Moratorium On Unemployment Contributions Granted To French SMEs

by Ulrika Lomas, Tax-News.com, Brussels

17 October 2008

In an endeavour to reduce the burden on small businesses, given the difficult prevailing economic conditions, Unédic, (l’Union national interprofessionnelle pour l’emploi dans l’industrie et le commerce), the non-profit organisation in charge of managing unemployment funds in France, has taken the exceptional measure of granting a moratorium on unemployment contributions due this month to all SMEs with fewer than 50 employees.

Under the proposals, small businesses may opt either to pay their contributions now or to accept the offer of a deferral.

Unédic’s pro-active initiatives will apply to businesses as follows:

• SMEs with fewer than 10 employees will be entitled to defer their quarterly payment by two months from October 15, to December 15, 2008, without incurring penalties.
• SMEs with between 10 and 50 employees may defer their monthly settlement by one month, from October 15 until November 15, 2008, again, without incurring any late payment charges.
• Companies with more than 50 employees will be able to request assistance by contacting the employment agency, Assédic.

In the past, deferrals have only ever been granted in unique and specific cases, for example, to businesses in the town of Nîmes following floods in 2002, and to businesses in Martinique in the wake of hurricane Dean.

Nevertheless, the CGT union have vehemently opposed the moves, citing the enormous cost that will result in order to fund the measures. According to the union, if all of the SMEs elect to defer, Unédic will have to borrow EUR1.5bn in order to guarantee payment of unemployment costs.

The unemployment contributions, however, only represent a small proportion of the burden on businesses (4% out of 45%). Consequently, l’Union professionnelle artisanale or UPA, the professional union representing the craft industry, is asking the government to examine the scope for other possible deferrals.

As negotiations begin this week on the whole issue of unemployment insurance contributions, a sharp rise in unemployment means that reducing this charge will be difficult.

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