The reform of the French unemployment insurance

The reform of the French unemployment insurance

Decrees n°2019-796 and n°2019-797 of 26-7-2019

Two decrees were published on 26 July 2019 to implement a reform of the French unemployment insurance. The new rules of the unemployment insurance scheme will apply to job seekers whose employment contract ends as from 1 November 2019. Some measures will be applicable to employees deprived of employment from 1 April 2020. The main measures of this reform are the following:

1) Tightening of the conditions for claiming unemployment benefits

To receive unemployment benefits, employees deprived of employment as from 1 November 2019 and under 53 years of age on that date must evidence at least 6 months of employment over the 24 months before the end of their employment contract, instead of 4 months of employment over the last 28 months hitherto required.  Employees over 53 years of age must evidence at least 6 months of employment over the last 36 months.

2) Decrease of unemployment benefit levels for high incomes

Employees deprived of employment as from 1 November 2019 and under 57 years of age at the date of the termination of their employment contract who used to benefit from an income above €4,500 gross per month will now have their unemployment benefits reduced by up to 30% from the beginning of the seventh month of benefits, down to a benefit of at least €2,261 net per month.  Employees over 57 years of age will not be affected by this measure.

3) Bonus-malus on unemployment insurance contributions

As from 1 March 2021, in the business sectors using the largest numbers of short-term contracts, the rate of unemployment insurance contribution due by companies with at least 11 employees will be adjusted upwards or downwards according to the rate of termination of employment contracts attributable to the employer. This bonus-malus system will result in the unemployment insurance contribution rates varying (currently 4.05%) between 3% and 5.05%. However, many elements still need to be specified in an Order yet to be published, in particular the business sectors to be covered.

4) Unemployment benefits granted to resigning employees

As from 1 November 2019, resigning employees with 5 years of uninterrupted employment within the same company and a real and serious vocational retraining project will be entitled to receive unemployment benefits, under the condition that their project be agreed upon. This right may be renewed every 5 years.

Following these two decrees, The French Unemployment Insurance Found published on 14 October a new regulation n° 2019-11 stating the rules relating to companies’ contributions and providing in an annex a technical note on 4 main topics (including base and rates of contributions).