By: HUB’s EB Global Benefits Team

What Is It About?

Starting January 1, 2025, a new French law will require companies with 11 to 49 employees to implement a value-sharing scheme if certain profit thresholds are met. This legislation extends obligations previously only in place for larger businesses.

Companies with fewer than 11 employees are exempt, while those with over 50 employees have faced mandatory profit-sharing since 2020 and must address exceptional profit-sharing by mid-2024.

The law provides several mechanisms for compliance, allowing companies to select the most suitable scheme based on their financial position and strategic goals:

  • Participation in Profit-Sharing and Gain-Sharing Schemes (Participation and Intéressement): These bonuses utilize a legally defined formula and/or criteria negotiated with unions or employee representatives to share profits or performance-based bonuses with employees. They offer both tax and social security benefits.
  • Value-Sharing Bonus ("Prime de Partage de la Valeur" or PPV): The PPV allows companies to give employees a bonus that benefits from full tax and social exemptions until the end of 2026, subject to certain conditions.
  • Employer Contributions to a Savings Plan (“Plan d’Epargne d’Entreprise” PEE): Companies contribute to employee savings or retirement plans (PERCO or PERE-CO). Without additional value-sharing mechanisms, such as profit-sharing or gain-sharing bonuses, the tax advantages may be limited.
  • Voluntary Bonus Program Linked to Company Value ("Prime de Partage de la Valorisation de l’Entreprise" or PPVE): This new program is awaiting an implementing decree to define its terms and conditions. It would allow employees to be remunerated in proportion to the change in the company's value over a 3-year period, without becoming shareholders.

Legal and financial advice will be key to choosing the right scheme, balancing compliance, tax benefits, and sustainability.

Impact On Companies

  • Companies with 11 to 49 employees must implement a value-sharing scheme if they meet certain profit thresholds, similar to obligations previously limited only to larger businesses.
  • Qualifying employers will need to navigate the various program options available in order to comply with the requirements under this new law.
  • These employers will need to budget for additional contributions or distribution of profits as their larger counterparts have already been doing for many years.

Suggested Employer Action

  • Assess profit and turnover data from the past three years to determine whether the company meets the thresholds for implementing a value-sharing scheme.
  • Engage professional advisors to navigate the complexities of implementing profit-sharing or incentive schemes and ensure compliance with the new regulations.
  • Evaluate different value-sharing schemes (PPV, profit-sharing, incentive bonuses, etc.) to align with the company’s financial capacity and long-term strategic goals.
  • For companies using the PPV, plan for adjustments when tax exemptions expire after 2026.

If you have any questions, please contact your HUB Advisor. View more updates in our Global Benefits Directory.