On April 9th, the amendment tabled by the government to the DDADUE bill (containing various provisions for adapting to European Union law), which brings French paid leave (CP) law into compliance with a European directive from 2003, is expected to be definitively adopted by the Assembly. This amendment, voted on in its first reading by the National Assembly on March 18th, having been examined and accepted by the Joint Committee, the law could be promulgated after the vote scheduled for April 9th (in the National Assembly) and April 10th (in the Senate). However, this promulgation will probably have to await a likely review by the Constitutional Council, which is highly probable to be seized of the matter.
The right to paid leave: a context of uncertainty for employers
France, which for the past 20 years has been “European outlaw” regarding the acquisition of paid leave by employees on sick leave, is finally deciding to transpose the directive which specifies that every employee is entitled to paid leave, whether they have worked or not, as the acquisition of paid leave under European law is not conditional on actual work. The Court of Cassation somewhat forced the hand of the legislator by issuing several rulings on September 13, 2023, in which it considered that employees on sick leave acquire paid leave during their absence, in contradiction with the Labor Code, but in compliance with European law.
The position adopted on September 13, 2023, raised many fears among employers: indeed, under these decisions, employees could theoretically claim their paid leave arrears without limitation of duration and without any statute of limitations, provided they had not been informed of the possibility of acquiring paid leave. Legal uncertainty was then at its peak for companies, because an employee whose contract had been terminated, for example in 2014, was entitled to refer the matter to the Labor Court to recover leave acquired in 2010, with no limit on the amount.
Amendment to the DDADUE bill: towards a reduction in the rights of claims for sick leave
It is in this context of uncertainty, between principled stances and rough estimates, that the amendment to the DDADUE bill was presented to the National Assembly, and this amendment significantly reduces the rights, and therefore the potential claims, of employees on sick leave.
Retroactive paid leave acquisition, but with a limit
The provisions allowing employees on sick leave to acquire paid leave are retroactive, but this retroactivity is framed since the amendment limits the number of paid leave days that can be acquired over a reference period to 4 weeks in the event of absence not attributable to a work accident or occupational disease (and not 5, as European law is less generous in this regard than national law). In parallel, the amendment limits the duration for carrying over paid leave for employees currently employed, by introducing a forfeiture period of 2 years starting from the publication of the law (and 3 years for employees who have left their company). Finally, acquisition will be limited to a maximum period of 15 months.
A text that raises many questions
A joint committee, initially scheduled for April 9, 2024, finally held on the 4th, will apparently definitively adopt the text which, while it has been the source of much relief for employers, will not necessarily put an end to their cold sweats, especially if the Constitutional Council is seized. Indeed, the text, in its current state, contains many questions:
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The text presents unequal treatment depending on the nature of the work stoppage
The Council of State (CE), which examined the amendment at the government’s request, found nothing to object to, for the following reasons:
“14. By its already mentioned decision no. 2023-1079 QPC of February 8, 2024, the Constitutional Council ruled that the provisions of article L. 3141-5 of the Labor Code (CT), in that the only periods of leave they assimilate to periods of actual work are absences due to work accidents or occupational diseases, do not disregard the principle of equality by the difference in treatment they introduce, for the acquisition of rights to annual paid leave, depending on the reason for the suspension of the employment contract.
- The Council of State considers that it can be deduced from this decision that the more circumscribed difference in treatment resulting from the amendment project envisaged by the government does not disregard the constitutional principle of equality, neither for that which it introduces with employees in professional activity, nor for that which it introduces with employees absent due to a work accident or occupational disease.”.
The CE refers here to the decision of the Constitutional Council which examined the old provisions of the Labor Code (before the transposition of the directive), a decision which specified the constitutionality of the CT provisions stipulating that paid leave was conditional on the exercise of actual work. However, the transposition of the European directive via the proposed amendment creates a new difference in treatment: employees on sick leave due to a professional cause (work accident or occupational disease) can acquire paid leave up to 5 annual weeks, while this acquisition is limited to 4 weeks for absences of non-professional origin.
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The text presents unequal treatment between current and former employees
The amendment indeed creates inequality between employees still in post and those whose employment contract has been terminated, since it stipulates that employees in post may carry over their paid leave within a limit of 15 months if they are unable to take them during the period of work stoppage (after this period, they will be lost, this duration being in conformity with the CJEU’s response to the preliminary question put to it, decision of November 9, 2023).
Whereas employees whose contract is terminated may claim paid leave compensation within the three-year statute of limitations for salary payment.
Employees who have left the company will therefore be able to claim paid leave compensation for 3 years, while employees still in post will have lost their paid leave if they have not carried it over within the 15-month period.
