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The government wants to encourage very small businesses to share in the value created within the company.

Published on January 09, 2023 by Pierre Belhache - 6 mins reading time
SMALL BUSINESSES Companies Procedures Savings

The sharing of value between employees and the company, through schemes such as profit-sharing, is seen by the government as a lever for increasing purchasing power. Small and medium-sized businesses, which make little use of existing tools, will be encouraged to play the game more.

Cross-industry negotiations underway

On November 8, 2022, an inter-professional negotiation dedicated to the issue of sharing the value created within companies was opened. In accordance with article L1 of the French Labour Code, the social partners were asked by the government to address several areas for discussion and to agree on various measures.

According to the terms of reference, trade unions and employers' organizations are expected to reflect on the generalization of " the benefits of value-sharing schemes for employees, particularly in the smallest companies ", as well as the modernization of the profit-sharing formula and the orientation ofemployee savings " towards major priorities of common interest ", such as the ecological transition.

These discussions, which will conclude at the end of January, are designed in part toencourage small and medium-sized businesses to take a greater interest in corporate value-sharing schemes. In his address to economic players on January 5, French Minister of the Economy and Finance Bruno Le Maire also announced that a convention on the subject would be held in February.

" When a company has the means to pay dividends, it must pass them on to its employees. We will be working on concrete proposals, in line with what has been done for nearly six years on profit-sharing and employee share ownership ", he declared.

Simplified systems for SMEs

Currently, 52.8% of employees benefit from one or more value-sharing schemes, but the differences between companies are very marked. 88.5% of companies with over 1,000 employees have set up at least one value-sharing scheme, compared with just 20% of companies with fewer than 50 employees.

Only one in 10 employees of a company of this size benefits from a profit-sharing bonus, the amount of which is proportional to the company's results, and 6% have set up a profit-sharing scheme, which is compulsory only for companies with more than 50 employees.

Yet the PACTE Act of 2019 and the Purchasing Power Act of 2022 have simplified these tools to make them accessible to VSEs and SMEs. On January 1, 2019, the 20% social flat-rate tax applied to sums paid by employers in respect of employee savings schemes was abolished, on profit-sharing for companies with fewer than 250 employees, and on profit-sharing and matching contributions for companies with fewer than 50 employees.

The French Purchasing Power Act has also helped to simplify the profit-sharing scheme. It can now be set up unilaterally by managers of companies with fewer than 50 employees, for a period extended from 3 to 5 years, renewable by tacit agreement. Controls have also been streamlined.

These measures have removed a number of obstacles: in June 2022, 367,000 companies - 90% of them SMEs - had set up an employee savings scheme, compared with 348,000 a year earlier, an increase of 5.6%. In companies with fewer than 50 employees, the increase was 6.1%.

Employee dividends

However, the government believes that the interest shown by small and medium-sized businesses in value-sharing schemes is still too limited. To bring about change, it is relying in part on education, in particular through support provided by chartered accountants.

The current economic climate, marked byinflation and high employee expectations in terms of improved purchasing power, could also play in favor of these schemes, which offer an alternative towage increases. Especially as companies are struggling to recruit and retain their employees, and could therefore use these levers to set themselves apart from the competition.

But while education and incentives are still the order of the day, the government no longer seems to be ruling out the possibility of introducing binding measures to speed up the deployment of these schemes. The employee dividend, which featured in Emmanuel Macron's program, is back on the agenda: it would require companies paying dividends to their shareholders to do the same for their employees. All companies would be concerned, but not at the same level.

However, the majority of business leaders are opposed to the introduction of employee dividends, even among those running SMEs. According to a survey carried out in mid-November by the CPME (Confederation of Small and Medium-sized Enterprises), 7 out of 10 members were opposed. The trade unions themselves are not all convinced, following the example of the CGT, which sees it as a way of getting round wage increases.