An insight into the French company bonus plan ‘intéressement’
Company performance and profit sharing plans can help to increase loyalty and maybe even productivity of employees. They create a link between work and reward. In a work environment where employees can directly contribute to the company’s success, they can create a culture of ownership. Employees who feel that they have a greater stake in the company might be more motivated and satisfied.
Which company bonus plans exist in France?
In France, profit sharing plans are mandatory in companies with 50 employees or more. These are referred to as ‘participation’.
In smaller companies, an optional company bonus can be set up, either based on profit or performance. It is referred to as ‘intéressement’.
Both company bonus plans are to a large extend exempt from contributions.
In this article we will give an insight into the French performance and profit sharing plan ‘intéressement’.
French Company Bonus Plan ‘intéressement’
In order to set up the company bonus plan ‘intéressement’ the company has to draft a company agreement. It is often concluded for a duration of three years.
In this agreement, the company stipulates the objectives that will result in a bonus payment. A calculation formula and the criteria for the distribution among employees are fixed.
Fixing the objective of the French company bonus plan ‘intéressement’
The company bonus plan can be based on the company’s profit or on the performance (e.g. turnover, or other criteria such as delivery times, the completion of a project).
Distribution of the company bonus among employees
The company agreement can stipulate that all employees receive the same amount, or that the amount differs e.g. based on the employee’s salary or other criteria. It is also possible to combine several criteria.
Exemption from social contributions
In 2022, per year and per employee an amount of up to € 30 852 can be exempt from most contributions.
For companies with a staff headcount of less than 250 employees, the company bonus is fully exempt from all employer contributions.
As for the employee contributions, the company bonus is partially exempt. The employee pays a contribution of 9.70 % only (generally the employee contributions range between 21 and 23%).
Payment or saving plan
The company bonus is either paid to the employee or in certain cases the employee can choose to add the bonus to a company savings plan.
To help households scope with inflation, the government introduced a new measure in 2022 allowing for a flexible and early release of a company bonus allocated to a company savings plan.
Whether paid out directly or put into a savings plan, the company bonus will be mentioned on the French payslip.
Conclusion: French company bonus plan ‘intéressement’
With payroll taxes in France in many cases summing up to about 43 %, the company bonus plan cannot be neglected. It is one of the most important means of optimizing payroll taxes and contributions in France.
Overall, the French company bonus plan ‘intéressement’ is a very powerful reward system.