A modulation system for the unemployment insurance contribution

To encourage companies to offer more permanent contracts and to extend the duration of fixed-term contracts, the government has introduced a modulation system for the employer’s unemployment insurance contribution. This system has been applied since September 2022 to companies that employ at least 11 workers. Now, it will last until at least August 31, 2024. But only companies in seven selected sectors of activities are concerned.

Which sectors?

The modulation of the employer’s unemployment insurance contribution applies only to those companies which employ at least 11 workers in one of the 7 sectors of activity and regularly use short-term contracts (apart from those relating to integration through economic activity), namely:
- food, beverages, and tobacco production.
- water production and distribution; sanitation, waste management and depollution.
- other professional, scientific, and technical activities.
- accommodation and catering.
- transport and storage.
- rubber and plastic and other non-metallic mineral production.
- woodworking, paper industries and printing.

What contribution rate?

The basic rate of the unemployment insurance contribution is, in principle, set at 4.05%. In the companies concerned by the modulation system, this rate can vary between 3 and 5.05% depending on their practice in terms of using short-term contracts.

Thus, the exact rate applicable to the company is calculated by comparing its separation rate and the median separation rate of the sector of activity (rate defined each year by decree) to which it belongs. This gives rise to three possibilities:
- If the separation rate of the company is lower than the median separation rate of its sector, the unemployment insurance contribution is reduced.
- If the separation rate is higher than the median separation rate of the sector, the contribution is increased.
- If the separation rate is equal to the median separation rate of the sector, the contribution corresponds to the basic rate (i.e., 4.05%).

Over what periods?

The modulated rate of the unemployment insurance contribution starts to apply to wages due for periods of employment from September 1st, 2022, to August 31, 2023: a rate calculated according to the number of contract terminations within the company between July 1st, 2021, and June 30, 2022.

A recent decree extends the application of the modulation system for the period 2023-2024. Also, from September 1st, 2023 to August 31, 2024, companies will pay a modulated rate of unemployment insurance contribution calculated according to the number of contract terminations between July 1st, 2022 and June 30, 2023.

Companies in the sectors most affected by the health crisis linked to the Covid-19 epidemic (protected sectors known as “S1” such as hotels, restaurants, pubs, distilled alcoholic beverage producers, cider and fruit wine producers, passenger transporters or photographic activities) have been excluded from the modulated rate of the unemployment insurance contribution for the period 2022-2023. But they will no longer be for the period 2023-2024.