Breaking news : Companies with at least 11 employees will have to implement profit sharing plans
As from January 2025 a profit-sharing scheme will have to be implemented in companies having at least 11 employees and whose headcount has not reached the threshold of 50 employees during five consecutive years.
This new obligation results from the law n°023-1107, adopted on November 29th, 2023 and applies for a five-year experimental period.
Who are the employers concerned by this new obligation?
Three cumulative criteria must be met to fall under the scope of the law:
- A headcount criteria; Employers with a headcount comprised between 11 and 49 employees and employers having 50 employees if this threshold has not been reached during five consecutive years obliging the company to implement the so-called “accord de participation”;
- A turnover criteria; Employers who generated a net profit for tax purposes (“bénéfice net fiscal”) of at least 1% of their turnover during three consecutive fiscal years, i.e. in 2022, in 2023 and in 2024;
- Absence of profit-sharing scheme already in place on a voluntary basis (“accord d’intéressement”);
This new obligation does apply to foreign companies having permanent establishment in France and who makes social security and tax declarations in France even in the absence of registration in France, as confirmed by the French labour ministry.
What form or profit-sharing scheme must be implemented?
In practice, this experimental profit-sharing scheme could have the form of one of the four following schemes:
- A mandatory profit-sharing agreement – so-called “accord de participation” adopted either by adhering to an agreement negotiated at the level of the company’s sector industry (collective bargaining agreement), or by negotiating a company agreement with trade unions, or with staff representatives – and if the negotiation does not succeed – through a unilateral decision after consultation of the works council if it exists;
- A non-mandatory profit-sharing agreement – so-called “accord d’intéressement” by negotiating a company agreement with trade unions, or with staff representatives, or through a unilateral decision of the employer in the absence of trade union delegates and works council;
- The provision of employer’s contribution to employees saving schemes or to a pension plan
- The payment of a “value-sharing bonus” each year – the bonus may be the same for every employee or depend on the employee’s remuneration, classification level, length of service with the company or actual length of time with the company during the previous year. It would be exempted of tax and social charges.
In summary, companies with between 11 and 49 employees remain rather free to choose the form of application for sharing the company’s value with the staff, and to what extent.
The future of this temporary experiment will be reassessed after November 29, 2028.
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Sources :
- Law n°2023-1107 – November 29th, 2023 transposing the national interprofessional agreement on the sharing of value within the company
- Q&A n°7 published on the labour ministry website on July 8, 2024