VSEs/SMEs: towards more flexible profit-sharing agreements

According to the French daily Les Echos, the draft law on purchasing power will contain measures relating to profit-sharing agreements within companies. Constraints are to be relaxed, and the introduction of profit-sharing schemes is to be made easier for very small businesses and SMEs.

The Pacte Act 2019: measures with disappointing results

At the end of May, French Finance Minister Bruno Le Maire announced that he was "ready to drastically simplify incentive and profit-sharing schemes once again ", particularly for VSEs and SMEs.

Several measures had already been taken in this direction as part of the 2019 Pacte law. The latter had, for example, required branches to negotiate incentive, employee savings or profit-sharing agreements to encourage their implementation in companies with fewer than 50 employees.

The Pacte Act had also abolished the lump-sum social security charge on employer contributions and profit-sharing for companies with fewer than 50 employees, and on profit-sharing for companies with fewer than 250 employees.

However, these various measures have not produced the expected results: out of 220 active branches, only around 30 have negotiated agreements.

New measures to facilitate value sharing

To encourage the sharing of value between companies and employees, the government has decided to include additional measures in its bill on purchasing power, which the daily newspaper Les Echos has been able to consult.

An entire article is devoted to the relaxation of profit-sharing agreements, an employee savings scheme that enables employees to share in the company's performance. Profit-sharing is not compulsory, unlike participation, another employee savings scheme which aims to redistribute a share of company profits to employees, and which is mandatory for companies with at least 50 employees.

The article in the bill provides for " the introduction of profit-sharing by unilateral decision of the employer in companies with fewer than 50 employees ", as reported in Les Echos, so that "the smallest companies, which have the fewest value-sharing mechanisms and where social dialogue is underdeveloped " can more easily take advantage of this scheme.

In other words, they will be able to set up and renew a profit-sharing agreement by unilateral decision, if they cannot benefit from a branch agreement:

  • Companies with 11 to 49 employees and staff representative bodies faced with failure to negotiate an agreement ;
  • Companies with 11 to 49 employees and no employee representative bodies.

The article also extends the duration of profit-sharing agreements from 3 to 5 years, regardless of company size.