Unemployment insurance: what the new agreement for January 2024 provides

Unemployment insurance: what the new agreement for January 2024 provides

After two days of negotiations, trade unions and employers’ associations reached an agreement on determining unemployment insurance rules for 2024.

On Friday, November 10, the social partners concluded an agreement on unemployment insurance administered by Unédic. Two unions signed a memorandum of understanding, CFDT and CFTC, while CGT and CFE-CGC refused.

Reducing the minimum period of activity required to qualify for unemployment insurance is one of the main proposed changes. It lasts from 6 to 5 months. Another important measure, high earners (more than €4,500 gross) will suffer a reduction in their benefits under the age of 55 compared to 57 previously.

As for the payment of unemployment benefits, beneficiaries will now receive a fixed amount every month calculated for 30 days. This measure, which aims to simplify the payment system, should still cause the unemployed to lose 5 to 6 days of benefits per year.

As far as employers are concerned, the agreement provides for a slight reduction in employer contributions from 4.05 to 4 percent. Furthermore, the bonus-malus system, which penalizes companies that abuse short-term contracts, has been partially revised. The restriction now applies to a limited number of contracts, a concession given to employers.

The Ministry of Labor still has to examine the compliance of the agreement with the framework document of the Government. The measures from the agreement could then be applied from January 1, 2024.

Who can be insured for unemployment?

To be eligible for unemployment insurance, you must work for at least 6 months in the 24-month period before the end of your last employment contract. Unemployment insurance should benefit former employees in the private sector or public service who are looking for work. From 2019, the reform foresees benefits for self-employed workers and employees who quit, provided that they retrain or start a business. In general, the duration of compensation is applied according to the following principle: one day of work gives one day of compensation. The maximum period during which a job seeker can receive benefits is 18 months for people under 53, 24 months for those aged 53 to 54 and 27 months for people over 55.

The amount of unemployment compensation is calculated based on the reference daily wage (SJR). The latter is obtained by adding up all wages received by the employee during the 24 months before the end of the last employment contract (27 months for users aged 53 and over). Then you must divide that sum by the number of days corresponding to the duration of the benefit, i.e. working days and periods of inactivity, during which the reduced benefit was received (sick leave, parental leave, maternity leave, partial activity). The quotient resulting from this formula constitutes the daily reference wage (DWW).

The daily allowance offered by the unemployment insurance corresponds to 57% of the SJR. Pôle Emploi will multiply the amount of the daily wage by the number of days in the month. This final calculation shows the payment the job seeker will receive monthly. For high salaries, a reduction in the amount of compensation can be applied, with a reduction of 30% after 8 months of compensation.

How long does unemployment benefit last?

This is one of the foundations of the new unemployment insurance reform. The text is intended as countercyclical, that is, it is against the economic trend. The bill therefore authorizes the government to change by decree the duration of the benefit offered by the unemployment insurance, depending on whether the employment situation is “green” or “red”. In details, “green period” corresponds to an economic situation in which the unemployment rate is less than 9% and does not experience an increase of more than 0.8 points during the quarter. The “red period”, on the other hand, is equivalent to an unemployment rate higher than 9% or an increase in this rate of 0.8 points during the quarter. So, even if the unemployment rate is 4%, the system goes into the “red” if it rises to 4.9% within three months.

A reduction factor of 0.75 is applied when the labor market situation is considered “green”. Conversely, no coefficient is applied during the “red” period. The reform will concern only persons eligible for unemployment insurance after February 1, 2023. Therefore, currently unemployed people who are already receiving unemployment insurance are not affected. Others excluded from the system: residents of overseas departments, casual entertainment workers, fishermen, port workers, expatriates and beneficiaries of a professional protection contract (obtained after dismissal). The modulation planned by the Government was implemented by decree on February 1, 2023 and will be applied until December 31 of this year. Then, to change the duration of the unemployment benefit again, the public authorities will have to publish a new regulation.

A coefficient of 0.75 corresponds to a 25% reduction in unemployment insurance rights. Here are some examples of the impact this measure will have:

  • A job seeker who would have benefited from 24 months of unemployment under the old rules has their rights reduced to 18 months.
  • A job seeker who, under the old rules, would have benefited from 20 months of unemployment, their rights are reduced to 15 months.
  • A job seeker who, under the old rules, would have benefited from 12 months of unemployment, has his rights reduced to 9 months.
  • A job seeker who, under the old rules, would have benefited from 10 months of unemployment, has his rights reduced to 8 months.

Note, however, thatThe unemployed must receive benefits for at least 6 monthsregardless of the applied coefficient.

As a reminder, the method of calculating the unemployment rate chosen by the government is the unemployment method in terms of the ILO (International Labor Office). The calculation method is often criticized because it does not take into account data from INSEE. Only unemployed people who are actively looking for work are counted.. Which actually excludes parents who have decided to dedicate themselves to the education of their child(ren), people who are undergoing treatment that prevents them from working, job seekers who, in order to find a job more easily, decide to attend training. It is clear that unemployment according to the ILO definition includes only unemployed persons of category A, who were employed.

Reduced rights for those who refuse a permanent contract?

The text predicts deny unemployment benefits to employees who twice refuse to convert their fixed-term contract or their temporary engagement into a permanent contract. For the purpose of applying this measure, the Minister of Labor, Olivier Dussopt, he confirmed that employers will have to notify Pôle Emploi of these refusals. He explained that “Pôle Emploi currently has no way of knowing whether an employee has previously refused a permanent position, so it is necessary to reorganize the reporting and information transfer system.” The resident of rue de Grenelle also stated that a system would be put in place to avoid administrative overload for business leaders.

No unemployment benefits after leaving a job?

From now on, employees who leave their workplace will no longer benefit from unemployment insurance. Until now, employers initiated procedures for the dismissal of workers who voluntarily left the workplace without submitting their resignation. However, the new reform stipulates that a leaving office will now be considered “assumption of resignation”, it does not give the right to unemployment benefits. A person whose departure is based on legitimate reasons (for example, if his health or safety is threatened) can refer the matter to the industrial court.

The judges will then have a month to decide whether or not to overturn the presumption of resignation. for his part, the employer must set a deadline by which the worker must justify his absence or return to his workplace. Otherwise, it will be tantamount to resignation. The employer is obliged to inform the employee about the deadline by registered letter delivered in person.

Towards an extension of bonus-malus for employers?

This system, which has been applied since September 1, 2022 in sectors of activity that regularly use short contracts, will be extended until August 31, 2024. In particular, the measure consists of modulating employers’ contributions intended for unemployment insurance in accordance with the use of short-term contracts by employers. Those who abuse it pay a penalty (up to 5.05% of contributions, compared to 4.05% otherwise), while those who play the game benefit from a bonus (contributions reduced to 3%).

Private unemployment insurance, for whom?

Private unemployment insurance is insurance that compensates for the loss of income after losing a job. It is intended for business managers as primary insurance, and the latter do not benefit from the assistance of Pôle Emploi. It can also apply to employees who want help with traditional unemployment insurance.

Involvement in the unemployment insurance system

Unemployment insurance is mandatory for all employees in the private sector and they finance it themselves in the form of deductions from their salary. All private employers must register with the unemployment insurance system. Solidarity, the supplement provides the best support to former employees with low incomes, who are favored over those who benefited from a high salary.

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