In a significant change for French small and medium-sized businesses, a new law set to take effect in 2025 mandates companies with 11 to 49 employees to implement a value-sharing premium scheme – formerly known as the Macron bonus or purchasing power premium – if they meet certain profitability thresholds. Here’s how it works.
Introduced in November 2023 as part of an agreement on value-sharing within companies, the law requires businesses that have earned a net profit of at least 1% of their turnover for the past three consecutive years to establish a value-sharing bonus scheme for employees. This was previously an experimental five-year programme, but will now be mandatory for fiscal years starting on or after 1st January.
If a company meets these criteria, it will need to introduce one of several possible schemes, including: incentive or participation agreements allowing employees to participate in the company’s financial success; wage savings plans such as EEP, EIP, Perco or Pereco that offers options for employees to save and invest, linked to company performance; or a value-sharing premium (VPP), a direct premium paid to employees based on the company’s profitability.
The specific amount of the value-sharing premium and how the value-sharing scheme is distributed among employees is up to the employer. The premium may be the same for everyone or it could vary based on factors such as employee remuneration, seniority within the company, length of service, actual presence during the previous year, and full-time or part-time status. Under the new law, employers are permitted to use various criteria to ensure a fair distribution according to company norms and the financial performance achieved.
The goal is to encourage businesses to share their success with employees, aligning their interests and fostering a greater sense of ownership and engagement within the workforce.
It’s important to note that the VPP cannot replace wages, regular pay increases or bonuses outlined in contracts or agreements that are already in place. It is designed as an additional form of compensation that is specifically tied to a company’s net profit.
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