In order to help French nationals and residents deal with the economic hardship resulting from high inflation over the last quarter of 2021, the government has asked Parliament to vote in favour of an inflation allowance, i.e. an exceptional aid of €100 for the most vulnerable, to be financed by the State. The law is currently under discussion and should be confirmed in the next few days.
This inflation allowance would be paid out to individuals who received average earnings of less than €2,000 net per month, before income tax, from 1 January 2021 to 31 October 2021, i.e. an average of €2,600 gross per month for the period.
Employers would be in charge of paying the allowance to staff in employment in October 2021 who meet the income criteria.
The amount of the allowance would be €100 regardless of the duration of the contract, or if the contract is full time or part time. It would also be due to employees who are absent from work (sick leave, maternity leave, etc.).
Recipients of minimum income or social benefits and replacement income (e.g. combined employment-retirement) who are also working would receive the inflation allowance from their employer (and not from the social welfare organisation).
The allowance would also be owed to employees who left the company prior to the date of the allowance payment, if they were employed in October 2021.
The employer would be required to pay the inflation allowance to eligible staff in December 2021 or by January 2022 at the latest. It would need to appear on a dedicated line of the payslip under the heading “Inflation allowance – exceptional state aid”.
In order to be reimbursed, employers must include the total amount paid in their next monthly declaration to the URSSAF (French Social Security Authority). The allowance amount would then be deducted from the total monthly salary charges and contributions owed.
Key Action Points for Human Resources and In-house Counsel
Given the high likelihood that this measure will be passed by Parliament, employers should start identifying which employees are eligible for the allowance in order to be ready to pay it out in December 2021.