Profit-sharing agreements under the Syntec agreement

Incentive and profit-sharing schemes apply to companies governed by the Syntec collective bargaining agreement. What do these bonuses correspond to? How can they be paid out?

Incentive and profit-sharing agreements are employee savings schemes designed to define the terms and conditions for redistributing company profits and results. They can thus encourage employee motivation by associating them with the company’s economic performance.

The law of November 29, 2023 introduced a new mandatory experimental value-sharing scheme for small businesses. This means that employee savings schemes can now be applied to an ever-increasing number of companies. We explain the details of this law below.

What is a profit-sharing agreement?

A profit-sharing agreement pays employees a bonus linked to the company’s performance. Setting up such an agreement is optional.

The Syntec Convention therefore makes no specific provision for this agreement.

To be implemented, profit-sharing must be the subject of a collective agreement. This agreement is concluded for a period of 1 to 5 years and provides for :

Reasons for introducing profit-sharing ;
Criteria for distributing the total amount of profit-sharing among employees ;
The choice of profit-sharing calculation method ;
Dates and conditions for payment of the profit-sharing bonus ;
Procedures for dealing with profit-sharing disputes.

In companies with fewer than 50 employees, profit-sharing may also be introduced by unilateral decision of the employer. In this case, a “procès-verbal de carence” must be filed, less than 4 years old, proving that no employee representative body has requested the introduction of such a scheme, or establishing the failure of negotiations.

The agreement specifies the profit-sharing calculation formula and the criteria for allocation among employees. The distribution can be :

Uniform, i.e. all employees receive the same amount;
Proportional: the bonus received by employees is proportional to their salary or time spent with the company;
Depending on these two modes, the choice of allocation may combine several of these criteria.

What is a profit-sharing agreement?

Profit-sharing is a mandatory employee savings scheme for companies with more than 50 employees. It enables employees to share in the company’s profits.

It can be set up by means of a company-wide collective agreement. The profit-sharing agreement must contain provisions concerning :

The formula used to calculate the special profit-sharing reserve (RSP),
The period of unavailability of beneficiaries’ rights and cases of early release,
Conditions and deadlines for requesting immediate availability of sums,
Reserve allocation methods and ceilings,
The nature and management of beneficiaries’ rights.

The law provides a formula for calculating the amount of the special profit-sharing reserve, i.e. the share of profits to be distributed among employees: [½(B – 5% C)] x [S/V].

B: net income

C: shareholders’ equity

S: salaries

V: company added value

It is possible to provide for another formula, which must then be just as favorable to employees.

As with the profit-sharing scheme, the distribution among employees is based on selected criteria:

Uniformly across all employees,
Proportionally according to salary or time worked,
Or a combination of the above criteria.

The amount of profit-sharing paid out is, by its very nature, uncertain: it depends on the company’s profits for the previous financial year, which may vary from one year to the next. It cannot therefore be determined in advance.

For employees

Each company is required to provide its employees with an employee savings booklet, setting out the employee savings schemes set up within the company, such as a PEE (company savings plan) or a Perco (collective retirement savings plan).

The employee can then request immediate payment of the profit-sharing bonus within 15 days of being informed of the amount due.

Otherwise, the bonus will be placed in the employee’s company savings plan. It will then be available at the end of the blocking period for the plan concerned (5 years for the PEE, until retirement for the Perco), except in the case of early release applicable to the plan.

Premiums invested in an employee savings account are not subject to income tax.

For the company

Amounts paid out under incentive and profit-sharing schemes are exempt from social security contributions and social security charges when the company is below certain thresholds (fewer than 250 employees for incentive schemes and fewer than 50 employees for profit-sharing schemes).

These sums are also deducted from taxable income.

However, two cumulative limits must be respected in order to benefit from profit-sharing exemptions:

Total profit-sharing bonuses paid to all employee beneficiaries may not exceed 20% of total gross salaries paid,
The total amount of profit-sharing received by an employee per year may not exceed €34,776.

What changes?

Since November 29, 2023, a new mandatory experimental value-sharing scheme has also been in force for small businesses. It will run for 5 years from the law’s promulgation, i.e. from November 29, 2023 to November 2028. It concerns :

Companies with 11 or more employees who are not required to set up a profit-sharing scheme.
Companies that have made a net profit for tax purposes equal to at least 1% of sales for three consecutive years.
Please note: Net profit for tax purposes corresponds to the profit taken into account in the legal formula for calculating the special profit-sharing reserve, set out inArticle L.3324-1, 1° of the French Labor Code.

