Labor Law Newsletter March 2025
Case Law
Consultation of the Social and Economic Committee on a pilot phase for the deployment of artificial intelligence systems
The Nanterre Judicial Court ruled in an order dated February 14, 2025, that the company must suspend the deployment of artificial intelligence software tools until it had consulted its CSE, even though the company considered this to be a trial phase. The court held that the pilot phase actually constituted an initial implementation of the tools, which, in the absence of consultation with the CSE, constituted a manifestly unlawful act.
Interim Order of the Nanterre Judicial Court, February 14, 2025
Failure to Inform Regarding Priority for Reemployment
An employer who fails to inform an employee, who has entered into a professional security contract, of their priority for rehire during the pre-dismissal interview does not deprive the termination of the employment contract of a real and serious cause, but merely allows the employee who can demonstrate harm to obtain damages.
Cass. Soc., 26 février 2025, n°23-15.427
Special Conditions for Exemption from Meal Allowance Expenses
The Court of Cassation upheld the annulment of a URSSAF assessment regarding the workplace meal allowance, clarifying that this allowance is deductible for the calculation of social security contributions when the employee is subject to specific organizational conditions or work schedules, and must eat a meal at their actual place of work, even during regular meal times. In this case, the employee had only 30 minutes to eat their meal.
Cass. Soc., 30 janvier 2025, n°22-20.960
Regulatory
2025 Finance Act
The 2025 Finance Act was definitively adopted and published in the Official Journal on February 15, 2025.
Management packages
The 2025 Finance Act introduces a new tax regime (and certain social provisions) applicable to gains derived from “management package” instruments. This new regime applies to the net gain realized on securities subscribed to or acquired by employees or executives (or allocated to them) in exchange for the duties performed as an employee or executive in the company issuing the securities or in any subsidiary or parent company.
The tax regime applies to all management packages, regardless of whether the plans are considered “qualified” under the Commercial Code.
The tax treatment of acquisition gains remains unchanged and depends on whether the plans qualify as such. However, capital gains are generally taxed as salary but may qualify for taxation as capital gains on securities subject to:
- The existence of a risk of capital loss,
- Holding the securities for two years (except for BSPCE and stock option plans).
However, this favorable capital gains tax regime applies up to a limit calculated based on the increase in the company’s actual value. Under the formula outlined in the General Tax Code, any portion of the capital gain that exceeds three times this increase is taxed as salary.
Regarding the social security treatment of these management package arrangements, the capital gain is exempt from the CSG and CRDS on earned income and from social security contributions. For the portion taxed as capital gains on securities, it is subject to the CSG on investment income, and for the portion taxed as salary, it is subject to a 10% payroll contribution, collected in the same manner as the CSG on investment income.
Loi 2025-127 du 14 février 2025 art. 93
Revisions to the Tax Treatment of Business Founder Share Subscription Warrants (BSPCE)
Section 92 of the Finance Act aligns the tax treatment of BSPCEs with that of AGAs or stock options by distinguishing between the exercise gain—which is treated as income—and the gain on the sale of securities derived from BSPCEs—which is treated as capital gains. The gain upon exercise is taxed at the flat-rate withholding tax rate or, at the beneficiary’s option, at the progressive income tax rate. The gain upon sale is taxed under the conditions applicable to capital gains on securities. Both types of gains are, in all cases, subject to social security contributions on investment income.
Loi 2025-127 du 14 février 2025 art. 92
Long-Term Partial Unemployment Scheme “Rebond”
The 2025 Finance Act (LF) establishes a long-term partial unemployment scheme called “Rebond” (or APLD Rebond) (LF Art. 193), similar to the APLD scheme implemented during the COVID-19 crisis. A decree is required for it to take effect.
Eligible companies. The APLD Rebound aims to ensure that employees remain employed in companies facing a sustained reduction in activity that does not threaten their long-term viability. A decree will specify the maximum level of reduced activity that may be implemented (likely 40%; Ministry of Labor press release of January 27, 2025).
Implementation. The APLD Rebond is implemented either through a collective agreement (concluded at the establishment, company, or group level) or, after consulting the Social and Economic Committee (CSE) if one exists, through a unilateral document adopted pursuant to an extended sector-wide collective agreement on the APLD Rebond.
The collective agreement or unilateral document must specify the commitments specifically undertaken by the employer, in particular regarding job retention and vocational training (Labor Code Art. 193, I and II).
The collective agreement or unilateral document is submitted to the administrative authority for validation (in the case of an agreement) or for approval (unilateral document implementing an extended sectoral agreement) (Labor Code Art. 193, III).
Loi 2025-127 du 14 février 2025 art. 193 : JO 15
Social Security Financing Act for 2025
Reform of Social Security Contribution Relief
Article 18 of the Social Security Financing Act adjusts the general reduction in employer contributions for 2025 and reduces the contribution rate reductions for family and health coverage prior to a merger of the mechanisms in 2026 into a single relief mechanism.
The general reduction is adjusted in 2025
Until the 2025 Social Security Financing Act, the ceiling for this reduction was set by law at 1.6 times the minimum wage (Article L.241-13 of the Social Security Code).
