what are the two reform options?

UNEMPLOYMENT INSURANCE. Labor Minister Olivier Dussopt received the social partners on Monday to present the unemployment insurance reform project to them. The government wants to base itself on the Canadian model.

[Mis à jour le 13 septembre 2022 à 10h58] This Monday, September 12, the Minister of Labor Olivier Dussopt and the Minister Delegate for Vocational Education and Training Carole Grandjean received the social partners as part of the unemployment insurance reform. And the debates promise to be heated, especially with the trade unions. 13 of them have already published a press release in total disagreement with the executive’s proposals. the The government’s project aims to extend the rules currently in force for unemployment insurance, enacted during Emmanuel Macron’s first five-year term and which had not failed to arouse controversy. These measures come to an end on October 31, 2022 and must be extended until 2023. Today, the government considers unemployment insurance to be too little incentive to return to work and plans to further tighten the conditions for compensation in going further than in 2019. As a reminder, the change in the calculation of the allowance, the bonus malus on short contracts and the degressiveness of the allowances are reforms already in place, they were part of the first part of the 2019 reform , mostly in force since 2021.

In 2022, the objective is to move up a gear based on my Canadian model, thanks to two main proposals. Against the advice of the unions, the executive now wants to modulate the conditions of compensation for the unemployed according to the economic situation, we are talking here about countercyclicality. In other words: when everything is going well, the rules would be tougher, when things are going badly, they would be relaxed. For now, two options hold the rope. First, change the duration of compensation for the unemployed (currently 24 months) and/or the number of months worked and compulsory over the last 24 to open the right to the allowance. Second option, gradually reduce the amount of compensation. Playing the famous 24 months seems like the most likely option at the moment. The Minister of Labor Olivier Dussopt still regrets an unemployment rate that is too high at 7%, and a great difficulty for employers to recruit. The new 2022 reform also provides for an overhaul of the validation of acquired experience (VAE).

With the 2022 unemployment insurance reform project, the government seems to want to go a little further than during the previous reform. Minister of Labor Olivier Dussopt insisted on recalling that consultation with the unions absolutely had to take place in order to find a majority agreement. The next exchanges promise to be stormy and complex. In addition to the extension of the current compensation rules, the executive is considering several important new features:

  • Overhaul of the validation of acquired experience (VAE)
  • Adjust rules based on economic conditions
  • Change the compensation period to 24 months
  • Change the number of months worked necessary for the opening of unemployment (currently 6 months)

Several provisions of the reform have already been implemented in 2021.

The bonus malus on short contracts

The objective of the bonus-malus is to encourage companies to extend the duration of employment contracts and avoid excessive recourse to short contracts. The bonus-malus consists of modulating the unemployment insurance contribution rate, which is currently 4.05%, upwards (malus), or downwards (bonus), depending on the rate of separation of the companies concerned.

Change in the calculation of the allowance

Since October 1, 2021, the calculation of unemployment benefit has changed: the daily reference wage, which serves as the basis for the latter, is assessed by dividing the wages received during the last 24 months, by all the days whether worked or not. In order to prevent precarious workers alternating between short contracts and periods of inactivity from being affected, the Minister has corrected this measure, by introducing a floor. The latter will guarantee a minimum allocation. The number of days not worked taken into account in this calculation will also be limited to a maximum of 13 days not worked out of 30.

The degressivity of unemployment benefits

This new feature was introduced in 2021 for high earners. In detail, employees under the age of 57, whose salary exceeds 4,500 euros gross per month, will see their compensation reduced by 30% from the seventh month. The degressivity is expected, at the earliest, from June 2022 for people who opened their rights to unemployment from 1 December. “Since the 1er July 2021, the degressiveness of the allowance (-30%) applicable to employees under the age of 57 with a previous income of more than €4,500 gross per month takes effect from 9e months, that is to say after 8 months of compensation”, indicates the public service site. “The degression will take place from March 2022 for people who opened their right to unemployment on 1er July 2021. The 6-month count at the end of which the degressivity applies had been suspended between 1er March 2020 and June 30, 2021, i.e. 487 days in total. He started shooting again from 1er July 2021″.