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The text presents inequalities in the time limit for legal action
The right to take legal action being considerably reduced and different depending on whether employees are in post or not:
- For employees still in post who wish to claim their paid leave acquired during their work stoppages over the 2009-2024 period (the Charter of Fundamental Rights became binding upon the entry into force of the Treaty of Lisbon on December 1st, 2009) and add them to their accounts, the possibility of legal action will be time-limited.
They will indeed have to seize the judge within 2 years following the publication of the law (forfeiture period, or prefixed period, distinguished by nature from the statute of limitations: the forfeiture period is defined as a civil sanction which, due to the expiry of a legally allotted period to assert one’s rights in court, extinguishes the action available to the person to have them recognized).
A peculiarity of this law is that the forfeiture period begins on the date of publication, which appears to be an exorbitant departure from common law, which generally sets the starting point of a forfeiture period at a specific event related to the case in question (generally the date on which the beneficiary is deemed to have become aware of the rights in question).
- For employees who have acquired paid leave and whose contract is terminated, these are subject to the three-year statute of limitations set out in Article L 3245 of the Labor Code: “The action for payment or recovery of salary is time-barred after 3 years from the day on which the person exercising it knew or should have known the facts allowing it to be exercised. The claim may relate to sums due for the last 3 years from that day or, when the employment contract is terminated, to sums due for the 3 years preceding the termination of the contract“.
If they have been informed of their rights, they can act within 3 years following the termination of their employment contracts, which is one year longer than employees in post.
For employers, therefore, it is far from the end of legal uncertainty…
Furthermore, and even without ensuring the legal stability of the measures, companies will need to address the business and technical issues that this reform will generate.
Paid leave acquisition, towards a revision of payroll tools
Indeed, the acquisition of paid leave during periods of illness will necessitate the revision of parameterization specifications, both for payroll tools and time management tools: the detrimental effects of all sick absences on the acquisition of paid leave will have to be nullified, both for the “in-progress acquisition” period, i.e., that running since June 1st, 2023, and for periods of acquired paid leave and the various accumulations of remaining leave.
In parallel, significant work will have to be done for previous years, particularly concerning employees who have left the company (in connection with the legal uncertainties still hovering over the final version of the text, as we mentioned above), and, in this case, without being able to rely on the automated calculation capabilities of payroll and GTA tools.
It will therefore be necessary to review each period of illness for departed employees, taking into account the statutes of limitations, in order to generate the paid leave rights not acquired during that period of the employee’s life. And subsequently to work intelligently with accounting departments to generate provisions to cover potential employee claims up to the forfeiture and/or limitation periods: indeed, accounting plans currently provision for actually acquired paid leave (or leave in the process of being acquired), thus deflated by detrimental absences, which include periods of non-occupational illness.
While the integration of the new rules will be seamless once the payroll tool’s configuration aligns with the new regulations, updating past provisions will require significant effort in collating information on rights, gross pay, and charges (personalized or by status, according to current company practices), and this within a constrained timeframe, in order to be able to address potential litigation from employees or ex-employees as soon as the law is promulgated.
A new regulation that will impact the HR activity continuum
In addition to rights calculation and provisioning actions, the new regulation will impact the HR activity continuum, and notably entail an extremely significant burden on the departments in charge of these activities: indeed, one of the major challenges in responding to this regulatory shift will be the ability of HR departments to demonstrate that employees—and former employees—are aware of the terms of the law, in order to initiate the prescription and forfeiture periods which will ultimately lead to the loss of rights.
The amendment also inserts an information obligation for employers, to start the statute of limitations and also the period for carrying over paid leave.
Indeed, the employer must inform the employee within 10 days following the return to work after sick leave of the number of days acquired and the deadline for taking them.
What will happen if this information is not provided?
For employees still in post, the carry-over period starting from the date of employer information, for employees on leave for less than a year, without being able to justify this information, the period will not begin and the employee will never be in a position to lose their leave. As for employees whose contract has been terminated, this information would be the starting point for the 3-year statute of limitations. Without proof that the ex-employee received this information, the statute of limitations will never begin and the uninformed employee could request all their paid leave acquired during sick leave without the amount being limited to 3 years of paid leave…
These consequences, as well as many others that will impact companies’ HR activity—to take just one example, the modification of payroll control practices, which will have to integrate these new acquisition periods during contract suspension periods, but also the risk of impacting other aspects of payroll management (e.g., why reduce such and such a bonus due to absences that no longer reduce paid leave acquisition)—will undoubtedly represent a need for expertise that will burden HR and payroll departments, and this within extremely tight deadlines, even under the pressure of litigation.
It is therefore essential to understand, as early as possible, all upcoming impacts, embracing all affected areas, thanks to the value contribution of Althéa’s payroll and HR process experts, who will be able to support you in analyzing the processes to investigate (payroll, HR, accounting) and in implementing actions across the entire company.
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