For contributions and payments due for periods of employment beginning on or after January 1, 2025, the remuneration ceiling is set by decree; however, the law stipulates that it must fall between:
- 1.6 times the minimum wage applicable as of January 1, 2024, i.e., €2,827.14 for a full-time employee
- 1.6 times the minimum wage in effect for the year in question, i.e., €2,882.94 for a full-time employee as of January 1, 2025.
The decree has not yet been published, but it is expected to be based on the minimum wage in effect as of January 1, 2025, regardless of any changes to the minimum wage during the year.
In addition, the law includes any value-sharing bonus paid to employees in the calculation of the general reduction (for the purposes of the eligibility ceiling and the calculation of the reduction).
The reduction in health and family contribution rates will be lowered starting in 2025
For contributions and premiums due for periods of employment beginning on or after January 1, 2025, the thresholds for applying the rate reduction are reduced to:
- 2.25 times the minimum wage (compared to 2.5 times the minimum wage until December 31, 2024) for the reduction in the health insurance contribution rate (Social Security Code, Art. L.241-2-1, as amended)
- 3.3 times the minimum wage (compared to 3.5 times the minimum wage until December 31, 2024) for the reduction in the family contribution rate (CSS Art. L.241-6-1, as amended)
In 2026, the three reductions will be consolidated
For contributions due for periods of employment beginning on or after January 1, 2026, the reductions in health and family contribution rates will be eliminated.
In parallel with the elimination of the reductions in family and health insurance contribution rates, it is planned that, for contributions due for periods of employment beginning on or after January 1, 2026, the earnings ceiling eligible for the general reduction will be raised and the amount of contributions used to calculate the reduction coefficient will be lowered.
Loi n° 2025-199 du 28 février 2025 de financement de la sécurité sociale pour 2025 – article 18
Increase in the Employer Contribution Rate on Free Share Allotments (FSA)
The employer contribution rate applicable to FSAs will increase from 20% to 30%, effective March 1, 2025, after remaining unchanged since 2018.
This increase applies to all definitive grants effective as of the first day of the month following the publication of the law, thereby including existing plans.
Loi n° 2025-199 du 28 février 2025 de financement de la Sécurité Sociale pour 2025 – article L. 137‑13 du code de la sécurité sociale
Work-Related Accidents and Occupational Diseases: Changes to Compensation Rules for Permanent Functional Impairment
The Social Security Financing Act for the year 2025 revises the rules for compensation for workplace accidents and occupational diseases (AT/MP) to include coverage for permanent functional impairment that victims of AT/MP may suffer in social security compensation, including in cases of gross negligence on the part of the employer. The measure will take effect on a date set by decree and no later than June 1, 2026.
Loi n° 2025-199 du 28 février 2025 de financement de la Sécurité Sociale pour 2025 – article 90
Donation of days off to associations or foundations: a decree limits the maximum number of days that may be donated to 3 and sets their monetary value
Décret 2025-161 du 20 février 2025, JO du 21
-
Sickness Benefits: Decree Reducing Sick Leave Compensation Published
The decree lowering the maximum wage threshold used to calculate daily sickness benefits from 1.8 to 1.4 times the minimum wage was published in the Official Journal on February 21.
The measure will apply to IJSS benefits paid for sick leave prescribed on or after April 1, 2025. It will result in a reduction in social security sick leave benefits for certain employees. The “cost” will be borne by employers (when continued pay applies) or employees, either directly or indirectly through the impact on pension plans.
Décret 2025-160 du 20 février 2025, JO du 21
-
New Valuation Rates for Benefits in Kind
A new decree dated February 25, 2025, regarding the valuation of benefits in kind was published in the Official Journal on February 27, 2025, repealing and replacing the 2002 decree. This decree applies to contributions and premiums due for periods of activity beginning on or after February 1, 2025, and thus to vehicles made available on or after that date. The old rules continue to apply to vehicles made available through January 31, 2025.
The decree modifies the following valuation rates:
- When the vehicle is purchased: valuation based on 15% of the purchase cost (instead of 9% for vehicles made available through January 31, 2025) or 20% of the purchase cost when the employer pays for the vehicle’s fuel (instead of 12%). When the vehicle is more than 5 years old, valuation based on 10% of the purchase cost (instead of 6%) or 15% of the purchase cost when the employer pays for fuel (instead of 10%).
- When the vehicle is leased, with or without a purchase option: valuation based on 50% of the total annual cost, including the lease, maintenance, and insurance of the vehicle (instead of 30%). If the employer pays for the fuel, the rate is 67% (instead of 40%) and the valuation is on a flat-rate basis.
These rates are prorated when the vehicle is made available during the year. However, when it is made available during the month, the entire month is taken into account.
For electric vehicles made available on or after February 1, 2025, the benefit is calculated as follows:
- Without taking into account the electricity costs incurred by the employer for the vehicle;
- After applying a 70% deduction, up to a limit of €4,582 per year in 2025.
The rules for assessing the benefit derived from the provision of an electric charging station are extended until December 31, 2027.
Decree of February 25, 2025, regarding the assessment of benefits in kind for the calculation of social security contributions for employees affiliated with the general scheme and employees affiliated with the agricultural scheme
