How to Comply with France’s New Profit-Sharing Obligation Effective as of January 1

French Act No. 2023-1107, Transposing the National Interprofessional Agreement on Value Sharing within Companies, entered into force on January 1, 2025 and, similarly to previous laws on the topic, aims to simplify, secure, and generalize the development of employee savings and employee stock ownership. It seeks to involve employees more closely in the performance of companies, particularly small- and medium-sized companies.

The act is structured around several key points:

• Facilitating the spread and development of value-sharing schemes
• Introducing a new obligation to negotiate on exceptional profits
• Simplifying the implementation of value-sharing schemes
• Developing employee shareholding
• Strengthening social dialogue on job classifications

GENERALIZING VALUE-SHARING WITHIN COMPANIES

Until November 29, 2028, article 5 of the act requires companies with 11 to 49 employees and regular profits to set up at least one value-sharing scheme. Introduced on an experimental basis for five years from November 29, 2023, this obligation applies from January 1, 2025. Companies already applying a value-sharing scheme for the year in question will be deemed to have met this obligation.

This applies to companies with 11 to 49 employees that have made a net profit for tax purposes equal to at least 1% of turnover for three consecutive financial years (2022, 2023, and 2024).

Companies subject to the new obligation will have to set up at least one of the following legal value-sharing schemes during the following financial year:

• Voluntary mandatory profit-sharing (participation)
• Nonmandatory profit-sharing (intéressement)
• Value-sharing bonus
• A contribution to an employee savings plan [1]

From a practical perspective, the easiest tool to implement to comply with the new obligation is the value-sharing bonus as it does not require negotiations with trade union representatives or CSEs (works councils).

WHICH EMPLOYERS CAN PAY THE VALUE-SHARING BONUS?

The following employers may pay a value-sharing bonus to employees, regardless of their number of employees:

• Private sector employers
• Public industrial and commercial establishments (EPICs)
• Public administrative establishments (EPAs) when they employ employees who are not civil private staff

WHICH EMPLOYEES ARE ELIGIBLE?

Employers may pay a value-sharing bonus to employees with a contract of employment (open-ended or fixed-term, full-time or part-time) and to temporary workers made available to the user company, among others.

The amount of the bonus may be adjusted for each beneficiary according to the following:

• The remuneration (the value-sharing bonus may be paid only to some of the employees, excluding those whose remuneration exceeds a certain ceiling. However, it is not possible to reserve the bonus for employees whose remuneration exceeds a certain threshold)
• The level of classification
• The length of service with the company
• The length of actual presence during the previous year, assessed under the same conditions as those used to calculate the value of the minimum wage taken into account to calculate general reductions in social security contributions, i.e., in proportion to the length of time worked, and using the same rules for taking absences into account (Article L. 241-13 of the French Code of Social Security)
• The working time stipulated in the employment contract

These criteria may be combined. No other criterion for adjusting the amount of the bonus is authorized, and specifically no criterion based on a discriminatory ground prohibited by law (age, sex, trade union activities, etc.).

HOW COULD THE VALUE-SHARING BONUS BE IMPLEMENTED?

The value-sharing bonus is implemented by (1) a company or group collective agreement or (2) a unilateral undertaking of the employer. There is no hierarchy between these two methods of introducing a value-sharing bonus, and therefore no obligation to negotiate before taking a unilateral decision.

Collective Agreement

The value-sharing bonus can be entered into by:

• A collective agreement under ordinary law (i.e., with one or more trade union delegates)
• An agreement between the employer and a delegate of representative trade union organizations in the company (i.e., with an employee mandated by a representative trade union organization in the company)
• An agreement with the CSE via a positive opinion on the employer’s project by a majority of the members present at the CSE meeting
• Following ratification by two-thirds of the workforce of a draft agreement proposed by the employer

The agreement must be filed on the Ministry of Labour’s tele-procedure platform.

Unilateral Undertaking of the Employer

If the bonus is introduced by a unilateral decision of the employer, the latter must first consult the CSE, if any.

Employers with fewer than 11 employees (which are not obliged to have a CSE) may inform their employees of their decision to pay a value-sharing bonus by any means.

WHAT MUST AND CAN THE AGREEMENT OR UNILATERAL UNDERTAKING PROVIDE FOR?

The collective agreement or unilateral undertaking must set out the following:

• At least the amount of the bonus and the date taken into account to assess the employees concerned
• The eligible establishments, when the bonus is paid in some establishments within the company
• Where applicable, the maximum level of remuneration for eligible employees and the conditions for adjusting the level of the bonus according to the beneficiaries

The agreement or unilateral decision (DUE) may last for more than one year or one financial year.

VALUE-SHARING BONUS CANNOT BE SUBSTITUTED FOR AN ELEMENT OF REMUNERATION

The value-sharing bonus must not replace:

• An element of remuneration, which is paid by the employer or which becomes mandatory in application of legal, contractual, or customary rules
• An increase in remuneration or bonus provided for in a wage agreement, employment contract, or by company practice

To avoid this substitution effect, the bonus cannot be paid monthly. However, the bonus may be paid in installments up to a maximum of once per quarter during the calendar year.

WHAT IS THE SOCIAL SECURITY REGIME FOR THE VALUE-SHARING BONUS?

The value-sharing bonus is exempt from all statutory or conventional social security contributions payable by the employee and the employer, up to the ceilings of €3,000 or €6,000, whatever the employee’s level of remuneration.

The following are therefore covered by the exemption:

• Social security contributions
• Contributions to supplementary pension schemes
• Contributions to unemployment insurance schemes
• The health insurance contribution stipulated in L. 131-9 of the French Social Security Code
• Contributions “solidarité autonomie”
• Mobility payment contributions
• Social dialogue contributions
• Contributions due to the FNAL (Fonds national d’aide au logement)
• The apprenticeship tax and additional apprenticeship contribution, the one-off contribution to professional training and work-study schemes, or the contribution dedicated to financing the CPF (personal training account) for fixed-term contract holders
• Employers’ contributions (agricultural and non-agricultural) to the construction effort
• Where applicable, contributions resulting from branch agreements

To benefit fully from this exemption, the value-sharing bonus must not exceed €3,000 per calendar year and per beneficiary. This exemption ceiling is raised to €6,000 for the following businesses:

• Companies required to set up a profit-sharing scheme (companies with 50 and more employees) and which have set up a nonmandatory profit-sharing scheme (i.e., intéressement) (1) at the date of payment of the “value-sharing” bonus or (2) for the same financial year, without it being necessary for a nonmandatory profit-sharing bonus (prime d’intéressement) to have been paid
• Companies not required to set up a profit-sharing scheme which have set up a mandatory or nonmandatory profit-sharing scheme (participation or intéressement) (1) at the date of payment of the “value-sharing” bonus or (2) for the same financial year, without it being necessary for a mandatory or a nonmandatory profit-sharing bonus (prime de participation or prime d’intéressement) to have been paid
• Associations and foundations recognized as being of public utility or general interest and thus authorized to receive tax-deductible donations
• Establishments employing vulnerable individuals, such as disabled persons (ESATs)

The amount of the bonus is freely determined. There is no limit of €3,000 per beneficiary per calendar year, or €6,000, if the above conditions are met. There is therefore nothing to prevent the payment of a higher or lower amount. However, the social benefits attached to the bonus will only be granted within either of these limits.

This new mechanism which aims at sharing companies’ profit must be implemented by employers as soon as possible in order to be compliant with their legal obligations.