The French Social Security System V - Unemployment insurance

2020

France's unemployment insurance scheme is the product of a negotiated agreement between the two sides of industry (national and multi-industry employers' and employees' organizations).

The government then approves the agreement if it is pursuant to applicable law. This approval makes the agreement officially enforceable.

The Unemployment insurance system applies to metropolitan France, the overseas Departments, Saint Pierre and Miquelon, Saint Barthelemy, Saint Martin, and Monaco. It does not apply to Mayotte, which has its own system.

Organizational structure

The public employment service is organized around two bodies: the bipartite body UNEDIC (National Professional Union for Employment in Industry and Trade), which will continue to perform its task of administering the unemployment insurance scheme and organizing the benefits payment system, and the service for jobseekers ("Pôle emploi").

Pôle emploi brings all employment services under a single body, with a single point of contact for registering, counseling, training, placing and paying benefits to jobseekers.

Financing

The unemployment insurance scheme is financed through contributions paid on earnings: subject to the limit of 4 times the monthly social security ceiling (€13,712 in 2020). As from January 1st, 2019, only employers contribute into the employment insurance scheme. Employee's contributions have been ended, except for short-term contract workers in the entertainment industry (“intermittents du spectacle”), salaried workers in Monaco, and some expatriate employees. The State also pays into the employment insurance scheme to substitute for the employee's contribution, which has been eliminated.

Unemployment contributions are paid to the competent collections agency as determined by the workers' local authority: Urssaf in metropolitan France and the general social security fund (CGSS) in France's overseas departments.

Applicability

The scheme is applicable to all employees of companies in geographical areas covered by the agreement.

Benefits

The amount and duration of benefit payments depend upon the period during which the claimant has contributed to the scheme and total contributions paid.

Eligibility requirements

To qualify for unemployment benefits (Return to employment benefit or ARE), the claimant must meet the following 7 requirements:

  • Be registered as a jobseeker.
  • Be below statutory retirement age. Salaried workers born in or after 1955 can currently retire from age 62. This makes them no longer eligible for the return to employment benefit (ARE), unless they have not accrued the required number of quarters. In that case, they can draw ARE until they are entitled to a full-rate pension. However, their entitlement will stop when they reach the age of automatic full-rate entitlement (65 or 67 as determined by their birth year).
  • Have worked at least 130 days or 910 hours (6 months) over the previous 24 months for those under age 53, or over the previous 36 months for those ages 53 and up*.
  • Be involuntarily unemployed. However, applicants who have resigned from their job for certain legitimate reasons (e.g. to accompany a spouse) can qualify for unemployment benefits. In addition, effective November 1st, 2019, employees who resign can draw unemployment benefits if they submit a genuine, substantive career change plan. The plan must consist either of creating or taking over a business, or of completing a training program. Benefits, which are calculated on the basis of previous wages, can only be granted to applicants with at least 5 years of consecutive salaried employment and who requested career counseling through the official “CEP” (“conseil en évolution professionnelle”) program prior to their resignation. The applicant must also have had their career change plan approved by a regional committee and is required to register with the French unemployment authority “Pôle emploi” within a 6-month period following approval of their plan. For more information.
  • Be physically fit for work.
  • Be engaged in a substantive ongoing search for employment: have drawn up a personal employment plan (“projet personnalisé d'accès à l'emploi”) with the French unemployment authority “Pôle emploi”.
  • Reside in the geographical area covered by France's unemployment insurance program.

* Due to the extraordinary circumstances related to the Covid-19 epidemic, the base period for insured wages has been extended by 3 months (i.e. increased to 27 months or 39 months, depending on the jobseeker's age). Moreover, minimum length of employment for claimants whose contract ended between August 1st, 2020 and December 31, 2020 has been reduced to 88 days or 610 hours (4 months).

Unemployment benefits can be stopped if claimants fail to meet their obligations by:

  • being unable to document their job searches,
  • rejecting a reasonable job offer on 2 occasions,
  • missing required appointments scheduled by Pôle emploi,
  • refusing to enter a training program, etc.

Benefits can be stopped for a period of 1 to 4 months, depending on the type of violation. Payments can be permanently stopped if the claimant declares false information.

Return-to-work allowance (“ARE”) rates

Unemployment benefits are subject to social security surcharge (CSG) and Social security debt reimbursement contribution (CRDS) withholdings.

The return-to-work allowance ("Aide au retour à l'emploi"/ ARE) guarantees replacement income to eligible employees who have been involuntarily deprived of a job.

