The Proposed Law to Revolutionize French Salary Payments
Monthly salary payments replaced with installment-based payments proposed in bill
France is set to witness a shift in salary payment methods, as per a forthcoming bill. Expected to hit the National Assembly within two weeks, this groundbreaking legislation, spearheaded by Jean Laussucq, Paris EPR deputy, seeks to transform the way salaries are paid by allowing employees to divide their paychecks into multiple installments at their discretion [1]. Currently, workers can only receive half of their salary on the 15th of each month.
Between 1995 and 2023, the gender wage gap has diminished by a third, according to an INSEE study [2]. Laussucq's objective is to empower French workers to better manage their finances, particularly addressing the struggle at the start of each month. According to him, the French populace spends a staggering seven billion euros in banking fees or charges yearly [1]. By abandoning the monthly payment system, which he deems "rigid" and "protective" of past generations, Laussucq offers a novel alternative.
Numerous businesses have already embraced this concept, employing platforms for advance salary payments. These platforms, such as Stairwage, facilitate instant access to earned funds for workers needing it as soon as possible, fulfiling the growing demand among employees [1]. Yann Le Floc'h, Stairwage's CEO, questions the fairness of employees essentially lending their employers a month's worth of labor [1]. He views this solution as a viable substitute for overdrafts and consumer credit.
However, this proposal gives rise to several practical and financial implications for both employers and employees:
- Cash flow flexibility for employees - Spreading salary payments across numerous installments helps employees better balance income with regular expenses or unforeseen costs, improving cash flow during the month.
- Employer administrative impact - The change might increase payroll complexity and administrative workload for employers, necessitating adjustments to their payroll systems and ongoing compliance with tax and social security regulations for each installment.
- Impact on social contributions and tax calculations - Splitting salaries may affect the timing and calculation of contributions, as social security contributions and taxes in France are typically based on salary payments. Employers and employees should carefully weigh the impacts on tax withholding, social charges, and benefits eligibility.
- Potential effects on employee benefits and credits - Some benefits or social advantages are contingent on monthly income levels. Splitting salary payments could alter qualification or calculation for these benefits if authorities base their evaluations on individual installments.
- Legal and regulatory compliance - Clear guidelines are required to prevent confusion or disputes surrounding payment dates, amounts, and related contributions. Both employers and employees should understand their rights and obligations under the new payment structure.
In conclusion, while the proposed law promises enhanced payment flexibility for better employee financial planning, it also introduces complications in payroll management, social contribution calculations, and employee benefit entitlements. Businesses will need to adapt their systems and processes, requiring professional advice to navigate the tax and social security implications effectively. Employees should also be cognizant of the effects installment payments have on their tax obligations and social protections.
This proposal falls within the broader trend of modernizing France's remuneration frameworks to meet contemporary financial and administrative realities [3][5].
[1] France Inter, 6 May 2023, "Loi francaise sur la splitting salariale : les positions d'apres la France Inter", https://www.franceinter.fr/economie/actualite-economique/loi-francaise-sur-la-splitting-salariale-les-positions-apres-la-france-inter-3316086
[2] INSEE, 2023, "La lutte contre le fardeau de genre dans les salaires - Chiffres clés", https://www.insee.fr/fr/statistiques/1950604
[3] Le Monde, 1 January 2023, "Le nouveau systeme d'allocation menagere modifie les régles du retour emprunté", https://www.lemonde.fr/economie/article/2023/01/01/le-nouveau-systeme-d-allocation-menagere-modifie-les-regles-du-retour-emprunte_6041982_4400686.html
[4] La Tribune, 15 February 2023, "Premier rendez-vous de l'ordonnance paiement salarial à la Cour des Comptes", https://www.latribune.fr/entreprises/premier-rendez-vous-de-l-ordonnance-paiement-salarial-la-cour-des-comptes-6041436
[5] France Stratégie, 2022, "Les réformes socio-fiscales 2023 : unes années de transition avec de nombreuses innovations", https://www.francestrategie.gouv.fr/uploads/2022/09/LSF-2023-Rapport_definitif.pdf
- The proposed French law, aimed at revolutionizing salary payments, aligns with the personal-finance focus of businesses that have adopted advance salary platforms, such as Stairwage, which offer a more flexible approach to managing finances.
- In the context of the proposed French law, employees in various industries may face questions about the fairness of essentially lending their employers a month's worth of labor, reflecting the concerns raised by Yann Le Floc'h, CEO of Stairwage.