When these conditions are met, you must implement one of the following three measures:

Set up a profit-sharing agreement;
Set up a profit-sharing scheme;
Contribute to an employee savings plan;
Pay a value-sharing bonus.

Important: If your company already implements one of these three schemes, then you will be exempt from this obligation, which you are already implementing in practice.

This obligation will apply to financial years starting on or after January 1, 2025, and the three previous financial years will therefore be taken into account to determine whether or not you need to implement one of these systems.

Naturally, DESRUMAUX AVOCATS will be happy to provide you with further information on these systems, and to help you set them up.

19 January 202417 April 2025

More flexible rules for companies in formation

If you’re running a business, or planning to launch a new entrepreneurial venture, a recent legal development could be of great interest to you (e.g. to acquire a new real estate lease, a business, or simply to contract with a company not yet registered with the RCS, etc.).

The French Supreme Court has recently relaxed the rules governing actions taken on behalf of companies in formation, simplifying the process of setting up and expanding businesses.

Background: in company law, a company in formation is a business in the process of being set up, but which has not yet been officially incorporated as a legal entity.

Articles 1843 of the French Civil Code and L. 210-6 of the French Commercial Code provide that during this formative period, when the company does not yet have a legal personality, individuals may act on behalf of the company in formation to negotiate contracts and perform other acts on behalf of the future company.

At the time, case law imposed very strict formalities for this type of deed, which had to be concluded “by Mr. X, acting in the name or on behalf of the company in formation Y”. Deeds could therefore be annulled if the wording was not reproduced.

From now on, it is no longer necessary to specify this wording when concluding contracts or other legal acts prior to the official registration of your company. This flexibility means that acts carried out in the name of your company, even if it is not yet formally established, will no longer be automatically considered null and void.

Recent rulings by the French Supreme Court (Cour de cassation) have put an end to this severe rule, since the judge hearing a case involving a deed concluded by a company in formation now has the power to assess, on a case-by-case basis, “whether the common intention of the parties was that the deed should be concluded in the name or on behalf of the company in formation, and that this company could then, after acquiring legal personality, decide to take over the commitments entered into” (Cass. Comm, November 29, 2023, no. 22-12865, no. 22-21623 and no. 22-18295).

This decision marks a welcome step towards simplifying procedures for small and medium-sized businesses, giving them greater latitude during the crucial training period.

This is excellent news for entrepreneurs, who will be able to concentrate more on developing their business without fearing the legal consequences of formal errors.

As we await the first rulings following this reversal, we hope that it will simplify the lives and disputes of contractors who were unaware of these strict rules with sometimes serious consequences.

Practical application: previously, if your company entered into a contract with a company in formation, for example for the sale of a batch of computer equipment, and the company in formation failed to specify its status in the contract, the latter could be annulled.

As a result, not only did you lose a potential customer, but you also had to manage the return of sold equipment, a waste of valuable time and resources.

With the relaxation of case law, such complex and costly situations are now less likely to occur, offering greater legal certainty to VSEs/SMEs in their commercial transactions.

9 January 202417 April 2025

Increased vigilance when it comes to signing up pregnant employees to the contrat de sécurisation professionnelle (job security contract)

Our previous article on redundancies highlighted the obligation to offer employees a “contrat de sécurisation professionnelle” (CSP). However, where a pregnant employee is concerned, particular attention must be paid to the justification for dismissal.

In the event of redundancy, employees are obliged to be offered a Contrat de Securisation Professionnelle (CSP). However, particular attention is required when a pregnant employee is concerned.

⏰ An important reminder: Dismissal of a pregnant employee is prohibited, except in cases of gross misconduct or if the position cannot be maintained for reasons unrelated to the pregnancy. Otherwise, breach of contract is considered null and void.

The Cour de cassation (French Supreme Court) points out that the employee’s acceptance of the CSP does not alter this rule. Even in this context, the employer must justify the economic dismissal by demonstrating that maintaining the position is impossible for reasons other than pregnancy.

According to established case law, the existence of an economic reason is not sufficient to justify the termination of an employee’s employment contract during pregnancy.

Also: when the employee concerned is pregnant, the letter of dismissal must indicate the economic reason for dismissal (1) and also justify the impossibility of maintaining the employment contract (2), which must necessarily be unrelated to the pregnancy.

