Five New Tax Changes You Should Know About

The start of the school year often brings new developments. This year, employees will see a few changes in labor law. SVP, a business services company, breaks them down for us.

Probationary periods reduced to a maximum of 4 months

Gone are the days of 9-month probationary periods, such as those common in the banking sector. Effective September 9, 2023, companies must comply with the Labor Code regarding the maximum duration of probationary periods. Pursuant to the DDADUE Act of March 9, 2023, certain industries will therefore need to revise their policies.

The law now limits the duration of probationary periods to 6 months; the provisions of the Labor Code regarding the possibility, for permanent contracts, of extending the duration of probationary periods by mutual agreement have been amended. Thus, as of September 9, 2023, it will no longer be possible to set probationary periods longer than those provided for by the Labor Code.

It should be noted that, until now, industry-wide agreements entered into before June 26, 2008, allowed employers to deviate from the statutory provisions and apply longer trial periods for permanent contracts.

As of September 9, 2023, it will therefore no longer be possible to exceed the maximum durations provided for by law, namely:

- 2 months (renewable for 2 months) for blue-collar workers and employees;
- 3 months (renewable for 3 months) for supervisors and technicians;
- 4 months (renewable for 4 months) for executives.


New rights regarding working while receiving a pension

Effective September 1, 2023, the pension reform will allow the total combination of employment and retirement income (the full combination of pension benefits and new income) to generate new entitlement rights.

Thus, employees who meet the requirements for the “combined employment and full retirement” option will be eligible for a second retirement pension.

However, if the employee returns to work with their most recent employer, they must observe a 6-month waiting period following the commencement of their old-age pension (except for insured individuals who began receiving their retirement pension no later than 6 months after the law’s publication, i.e., no later than October 15, 2023).

This second pension will be paid at the full rate, with no reduction or increase. It will be capped (at 5% of the annual Social Security ceiling, or a maximum amount of €2,199.60 in 2023) and will not be subject to any increase, supplement, or additional payment. It will have no impact on the amount of the first pension and cannot be paid as a one-time lump sum. Subject to specific provisions, the second pension will be calculated, determined, and paid under the conditions applicable to the old-age pension of the plan to which the insured person belongs based on their new employment.

The salary used as the basis for calculating the pension will be the average monthly salary corresponding to the contributions that qualify for at least one quarter of insurance coverage and that were paid between the date on which the insured person meets the conditions for receiving both a pension and a salary and the date on which the new old-age pension becomes effective.
As an exception, for the calculation of the new pension for self-employed workers, the annual income for the year in which the pension takes effect will be taken into account.
The insured person must submit the application to the basic pension plan under which they are covered for the new pension they are requesting, using a form common to all relevant plans and conforming to a template established by administrative order.


Provisions Supporting Parenting

Several provisions relatedto parenting were enacted this summer. First, the law of July 19, 2023, aimed at strengthening protection for families of children with an illness or disability or who are victims of a particularly serious accident, extends the duration of leave following the death of a child.

This leave increases from 7 days to a minimum of 14 days in the event of the death of a child under the age of 25, or regardless of the child’s age if the deceased child was a parent, or in the event of the death of a person under the age of 25 who was effectively and permanently dependent on the employee. In all other cases, the leave increases from 5 days to a minimum of 12 days.

In addition, leave granted upon the diagnosis of cancer, a disability, or a chronic condition in a child has been extended from 2 days to a minimum of 5 days. These new leave periods took effect on July 21, 2023. 

This same law also establishes Article L. 1225-4-4 of the Labor Code. It provides protection against dismissal for employees on parental leave: no employer may terminate an employee’s employment contract during this leave, including during periods worked when the leave is taken in segments or on a part-time basis. As an exception, the contract may be terminated if the employer can demonstrate serious misconduct on the part of the employee or an inability to maintain the contract for reasons unrelated to the child’s health.
Finally, the Act of July 19, 2023, amends Article L. 1222-9 of the Labor Code regarding telework. The collective agreement or policy must now specify the terms and conditions for employees caring for a child, parent, or close relative to access remote work, and the employer may not deny these employees access to remote work without providing a valid reason for the denial.
Second, the law of July 7, 2023, aimed at providing support to couples facing a spontaneous pregnancy loss, eliminated the waiting period for the payment of daily social security benefits in the event of an inability to work following a spontaneous pregnancy loss occurring before the 22nd week of amenorrhea. This provision applies to sick leave orders issued on or after a date to be set by decree, and no later than January 1, 2024.
The law also prohibits the termination of an employee’s employment contract during the ten weeks following a medically confirmed spontaneous termination of pregnancy that occurred between the 14th and 21st weeks of amenorrhea, inclusive. During this period, however, the contract may be terminated in the event of serious misconduct or if it becomes impossible to maintain the contract for reasons unrelated to the spontaneous miscarriage. This prohibition takes effect on July 9, 2023, the day following the law’s publication.
 

A New Social Security Regime for Severance Pay and Retirement Benefits

The social security regime for severance pay changed as of September 1. Prior to this date, the social security treatment of the severance pay varied depending on the employee’s age:

- when the employee had reached the minimum retirement age (including under the “long career” scheme), the severance pay was fully subject to income tax, social security contributions, as well as the CSG and CRDS. Given this subjection to social security contributions, the social security flat fee was not due.

- For other employees, the applicable rules were exactly the same as those governing severance pay for dismissal for personal cause, with one exception: the 20% social security surcharge was due on the portion exempt from social security contributions.

As of September 1, 2023, all employees are now subject to the same rules. Thus, severance pay resulting from a mutual termination agreement is exempt from social security contributions and CSG/CRDS within the same limits as severance pay for dismissal.

At the same time, the social security flat fee is no longer due on severance pay resulting from a mutual termination agreement; instead, it has been replaced by a specific employer contribution. This contribution, set at a rate of 30%, is due on the portion of the severance pay that is excluded from the social security contribution base.

The law stipulates that these changes apply to terminations of employment contracts occurring on September 1, 2023.

The Official Social Security Bulletin (BOSS) has clarified that this new system applies to compensation paid in connection with the termination of an employment contract that expires after August 31, 2023.

Specifically, the date to use is the contract termination date indicated on the Cerfa form (which occurs no earlier than the day after court approval), not the date the termination agreement was signed or the date the severance pay was paid.

The social security rules governing retirement severance pay have also changed as of September 1.

Previously, an employer who retired an employee was required to pay a specific employer contribution of 50%, calculated on the total amount of the retirement severance pay.

Effective September 1, 2023, this contribution has been replaced by a 30% employer contribution, which is payable only on the portion of the severance pay that is exempt from social security contributions. The rate and tax base for this contribution have therefore been modified.

This new rule applies to severance pay awarded in connection with the termination of an employment contract that expires after August 31, 2023.
In practice, this means that the end date of the notice period should be used, not the date on which the retirement was notified.