contrast, the DIF entitlement expired after a period of transferability. The use of the personal training account is no longer subject to the employer s prior approval if the training is taken outside working hours or to develop basic requisite skills. However, if training takes place during working hours, the employee must seek the employer's prior approval on the training programme and schedule. The employer must maintain the employee's salary. It may request a reimbursement of up to 50% from the relevant vocational training fund (OPCA), subject to the express approval of the company's board of directors. Sanctions The Act reforming professional training also provides for changes in the employer's career development obligations. From now on, every two years, the employer will have to hold a job interview with the employee to discuss professional development opportunities. Every six years, this job interview will be held to assess the employee's career development and check whether he or she has received training, acquired qualifications, accredited their work experience (under the so-called VAE system), benefited from professional development opportunities and a salary increase. Companies with a staff of at least 50 that failed during these six years to provide employees with career interviews in accordance with article L of the French Labour Code and at least two of the three measures referred to in points 1, 2 and 3 of the same article are subject to a penalty. Accordingly, they have to credit 100 hours of additional training to their employees' accounts (or 130 hours for part-time employees) and to pay a flat-rate amount, set by decree at 30 per credited hour (article L of the French Labour Code, into the relevant vocational training fund (OPCA). French Social Security update 1 quarter 2015 Number 83 19

22 In brief... Career-path security contract renewed Trade unions finally reached an agreement on 22 December 2014 to maintain the career-path security contract (CSP), which was implemented in 2011 to assist employees made redundant for economic reasons in companies with fewer than 1,000 employees and companies put into receivership or liquidation. The new agreement, which has to be approved to enter into force, is intended to apply to employees in redundancy situations from 1 January 2015, for a term of two years. It is due to expire on 31 December The changes include the reduction of the compensation paid to beneficiaries from 80% to 75% of the daily reference salary, with the understanding that the amount will not exceed the unemployment benefit ceiling (ARE), to which the beneficiary could be entitled. In return, if the beneficiary of a CSP keeps a job, and becomes involuntarily unemployed during the term of the contract, the amount of the benefit will be revised to ensure that the compensation paid to the beneficiary is not lower than the compensation he or she would have received had they not entered into a CSP. In addition, CSP beneficiaries can work for as many periods as they like, for a minimum of 3 days (versus 14 days in the previous agreement), provided these periods are validated by the assigned advisor of the job centre (Pôle Emploi) who will check that they are consistent with the beneficiary's professional reassignment plan If the beneficiary works after the end of the sixth month under the CSP, the term of this contract may be extended up to the total periods of work, and up to three additional months. Further, the beneficiary who finds employment (on a permanent contract, fixed-term contract or temporary contract of at least 6 months) before the end of the tenth month under the CSP may request payment of a reintegration premium equal to 50% of the remaining employment security allowance (allocation de sécurisation professionnelle), which cannot be combined with the differential reintegration allowance (indemnité différentielle de reclassement). Flat-rate deduction of contributions of employers who are private individuals The amount of the flat-rate deduction of employer contributions to which employers who are private individuals are entitled has increased for the employment of home-based employees caring for children between 6 and 13 years of age in metropolitan France. The amount of the deduction is 1.50 per hour of work, versus 0.75 in the general case. This increased deduction is applied to social security contributions (contributions for sickness, maternity, invalidity, old age, occupational accidents and family allowances) subject to an hourly limit set by decree and provided that the employer complies with certain reporting requirements. For activities other than those eligible for the increased deduction, the deduction applies only to contributions for sickness, maternity, disability and death. During parliamentary debates, it was stated that entitlement to the increased deduction would be subject to the online filing of the payroll return by the employer on the Pajemploi website. 20 Number 83 1 quarter 2015 French Social Security update

23 This requirement is prompted by the need to verify the activity performed by the salaried employee (childcare of children between 6 and 13 years of age), which is not possible with the use of the chèque emploi service universel (CESU) system, used to pay for services rendered by private individual. This measure enters into force on 1 January 2015 but enforcement is subject to the publication of the related implementing decree. Christmas bonus renewed in 2015 In a ministerial notice of 4 December 2014, the French government announced that the Christmas bonus would again be paid this year to recipients of minimum social benefits and would amount to for a single person and more than twice this amount for a couple with two children. This bonus will be paid in the week preceding Christmas. Its amount, which varies depending on family size, is as follows: Single person: Couple without children or single person with one child: Couple with one child or single person with two children: Couple with two children: Couple with three children: Couple with four children: Single person with three children: Single person with four children: Single person with five children: Per additional person: French Social Security update 1 quarter 2015 Number 83 21