“ARE” rates are calculated partly on the basis of a daily reference wage (SJR). The reference wage is based on gross earnings subject to contributions during the 12 calendar months prior to the last day of paid work (calculation reference period/ “PRC”) up to a limit of 4 times the monthly social security ceiling (€13,712). It is calculated as follows:

*The weighting factor of 1.4, or 7/5, is used to convert the number of days worked to calendar days.

SJR = Reference salary/ Number of days worked during the calculation reference period X 1.4*)

The daily ARE rate is equal to the highest of the following amounts:

  • 40.4% of the SJR + a set amount (€12.05)
  • 57% of the SJR.

This amount cannot be below €29.38 or exceed 75% of the SJR.

A degressive benefit

Due to the Covid-19 epidemic, rate reductions based on past earnings are suspended until 2021.

Effective November 1st, 2019, unemployment benefit awards of more than €84.67 per day (based on a prior gross monthly wage of at least €4,500) are reduced by 30% from the 7th month of payment. However, benefits cannot be reduced to less than €84.67 per day.

Claimants with a prior gross monthly wage above €1,304.88 are liable to a withholding, which comes to 3% of their daily reference wage (SJR), from their gross daily benefit amount. This withholding, which finances supplementary retirement pensions for unemployment insurance claimants, cannot reduce daily benefits to less than €29.38.

Effective date and length of award

Payment begins on the day following the waiting period and any deferred compensation period(s).

  • The waiting period is 7 days long. It applies to all unemployment insurance compensation and is in addition to any:
  • Deferral for "paid vacation", calculated based on the "paid leave" compensation that is paid at the end of the employment contract,
  • "Specific" deferral, calculated based on "non-statutory" (higher than the legal minimum) termination compensation which is paid when an employment contract is terminated. This deferral is for a maximum of 150 days, 75 days when the employee has been laid off for economic reasons).

The duration of benefit payments is based on the principle of "a day of work equals a day of compensation". The days of work that count toward eligibility are multiplied by 1.4 in order to determine the payment period.

Payment cannot be made for under 122 days or more than:

  • 730 days (24 months) for persons under age 53,
  • 913 days (30 months) for persons between the ages of 53 and 55,
  • Or 1094 days (36 months) for persons ages 55 and above (age is calculated as of the date the employment contract was terminated).

Length of award is determined by age and length of membership. It is calculated by multiplying the claimant's number of days worked by 1.4.

Age when the employment contract was terminated Minimum length of membership Length of award Maximum length of award
Under 53 At least 130 days worked or 910 hours worked over the previous 24 months Number of days worked x 1.4 24 months or 730 days
53 to under 55 At least 130 days worked or 910 hours worked over the previous 36 months Number of days worked x 1.4 30 months or 913 days; 36 months or 1095 days if the employee has worked more than 652 days and has completed a training program as part of their personal employment plan (“PPAE”).
55 and up At least 130 days worked or 910 hours worked over the previous 36 months Number of days worked x 1.4 36 months or 1,095 days

Return-to-work incentive measures

Roll-over entitlements

This program allows a jobseeker who is drawing unemployment benefits to take one or more jobs while accruing new entitlements and postponing the cutoff date for the existing entitlements they have not yet used.

N.B.: If the claimant's most recent employment contract ends after August 1st, 2020, they only need 4 months of employment in order to qualify again.

To accrue new unemployment entitlements, the applicant must have worked at least 910 hours or 130 days (i.e. approximately 6 months) since their last unemployment benefits claim. This can have been through either a single or several periods of employment, whatever the duration and type of contract signed for each job (open-ended, fixed-term, or interim). These jobs must have ended before the applicant's benefit entitlement was exhausted.

If the applicant's last employment contract ended prior to November 1st, 2019, they are required to have worked at least 150 hours (1 month) in order to requalify for entitlements.

Ability to choose between old and new entitlements

Under certain conditions, and as an alternative to roll-over benefits, individuals can choose to receive the benefit to which they are entitled based on their latest period of employment without having to first use up their unused entitlements from a previous period of unemployment. This opportunity can arise when a jobseeker receiving benefits begins a new job that is better paid than the one that entitled him/her to the initial benefits. If the jobseeker uses this ability to choose, s/he permanently gives up any remaining benefits resulting from a previous ARE entitlement in order to draw new entitlements at a higher rate.

For more information, visit the UNEDIC website.

Earning a salary while drawing unemployment benefits

It is possible to receive return-to-work (ARE) benefits at a partial rate on top of earned income, with no consideration for the number of hours worked.

Benefits paid if a salary is being earned at the same time are calculated as follows:

  • Benefits that would be due without employment – 70% of the gross monthly salary earned from the new employment.

However, this amount is capped: it must not exceed the claimant's daily reference salary (“salaire journalier de reference”/ SJR).

More information is available on the UNEDIC website.