1. Legal Framework
French social protection is organized in four levels:
- Social Security which provides the basic risk cover “illness / maternity / disability / death”, “occupational accidents / occupational diseases”, “elderly” and “family.” It is composed of various schemes involving the insured according to their professional activities.
- Complementary plans which provide additional coverage to the risks covered by Social Security. Some are mandatory (supplementary pension for private sector employees) and other optional (mutual health organizations, insurance companies, pension funds).
- UNEDIC (National Employment Union Industry and Commerce), which administers the unemployment insurance program.
- State welfare, which provides support to the poorest.
2. Required Contributions
Social Security is mainly financed through Social Security contributions:
- The contribution is based on the basic salary paid (mainly indemnities, premiums, and monetary advantages, as well as tips, and under certain conditions benefits in-kind;
- The rate fixed by decree, with a portion paid by the employer and the other portion by the employee (“gross salary” is the total wages with deduction of employer contributions; “net salary” is the gross salary reduced employee contributions);
- The employer pays all due contributions to the administrative body;
- The average employer contribution can account for as much as 45% of the gross salary of the employee, whereas the employee contribution may only count for as much as 20%.
3. Required Maternity/Sickness/Disability/Annual Leaves
The French law provides for a basic minimum indemnity and protection of employees. Quite often, collective bargaining agreements provide for additional protection or allowances.
i. Maternity leave
The pregnant employee benefits from a maternity leave during the period, which is around the expected date of childbirth (there is a prenatal leave and postnatal leave). Its duration is variable, depending on the number of unborn children or already at charge (from 16 to 46 weeks). The Social Security Daily Allowance varies in function of the salary (from EUR 9.27 to EUR 83.58).
ii. Sick leave
Where the employee is out of work for sickness, subject to compliance with certain formalities (notably for the employee to submit, within 48 hours, the sick slip to the Social Security office and the employer) and satisfies the requirements, the employee is entitled to receive a daily allowance during his leave, after a three-day waiting period. This allowance will be directly paid to the employer in case of subrogation.
The daily allowance paid for sick leave is 50% of the basic daily wage (on average, the Social Security Daily Indemnity is of EUR 43.40). After 30 days of sick leave, the daily allowance is increased to 66.66% of the basic daily wage, if the employee has at least three children. After 3 months, the daily allowance will be re-evaluated.
If an employee is recognized invalid (work capacity and gain is reduced by at least 2/3 as a result of an accident or a non-occupational disease) the employee can obtain the payment of a pension disability to compensate for lost wages, by filling a demand before the CPAM (French Health Insurance).
Invalids are classified into three categories, depending on their level of disability, by the medical officer of the primary health insurance fund (CPAM) and the amount of the disability pension received will depend on the category the person is in, as the determining of a category is not definitive and may evolve.
iv. Annual leave
Every employee is entitled to paid vacations by his employer, regardless his age, seniority or type of contract (indefinite-term or fixed-term). The duration of paid vacations varies according to the acquired rights (legally 2.5 days of paid vacation per month, unless more favourable collective bargaining agreement provisions apply). The vacation dates are subject to the agreement of the employer.
4. Mandatory and Typically Provided Pensions
The French retirement pension system of employees is structured into three components; the first two are mandatory, hence, contributions are imposed on employees and employers, while the third is optional:
Basic retirement pension:
The characteristic of the basic diets is that they are extremely fragmented. They number thirty-six structured around the professional status of their contributors (private sector, agriculture, civil servants, independent …) or a particular occupational category (SNCF, RATP, ministers of religion …). For employees of the private sector, the fund is the National Elderly Insurance Fund (CNAV) and the largest pension fund.
Complementary retirement pension:
For employees and managers covered for their basic pension of national pensions’ fund, the complementary pension is managed by two entities:
- For executives – General Association of supplementary pension institutions of executives (AGIRC);
- For all employees – Association of supplementary pension schemes (ARRCO).
An agreement signed in October 2015 provides for the creation in 2019 of a unified complementary regime.
Based on the principle of capitalization by the employee, who saves for retirement, the additional pension is fairly marginal in terms of membership. It can be implemented by a company or individually. When implemented by the employee, it is primarily of savings products such as life insurance, the popular retirement savings plan (PERP) or “Madelin contracts” for non-salaried workers.