If the two grounds are not included, the termination of the employment contract will be null and void. As a result, the employee will be entitled to claim damages representing at least 6 months’ salary.

⚠ Important: This principle applies in the same way to protected employees in the event of an industrial accident. CSP must not be used as a loophole to circumvent legal protections against dismissal.

In other words, as soon as an employee benefits from protection against dismissal, particular attention must be paid to the grounds for dismissal, whatever the terms of the dismissal: in this case, the conclusion of a CSP is not sufficient to justify the dismissal of a sick employee or a pregnant employee.

We strongly advise you to be vigilant if you are planning to dismiss employees who benefit from special protection under legal provisions.

Naturally, DESRUMAUX AVOCATS will be happy to assist you with your dismissal procedures.

5 September 202329 November 2023

DESRUMAUX AVOCATS takes action for the planet

For almost a year now, the firm has been using ELISE to recycle its corporate waste. Despite all the firm’s efforts to reduce waste production, the use and disposal of large quantities of paper remains an inherent part of the legal profession. In an effort to reduce its environmental impact, the firm calls on ELISE to collect and recycle its waste.

By giving priority to recycling and avoiding the incineration of a large proportion of corporate waste, ELISE and the firm are helping to reduce atmospheric pollution and preserve natural resources.

In addition, ELISE’s workforce is mainly made up of people with disabilities or integration difficulties. By switching from incineration or landfill to recycling used paper, the firm is helping to create 10 times more jobs in the paper and cardboard processing sector.

After almost a year, the firm is very pleased to conclude that ELISE is a professional company, and would like to recommend it to all other companies wishing to reduce their environmental impact.

On a day-to-day basis, the firm pursues its efforts by adapting the insulation of its premises, encouraging teleworking, favoring soft mobility for its journeys, calculating its carbon footprint, etc.

28 July 202329 November 2023

Our support for Opéra National de Bordeaux

At Desrumaux Avocats, we thrive on making Corporate Social Responsibility not just an ideal, but a reality intrinsic to our identity. A staunch advocate of environmental, social and economic impact, we are steadfastly building our future while keeping a watchful eye on the world around us.

In July, we took a new turn, adding another string to our bow by joining the Opera Club. We are now proud to support the Opéra National de Bordeaux for the 2023-2024 artistic season.

For us, this commitment is much more than just a financial contribution. It is the materialization of our desire to contribute to the development of culture, an inseparable element of our vision of corporate citizenship.

Within the Opera Club, our role is not limited to promoting culture. We’re doing our bit to promote the artistic heritage of our beautiful New Aquitaine region.

Our membership of the club was also propelled by the ambition to broaden our social influence, beyond the cultural sphere. We support and admire the Opera’s commitment to social inclusion, through its initiation and awareness programs aimed at various groups, including young people and the disadvantaged.

So it’s with overflowing enthusiasm that our entire team is delighted to share this new adventure with you. As a supporter of the Opera, we look forward to sharing with you our progress towards a world where culture and solidarity are one.

Stay tuned to our newsletter to follow our exciting journey towards a more responsible and culturally rich future.

11 June 202310 February 2025

6 major advantages for adopting internal rules in your company

Whatever the size of your company, adopting a set of internal rules can transform your working environment and bring significant benefits. Here’s why you should take the plunge:

1. Reinforce Fairness and Transparency: Internal rules provide a clear structure for managing discipline, defining a system of sanctions that reflects your fair-minded approach. It prepares your employees to anticipate the consequences of their actions, propagating a respectful and collaborative working atmosphere.

Practical benefit: Employees are well informed of their rights and obligations, which prevents misunderstandings and facilitates problem-solving.

2. Be the Master of Operational Excellence: With internal regulations as your compass, clearly state your hygiene, health and safety standards. This promotes optimum adherence to protocols, minimizes incidents and boosts productivity.

Practical benefit: It reduces the risk of occupational accidents and illnesses, ensuring the protection of your employees and the peace of mind of your business.

3. Assert your corporate identity: The internal regulations are the mirror image of your company. In addition to highlighting specific details, they express your values, principles and expectations. It’s the ideal channel for conveying your company’s spirit and identity.

Practical benefit: It helps align employee behaviors with the company’s vision and objectives, thus facilitating the achievement of strategic goals.

4. Harmonize understanding : internal regulations ensure that company rules are clearly understood by all. They relieve employment contracts of repetitive standards, leaving room for job-specific clauses.

