Posted Jul 20, 2022, 12:33 PMUpdated on Jul 20, 2022 at 12:36 PM
Purchasing power, and in particular the remuneration of work, is the subject that worries the French the most. While a forced increase in wages, with a rise in the minimum wage, is rejected by part of the political class who fear that it will weaken companies, alternatives are sought so that work pays more. Among them, the company profit-sharing bonus.
1. How does the company profit-sharing bonus work?
The incentive bonus is a bonus proportional to the results or performance of the company. This is a system that allows the company’s profits to be shared while encouraging employees to contribute more to its results.
The profit-sharing bonus is set up thanks to an agreement, either at company level or at branch level. Capped, the bonus can be either uniform or proportional to the salary and/or working time of each employee. This is an employee savings plan: the recipient can choose to place their premium in an employee savings plan or a time savings account.
2. Who is concerned?
The establishment of a profit-sharing agreement is not mandatory. On the other hand, any company can set up such a system, whatever its legal form, its number of employees or its field of activity. According to Dares, in 2020, 14.7% of companies with 10 or more employees had a profit-sharing scheme, more than two out of five employees were concerned.
It should be noted, however, that the same year, less than 10% of companies had paid a bonus and 30.4% of employees received one, ie 4.4 million workers. Excluding the crisis, about 11% of companies distributed profit-sharing, and some 35% of employees were affected, ie some 5 million people.
3. How much does it pay?
According to Dares, the average profit-sharing bonus was 1,850 euros in 2020. This is slightly less than in 2019 (1,909 euros) and 2018 (1,888 euros). In total, 8.2 billion euros were distributed in 2020 thanks to profit-sharing, compared to 5.1 billion euros in 2019.
4. What could the purchasing power law change?
To develop these agreements within SMEs, an article of the purchasing power bill allows for a profit-sharing system on the “unilateral decision” of business leaders. Thus, employees will be able to benefit from the scheme in the absence of staff representative bodies or in the event of failure of negotiations, when the company is not covered by an approved branch agreement providing for a profit-sharing scheme.
5. Why is this device not unanimous?
For the defenders of profit-sharing, it is a balanced device which allows an increase in the income of employees when the company is doing well, without the risk of increasing its costs in the event of a decline in activity.
But for its defenders, this device is a “decoy”. Indeed, the payment of a profit-sharing bonus is conditional on the company’s results. Unlike a rise in wages, it is therefore uncertain.
6. Are profit-sharing schemes more developed abroad?
According to the European Foundation for the Improvement of Living and Working Conditions, France is one of the countries where profit-sharing is the most developed in Europe. According to a report by this European Union agency, in 2016, 41% of companies had profit-sharing arrangements (profit-sharing or participation, this distinction not being made in all countries).
By way of comparison, the countries where these schemes were the most developed were Lithuania (53% of companies concerned), the Czech Republic (51%), Finland (51%) and Austria (46%). On the contrary, Germany (30%), Italy (18%) and Spain (25%) did less well.
Do not confuse profit-sharing and participation
The profit-sharing bonus is not to be confused with the participation bonus, which is compulsory for companies with 50 or more employees. The employees then receive a portion of the profits, as in the context of a profit-sharing agreement.