Since December 1, 2021, the compensation rules have changed concerning the minimum duration of affiliation and the degressiveness of the allowance. To establish the amount of the return to work allowance, Pôle emploi takes your former salary into account. The ARE must be equal to the highest amount between these two formulas, explains Pôle emploi on its site:

  • 40.4% of your daily reference salary + €12.12 since July 1;
  • 57% of your RDS.

As an indication, the SRJ corresponded until the reform of October 1, 2021 to the annual reference salary divided by the number of days worked over the last twelve months, which precede the last day worked. “The maximum number of days worked retained over the reference period is 261 days”, could we read on the public service site. “The calculation of the SJR is obtained as follows: SJR = reference salary / (number of days worked x 1.4)”.

From now on, for new job seekers, the calculation will be made over the last 24 months by dividing the wages received during this period by the number of days spent, whether they are worked or not. A ceiling of 75% will be applied for days not worked.

The amount of the return to work allowance is strictly regulated: it must be between 57 and 75% of the daily reference salary. The amount cannot be less than 29.38 euros per day. An amount that should be qualified, since this amount corresponds to the situation of a person working full time, recalls Unédic on its website.

“After part-time, the calculation of your allowance follows the same rules as for a full-time job but it takes into account your particular working time”, indicates Unédic on its dedicated page. “For this, Pôle Emploi uses a part-time coefficient. This coefficient is equal to your number of weekly working hours, divided by the legal (35-hour) or conventional weekly schedule applied in your former company”.

To receive the ARE, you must be involuntarily deprived of employment. You must justify, at the end date of the employment contract, a minimum period of work. The public service website provides you with a simulator to try to find out the amount of your ARE according to your situation, click here. The ARE payment can be combined with other earned income. The payment of the ARE ceases if you find a salaried professional activity. The compensation conditions are not the same before or from 1er November 2019 and according to your age.

The amount of allowances paid to jobseekers increased on July 1, 2022. A decision taken following a Unédic board meeting on Thursday June 30. Regarding unemployment benefits, the increase should concern 2.1 million recipients. Are you a beneficiary of the ARE (return to work allowance)? You will pocket €30.42 per day, against 29.56 euros previously (for the minimum allocation). The fixed part of the ARE increases slightly from 12.12 euros per day to 12.47 euros per day.

You have lost your job and you want to know if you meet the conditions, do not panic. Bear in mind that civil servants and private sector employees can benefit from the ARE under the same conditions. But what are these? We summarize the rules in force:

  • You must prove that you have worked for a minimum period, and therefore have made sufficient contributions. We are talking about the membership period. In concrete terms, if you are currently under 53, you must provide proof of six months of work in the last 24 months at the end date of your employment contract.
  • “You must be involuntarily deprived of employment”, specifies one well on the site service-public.fr. This means that the end of your employment contract can only result from the following reasons: dismissal for an economic or personal reason, dismissal, non-renewal of a fixed-term contract (CDD) or a resignation considered legitimate (read more down).
  • You must imperatively register with Pôle emploi within 12 months following the end of your employment contract or complete a training program included in your personalized plan for access to employment (PPAE).
  • You must perform “positive and repeated” actions to find a job.
  • You must not have reached the legal retirement age set at 62 or fulfill the conditions for the full rate.

Unemployment insurance, also called social guarantee of the head of the company (GSC) covers the manager or corporate officer in the event of involuntary loss of his job. Whether you manage an SA, SARL, or EURL, you are never safe from a revocation of mandate for various reasons, emanating from your partners or shareholders. It may or may not be justified, but above all it can cause you to lose your job. Generally, it is a question of a non-renewal of the mandate. In this case, the company does not cease its activity. The director’s mandate can also be revoked early.

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