Inflation allowance: when and how to pay it to your employees?

To preserve the purchasing power of the population, the government announced, last October, the creation of an inflation allowance of a lump sum of 100 €. But a decree had yet to set its terms and conditions of payment. It’s now done! So, employers must pay the allowance to their employees by February 28, 2022, at the latest.

Who is concerned?

The inflation allowance is granted to employees (including work-study students):

- who had a professional activity during the month of October 2021.

- and who have received, from January 1st to October 31, 2021, a gross remuneration of less than €26,000 (regardless of their working hours) on which social contributions are payable.

Who pays the compensation?

Employers must automatically pay the inflation allowance to their employees who meet the above-mentioned conditions, even if they are no longer part of the company’s workforce. It is also paid to employees who, in October 2021, were absent or whose employment contract was suspended (due to work stoppage, maternity leave, etc.).

Exceptions: The allowance does not have to be paid by the employer if, last October, the employee also worked as a freelancer or benefited throughout the month from parental leave for education. The same applies when the employee informs his employer that he is not eligible for the allowance or that it is already paid to him by another employer.

In the case of employees who have benefited from a very short employment contract (fixed-term contract (s) of less than one month and totalling less than 20 hours of work or, where the contract does not mention hourly duration, less than 3 days of work carried out in October), the employer must not pay them the allowance automatically. This payment is made only if the employee concerned so requests.

In practice, in cases where the allowance is not automatically paid by the employer, the latter must fix a deadline allowing employees to request the payment. The deadline must be brought to the attention of employees by the means considered most appropriate by the employer.

When should it be paid?

Employers pay the inflation allowance to their employees as early as December and, at the latest, on February 28, 2022. This payment is made with the remuneration for the work done. So, the pay slip must clearly mention the payment of an “Inflation allowance – Exceptional State aid”.

And, of course, employers will be reimbursed the amount of inflation benefits paid to their employees. Specifically, they will deduct this amount from the social contributions they owe to URSSAF or MSA (Mutualité Sociale Agricole - Social Security System for farmers). This deduction must be made on the payment deadline following the payment of the indemnity.

Example: If the allowance is paid with the remuneration of the month of December 2021, its amount must be deducted from the social contributions to be paid on 5 or January 15, 2022.