Employment 2025

FRANCE Law and Practice Contributed by: Laetitia Tombarello and Audrey Demourgues, Bredin Prat

vidual/company-based performance bonus, a 13th month, seniority or holiday bonus, pension plans, and health and welfare plans). This additional compensa - tion is distinct from the minimum wage, and may be payable to all employees or specifically reserved to certain employee categories (eg, executives or non- executives). Some employees (usually managers) may receive additional compensation in the form of grants under long-term incentive plans (eg, bonus based on group’s performance, phantom shares or restricted/ free stocks), subject to their continued employment during the performance period. Profit-Sharing In companies that have been employing more than 50 people over the past five years, the implementation of profit-sharing mechanisms to the benefit of employees is mandatory. The amount due to employees is cal - culated using a legal formula that takes into account the company’s net income, added value, wage bill and common equity. Profit-sharing bonuses benefit from favourable tax and social contribution regimes. The company can also choose to set up profit-sharing schemes at its own discretion. These so-called “vol - untary” schemes are subject to the same favourable tax and social contribution regimes as mandatory profit-sharing schemes, and have been increasingly promoted by the government in the past few years. In addition, the Profit-Sharing Act, applicable as of 1 December 2023, has extended mandatory profit- sharing to companies with fewer than 50 employees and set up new profit-sharing schemes and bonuses, which can also benefit from favourable tax and social contribution regimes under certain conditions. Annual Negotiation on Compensation In principle, companies with more than 50 employees and with a trade union delegate are required to negoti - ate every year with the trade union delegates on the employees’ remuneration and the potential increase thereof. Whilst negotiating is mandatory, there is no obligation to reach an agreement.

According to the Bank of France, in early 2025, nego - tiations between companies and trade unions resulted in average salary increases of approximately 2.1%. This figure is significantly lower than the average increases recorded in 2024 (3.3%) and 2023 (4.2%). 1.5 Other Employment Terms Paid Holiday Leave Under French law, employees have at least five weeks of paid holiday leave per year. In principle, rights to paid holiday leave only accrue during periods in which employees work, or during any period treated as working time (eg, maternity leave or sick leave caused by occupational injury or illness lasting less than one year). Pursuant to a new law dated 22 April 2024, which has brought French law into line with EU regulations, any period of sick leave is now treated as working time (regardless of its cause), with retroactive effect to 1 December 2009. These new provisions, which impose a significant financial burden on com - panies, have already had practical effects. Notably, there has been an increase in paid leave claims in employment disputes, as well as requests from statu - tory auditors to set aside provisions for the associated liabilities. Employees can also be entitled to additional days off (RTT), which are granted when employees work more than the 35-hour working week or are subject to the specific forfait-jours working time (“day-year scheme”), based on a certain number of days worked per year. Public holidays are in addition to an employee’s annu - al leave entitlement. Employees can also be entitled to special paid leave for specific events, such as marriage, death of a rela - tive, sickness of a child, etc. Collective bargaining agreements can provide for additional days of paid leave. Leave of Absence In addition to holiday leave, employees may benefit from other kinds of paid leave, such as leave for per - sonal reasons, sick leave, family leave, pregnancy leave, and maternity or paternity leave.

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