In response to “yellow vests” protests, the Government implemented last year an optional compensation, in the form of an exceptional “purchasing power” bonus paid by employers and exempt from social contributions and employee income tax.
The so called “Macron bonus” is now renewed for 2020 but under new conditions.
– Employees who could be eligible –
This is an optional collective bonus and not to be paid individually on a discretionary basis. Potentially eligible employees are those that have an employment contract at the date of payment of the bonus (including apprentices, directors with both officer role and employment contract), as well as temporary workers put at the disposal of a user company allocating such bonus, public agents and employees with disabilities benefiting from a subsidized employment contract.
– Exemptions: conditions and caps –
The exceptional “purchasing power” bonus is exempt from social contributions and employee income tax under certain conditions:
- The employee’s remuneration over the last 12 months preceding the payment of the bonus should not exceed 3 times the value of the national minimum wage (Smic, i.e. in 2019 € 4,563.66 per month and in 2020 €4,618.25 per month). This cap must be adjusted depending on individual working time.
- The amount of the bonus should not exceed 1,000 euros.
Employers can decide to allocate a lower or higher amount, but if higher, the excess part will be subject to social contributions and employee income tax.
In addition, employers can allocate a bonus to all their employees, but for employees whose remuneration exceeds the cap, the full bonus will be subject to social contributions and income tax.
– Requirements –
Firstly, to benefit from exemptions, employers should have in place at the date of bonus payment a local profit-sharing agreement (“accord d’intéressement”). Those which already implemented such agreement covering the period of payment, are compliant. However, employers who did not implement such agreement in the past will need to do so in accordance with the specific framework for this type of agreement. The law exceptionally allows to conclude a profit-sharing agreement for less than 3 years and minimum one year, if it is agreed between January 1st and June 30th, 2020.
Another requirement concerns the period of payment. The bonus should be paid between December 28th, 2019 and June 30th, 2020.
Finally, the Macron bonus should not replace an item of remuneration paid by employers, or which becomes mandatory in accordance with the law, or with a collective agreement, an employment contract or a Company practice. It should neither replace an increase in salary, nor the payment of a bonus provided by a branch or company agreement, or by an employment contract or Company practices.
– Flexibilities left to Employers –
Employers are free to determine the amount of the bonus provided by agreement or by unilateral decision of the employer. The amount can be lower or higher than the exempted cap (1,000 euros). This bonus can also be allocated to all staff or be subject to a lower cap in remuneration. If the cap is lower, some employees may, as a result, be excluded from the scheme.
In addition, the amount of the bonus may be adjusted per employee based on specific criteria such as remuneration, level of classification or working time.
To define the amount, the cap in remuneration and the potential adjustment of the bonus level, employers can conclude a Company or group agreement in accordance with the rules applicable to the signature of a profit-sharing agreement, or take a unilateral decision requiring a prior information of employee representatives.