Practical benefit: It facilitates the integration of new employees and ensures better cooperation between teams thanks to a shared understanding of company rules.

5. Make internal regulations your CSR ally: Internal regulations are an invaluable support for your CSR actions. They can incorporate principles of eco-responsibility, respect for human rights and ethics, propelling your company towards a sustainable and respectful future.

Practical benefit: It enhances your reputation as a responsible company, attracting customers and talent who value ethics and sustainability.

6. Reinforce your corporate culture: internal regulations are the ideal tool for consolidating your corporate culture. Whether you want to encourage collaboration, innovation, diversity, integrity or other core values, they ensure that they are integrated and understood by all employees. This helps to attract and retain talent aligned with these same values, strengthening your team’s unity and performance.

Practical benefit: It helps improve employee engagement, foster a positive work environment and boost overall company performance.

Setting up internal regulations is simpler than it sounds. Once drawn up, all you have to do is send it to the labor inspectorate and the clerk’s office of the relevant industrial tribunal. Its flexibility allows you to modify it at any time, so that it always keeps pace with changes in your company.

Don’t wait any longer, take control of your company with well thought-out internal regulations!

Our firm, DESRUMAUX AVOCATS, is at your disposal to help you draw up and implement this essential document.

12 May 202310 February 2025

Mandatory clauses in general terms and conditions of sale

You’ve decided to draw up General Terms and Conditions of Sale to govern your business activity and your relationship with your professional customers. You’re wondering what must be included.

Article L. 441-1 of the French Commercial Code stipulates that general terms and conditions of sale must include two elements: (i) price-determining elements (such as the scale of unit prices and any price reductions) and (ii) terms of payment.

Elements of price determination

The unit price list

The December 8, 2005 circular on commercial relations sums up expectations in terms of pricing very well.

“A price list is not compulsory. In fact, it can only exist if the activity in question lends itself to its elaboration. This does not apply to products and services based on quotations. Similarly, the prices of certain products, particularly agricultural products, are subject to price fluctuations that preclude the establishment of a price list.

On the other hand, the seller is not prohibited from drawing up several price lists for several categories of customers to whom he markets his products or services.

Price reductions

This term covers three types of discount: rebates (immediate reductions in the price of a good or service), discounts (commercial price reductions granted in the event of quality defects, late delivery or non-conformity of the order) and rebates (reimbursement to the customer of part of the amount already paid). The amount and terms and conditions under which any buyer may benefit from these discounts must appear in the general terms and conditions of sale .

Terms of payment

These are all the terms and conditions under which the customer’s obligation to pay the price is to be fulfilled.
At the very least, the terms of payment specify the payment deadlines and penalties for late payment.

Payment terms

The French Commercial Code sets a maximum payment term of 45 days end of month, or 60 days from the date of invoice. However, this period may be contractually extended when the contract provides for an acceptance or verification procedure to certify the conformity of the goods or services, and explicitly provides for the extension of the maximum payment term.

However, this must not have the effect of unreasonably delaying the start of payment terms.

Penalties for late payment

By law, the interest rate for late payment is “equal to the interest rate applied by the European Central Bank to its most recent refinancing operation, plus 10 percentage points”. It is possible to derogate from this rule, but the late payment interest rate cannot in any case be less than three times the legal interest rate.

N.B.: this article concerns the General Terms and Conditions of Sale for business customers only. The General Sales Conditions for private customers include other mandatory clauses.

Posted on 12 May 202310 February 2025
Communication and acceptance of terms and conditions of sale: what are your obligations?

You’ve drawn up General Terms and Conditions of Sale, or had them drawn up, but you don’t know how or when to pass them on to your customers. This is not a question to be taken lightly. Too many professionals have GTCs that cannot be applied, and are therefore completely useless to them, because they have not been properly communicated to customers. The first paragraph of article 1119 of the French Civil Code stipulates that: “the general terms and conditions invoked by a party shall only have effect with regard to the other party if they have been brought to the latter’s knowledge and if the latter has accepted them”. The General Terms and Conditions of Sale are a contract; they cannot be applied to your customers by you alone. Your customers must have read and accepted your General Terms and Conditions of Sale before ordering from you. It is important to break down the two phases of this obligation:

