An increased time period to 6 months before being able to receive French unemployment benefits, a non-issue for executives?

carence assedic
11/4/2014
Since July 1, unemployment benefits in France will only start to be received after a period of 6 months, in contrast to a previous time period of 2 ½ months. (this is not applicable in situations of unemployment due to a company's financial situation)

What is the real financial cost of this change?

The point to underline is what is the financial cost of this change and whether a negotiation process could very simply alleviate this issue.

For this, we use a calculation based on the concept of purchasing power and show that the 3 ½ months without unemployment benefits correspond to approximately 1 month negotiated severance, i.e. meaning that this is a "non-issue".

3 ½ months with unemployment allowances based on 57% of your previous salary corresponds to two months gross salary. These amounts are then reduced with social charges and income taxes. By taking a marginal tax rate of 41%, the 3 ½ months without unemployment benefits corresponds to 1,2 months of purchasing power; this increases to 1,4 months with a marginal tax rate of 30%.

Alongside this, given the taxation of severance pay and the exemption on income tax on amounts less than € 225,288, the increased time period without being able to claim unemployment benefits can be, in the case of a calculation based on purchasing power, offset by obtaining 1½ months of severance pay, which in the context of a negotiated departure is extremely easy to obtain.

In other words, despite appearances, the lengthening of the time period for beginning to receive unemployment benefits from 2 ½ months to 6 months is a "non-issue" for executives if they are able to negotiate their departure.

Thierry Krief.