A new scheme for maintaining employment during Covid-19 period: Reduced activity for employment (ARME)

A new scheme of partial activity (or furlough) is implemented in France. Its objective is to ensure employment within companies facing long-term reduction in activity which does not compromise their continuity and who need the financial support from the Government for a temporary period. It is different from the specific partial activity scheme implemented to face the consequences directly linked to the Covid-19 pandemic (e.g. administrative closures of stores, …) and the 2 schemes cannot be combined.

It is exclusively implemented by a branch or company collective  agreement, including mandatory provisions, notably related to its duration of application, the activities and concerned employees, the reductions of the working hours schedule subject to specific indemnity, as well as the means  of information of unions and employee representatives. Importantly, it should also provide for the commitments specifically taken in counterpart by the Company, notably to maintain employment. These commitments should relate to all the jobs which are performed within the worksite or the Company. 

Process of approval or ratification of the collective agreement or of the document

The company agreement or the document established within the company in application of a branch collective agreement can be submitted to the Administrative authority until June 30th, 2022. The Administrative authority is the Prefect having authority for the company’s address. For a company with several work locations, it is the Prefect having authority for any of the locations’ addresses.  

The Administrative authority approves the collective agreement or ratifies the document established unilaterally. More precisely:  

  • The Administrative authority has 15 days from its receipt to approve the collective agreement.  The focus will be on the conditions of validity and of regularity of the negotiation process, and on the inclusion of mandatory provisions.
  • The Administrative authority has 21 days from its receipt to ratify a unilateral document. In such case, the focus will be on the regularity of the information and consultation process of the employee representatives if they exist, the inclusion of mandatory provisions, the compliance of the document with the stipulations of the branch collective agreement, and the indication of the specific commitments of the company in terms of employment.   

The process of approval or ratification is renewed in case of revision of the agreement or extension or adaptation of the unilateral document.

The motivated  decision of the Administrative authority is notified to the employer, to employee representatives if they exist, and to unions if they are signatories of the agreement.   No formal response  of the administration at the end of the investigation period is considered as approval or ratification. Employees should be informed, by the Company through posting or any other means enabling to date the information, of the response from the Administrative authority or, otherwise, of the request by the employer, completed by the confirmation of receipt, as well as of the appeal deadlines and procedures.   

Application and duration

The employer can only place its employees under reduced activity, and therefore benefit from the related indemnity, from the first date of the month during which the request for approval or ratification has been submitted to the Administrative authority.

The application of reduced activity is limited to 24 months, consecutive or not, over a reference period of 36 consecutive months.

Limitation of reduced activity

The reduction of the working time schedule which can be subject to the indemnity cannot exceed 40% of the legal working time. This reduction is considered for each concerned employee over the duration of application of the “ARME” scheme provided by collective agreement or by unilateral document.  Its application can result in a temporary suspension of activity.

However, this limit can be exceeded in very exceptional circumstances resulting from the specific situation of the company, upon decision of the Administrative authority, and within conditions provided by collective agreement. In any case, the reduction of working time schedule cannot exceed 50% of the legal working time.  

Follow up on the commitments provided in the agreement

Before expiration of each period of authorization (i.e. at least every 6 months), the employer should communicate to the Administrative authority an assessment related to its compliance with commitments in terms of employment and professional training and to the means of information of the signatory unions and employee representatives about the implementation of the agreement (which should take place every 3 months).  

This assessment should be provided with an updated statement of the economic situation and perspectives of Company’s activities, as well as the document of the last meeting during which employee representatives, if they exist, were informed of the reduced activity.

In the event of redundancy based on economic grounds of one or several employees who were on reduced activity, the employer is obliged to reimburse the indemnity received for each concerned employee.

When economical redundancy impacts an employee who was not under reduced activity but that the employer committed to maintain in employment, the reimbursement is equal, for each termination, to the total indemnity paid to the employer divided by the number of employees under reduced activity.  

The reimbursement may not be required if it is incompatible with the economic and financial situation of the company. It is also to be noted that the Administrative authority could suspend the payment of the indemnity if the employer would not comply with its commitments.

Indemnity paid to the employee

The indemnity received by the employee in compensation of the reduced activity is paid by the employer. It should amount to 70% of the gross remuneration, calculated  as an hourly rate on the basis of the legal working time applicable within the company, or if less, the working time provided by collective agreement or by the employment contract.

The maximum remuneration taken into consideration for the calculation of this indemnity is capped at 4.5 times the hourly rate of the statutory minimum wage (i.e. €31.97).

Indemnity reimbursed to the employer

The hourly rate of the indemnity reimbursed to the employer is, for each concerned employee, of:

  • 60% of the hourly gross remuneration, in the limit of 4.5 times the hourly rate of the statutory minimum wage (i.e. €27.4), for agreements (or documents) communicated to the Administrative authority by October 1st, 2020;
  • 56% of this remuneration for the agreements (or documents) communicated from October 1st, 2020.

The hourly rate of the indemnity cannot be less than € 7.23 (not applicable to apprenticeships or to professionalization contracts).  

Should you have any questions, please do not hesitate to contact us.

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