Changes as of 1 January 2021: Increase of the Minimum Wage and Provision of Financial Assistance to Companies 

by Arendt Newsflash

Published: January, 2021

Minimum Wage Increase


The Act of 15 December 2020 amending article L.222-9 of the Labor Code comes into force on 1 January 2021.
The new legal provisions increase the minimum wage by 2.8%:


  • raising unskilled employees' minimum monthly wages from EUR 2,141.99 gross to EUR 2,201.93 gross; and
  • raising qualified employees' minimum monthly wages from EUR 2,570.39 gross to EUR 2,642.32 gross.

The index applicable to employees' wages (834,76) remains however unchanged.


Financial aid granted to certain companies to offset the minimum wage increase


The Act of 19 December 2020 providing financial assistance to companies to compensate for the minimum wage increase comes into force on 1 January 2021.


This financial support benefits companies operating in sectors severely affected by the Covid-19 pandemic and whose financial situation renders the legally required wage increase difficult to put into place. This lump-sum subsidy may be allocated to companies operating in the defined sectors for each employee hired before the minimum wage increase and whose monthly gross salary on 1 January 2021 ranges between EUR 2,201.93 (ie the new minimum wage) and EUR 2,642.32 (ie the new qualified minimum wage).


The tax-free subsidy, capped at EUR 200,000 per company, amounts to EUR 500 per eligible employee and is granted for one month only falling between 1 January 2021 and 30 June 2021.


Companies are free to choose the month for which they wish to benefit from the subsidy during said period.


New as of January 1, 2021: increase in the minimum wage and aid to businesses


Increase in the Minimum Social Wage (hereinafter the “SSM”)


The law of December 15, 2020 "amending article L.222-9 of the Labor Code" comes into force on January 1, 2021.


Under the effect of the new legal provisions, the SSM increased by 2.8%, passing:


  • for unskilled employees from EUR 2,141.99 gross to EUR 2,201.93 gross and
  • for qualified employees from EUR 2,570.39 gross to EUR 2,642.32 gross.

The index applicable to wages (834.76) remains unchanged, however.


State aid granted to certain companies following the increase in the SSM


The law of December 19, 2020 “relating to compensation aid for the increase in the minimum social wage in the context of the Covid-19 pandemic” also comes into force on January 1, 2021.


The said law sets up financial assistance - in the form of a single payment - in favor of companies belonging to the sectors most seriously affected by the Covid-19 pandemic and for which it is difficult to bear the new burden resulting from the increase in SSM. This one-off capital grant could potentially be allocated to companies in the aforementioned sectors which employ employees hired before the increase in the SSM and whose gross monthly remuneration on 1 January 2021 is now between EUR 2,201.93 (i.e. the new SSM) and EUR 2,642.32 (i.e. the new qualified SSM).


The aid, capped at EUR 200,000.- per company, amounts to EUR 500.- (tax exempt) per eligible employee and only concerns a single monthly period between January 1 and June 30, 2021.


Companies remain free to choose the month during which they wish to benefit from it over the said period.


 



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