The bonus-malus system of the French unemployment insurance is finally coming into effect. After several postponements, notably due to the health crisis, it will now apply to certain companies from 1st of September 2022.
The bonus/malus system of the French unemployment insurance
The bonus-malus system will modulate the unemployment contribution rate of companies in certain sectors with very high staff turnover.
Companies which record a large number of contract terminations will be penalized. Companies which record few contract terminations will be rewarded.
New bonus/malus system intents to tackle abuse of short term contracts
In France, permanent contracts are supposed to be the norm, and fixed-term contracts are supposed to be the exception. However, in some business segments this does not reflect reality. With the new bonus/malus system, companies will now be encouraged to offer more permanent contracts rather than short fixed-term contracts. The objective of the bonus-malus system is to fight against the abusive use of short contracts in certain business segments.
Companies concerned by the bonus/malus system
The bonus/malus system of the unemployment insurance only concerns certain companies.
Staff headcount :
The bonus/malus system applies to employers with 11 or more employees.
Business segment with high staff turnover:
The bonus/malus system only applies to business segments with a significant high staff turnover: per definition, sectors which generate at least 1.5 times more registrations with the unemployment insurance than they have employees on average. As of 2022, 7 sectors are concerned (official list of business segments)
Effective date
For certain sectors the system applies as of September 2022. Other sectors like the accommodation and food service industry are exempt for one year.
Calculation of the bonus/malus rate
This bonus-malus system will modulate the rate of the employer’s unemployment insurance contribution: currently 4.05%. Companies with a comparatively low staff turnover will receive a bonus which consists of a reduction of the unemployment rate (limit 3 %). Companies with a comparatively high staff turnover will be subject to a malus rate (limit 5.05 %).
Ratio staff separation
The application of the bonus/malus will be determined by a comparison of the staff separations of the company and staff separations of the business segment.
Ratio : separation rate of the company / median separation rate of the business segment
The company’s separation rate is a ratio of the separations and the average annual workforce of the company. In simple terms, all contract terminations at the initiative of the employer as well as most fixed-term contracts are taken into account.
Notification by URSSAF
The rate is calculated by the social security based on the data transmitted on a monthly basis via the DSN declaration. URSSAF will notify the rate to all employers concerned by the bonus/malus system of the French unemployment insurance.