1. Read our terms and conditions

2. Accept T&Cs

For example, a customer may sign that they have accepted the terms and conditions, but if you have never given them to them, and they are not available online, then they have not been able to read them, and the conditions have not been met. Similarly, a customer may have received the General Terms and Conditions, sent with the quotation for example, but if he does not certify that he has signed them, the conditions are not fulfilled. We recommend that our customers always attach their terms and conditions to the customer’s quotation or order form, and ensure that both are signed at the same time. There are a number of software programs available to automate this process, or online signature software, which enable you to quickly get your customers to sign your terms and conditions, and keep electronic proof of this signature.
An example from our practice
We drew up general terms and conditions for a customer specializing in home services. He forgot to communicate them and have them signed by a client in a hurry to set up the service. A dispute arose between the two parties, and the failure to communicate the GTCs put our client in a difficult position. The dispute is still ongoing.

Posted on 12 May 202310 February 2025
Off-premises contracts: concept and obligations

The French Consumer Code governs relations between professionals and consumers (individuals acting in a private capacity). It grants consumers a number of particularly protective rights, including the right of withdrawal and the obligation to provide pre-contractual information.

Under certain conditions, certain provisions of consumer law may apply to certain professionals. These include the right of withdrawal.

You must offer your customer a right of withdrawal if :

The contract is concluded off-site; and

The subject of the contract does not fall within the customer’s main field of activity (e.g.: contract for the creation of a website when the customer has a gardening business); and

The customer has 5 employees or less.

What is an off-premises contract?

This contract is defined in article L. 221-1 of the French Consumer Code, which applies in particular to contracts concluded at a place of sale which is not the seller’s usual place of business (a fair, exhibition, promotional excursion, etc.) or concluded at the seller’s usual place of business immediately after a meeting at such a place.

If your sales process falls into this category, or is likely to do so on the occasion of a particular event, you need to adapt your General Terms and Conditions of Sale.

In particular, you must :

Insert the specific information required by article L. 221-5 of the French Consumer Code;

Include all the special provisions applicable to off-premises contracts set out in the Consumer Code;

Establish a right of withdrawal.

Professionals operating at trade fairs and exhibitions are particularly likely to have their General Terms and Conditions of Sale reviewed by the relevant authorities.

Posted on 5 May 202310 February 2025
Right of withdrawal: who pays for postage?

What is the right of withdrawal?

The right of withdrawal is a right granted by law to individual consumers. It enables them to cancel a purchase and request a refund, without having to give any reason.

The right of withdrawal applies in the following cases:

When the purchase has been made remotely (by telephone, internet, etc.)

When the purchase was made at a door-to-door sale

When the purchase was made at a fair or exhibition

Consumers generally have 14 days to exercise their right of withdrawal, from the date of receipt of the order.

It is important to note that the right of withdrawal does not apply to all types of goods or services. For example, it does not apply to personalized goods or services that have already been fully completed.

Who benefits from the right of withdrawal?

The right of withdrawal is granted to consumers, i.e. natural persons who act for purposes that are not part of their professional activity.

It is important to note that the right of withdrawal does not apply to legal entities or professionals purchasing goods or services in the course of their business. The latter must refer to the general conditions of sale, which are specific to each contract.

Does the company have to reimburse shipping costs?

A distinction must be made between two types of shipping costs: shipping costs and return shipping costs.

The cost of sending the product from the professional to the consumer: these costs must be reimbursed to the consumer. This is clearly stipulated in article L221-24 of the French Consumer Code, which states that “when the right of withdrawal is exercised, the professional shall reimburse the consumer for all sums paid, including delivery costs”.

The cost of returning the product from the consumer to the professional: the consumer bears the cost of returning the product under two conditions:

The professional must have informed the consumer that this cost will be borne by him. It is therefore important that this be stated in the General Terms and Conditions of Sale.

The product must be able to be returned normally by post. For products that cannot be returned due to their nature, the seller will collect the goods at its own expense.

What impact does this have on the General Terms and Conditions of Sale?

The French Consumer Code requires that the General Terms and Conditions of Sale of a company targeting consumers detail the scope and conditions for implementing the right of withdrawal, and present a specific withdrawal form.

In addition, to avoid having to bear the cost of returning the product, it is advisable to inform the consumer that these costs will be borne by him or her.

Generally speaking, if your business is aimed at individuals, you are required to include a certain number of compulsory clauses in your General Terms and Conditions of Sale. We can help you navigate your obligations and draw up a document that clearly sets out your rights and obligations.

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