Types of compensation in the event of sick leave

Understanding sick leave at micro- and macro-economic levels is a major challenge for public policy. That's why researchers and institutions are increasingly interested in their analysis.

In France, there are three types of compensation for work stoppage. Firstly, a portion paid by Social Security, from the 4th day in the event of sick leave (and from the 1st day in the event of an accident at work). Secondly, a part paid at 100% by the employer: the "mensualisation" or "Garantie Maintien de Salaire" (GMS), from the 8th day in the case of the legal minimum. Finally, the complementary provident scheme generally takes over from the mensualisation during the work stoppage phase (incapacity) and the consolidated phase (invalidity).

The sick leave compensation system comprises several components that can be grouped schematically into three stages. There are essentially historical reasons for this organization. Social protection schemes have often been set up on a professional basis, and the generalization and standardization of social coverage has been achieved by ensuring a universal minimum level of protection, while preserving the specificity of supplementary protection decided on a professional basis.

We can therefore distinguish three levels of compensation for employees who are off work. The first stage, compulsory and uniform, constitutes a universal minimum guarantee. It includes Social Security benefits and the employer's minimum supplementary benefit. The French Labor Code provides for a minimum wage supplement from the employer, with a waiting period of 7 days.

The second tier consists of the specific provisions of the collective bargaining agreement to which the employee may be subject. The employer is obliged to apply at least the provisions of the collective bargaining agreement to which the employee is subject. These must also comply with the day-to-day legal provisions, even if the collective agreement provisions themselves are more favorable at the start of the compensation period, e.g. 100% of gross salary from the 1st day of sick leave (Interpretation by the Social Security Department).

This level is highly heterogeneous, as the provisions laid down, negotiated between employers and employees at branch level, differ widely from one collective agreement to another. Finally, the third tier, which is optional and heterogeneous within branches, offers an additional annuity when coverage linked to the first two tiers is incomplete. This is negotiated at company level, and may form part of the benefits of any supplementary provident scheme taken out by the employer.

Social Security

The French Social Security system recognizes two types of sick leave: sick leave/accident in the private sphere and sick leave due to an accident at work, commuting accident or occupational disease (ATTMP). Whatever the cause, an accident at work is defined as an event affecting an employee or any other person on company premises for work-related reasons. An accident on the way to or from work is also considered to be an accident at work if it occurs on the way to or from the place where the employee usually takes his or her meals. Occupational illness is the direct consequence of a worker's habitual exposure to a physical, chemical or biological hazard, or results from the conditions under which he or she carries out his or her professional activity.

The conditions of seniority and the level of compensation are often more favorable in the case of ATTMP. For the sake of clarity, we will only present the rules for sick leave/accident in private life, which are those that interest us in understanding the drift of work stoppages. These are the main types of absence compensated by supplementary benefit plans.

In the case of sick leave/accident in private life, Social Security covers the replacement of salary (average gross salary over the last 3 or 12 months, whichever is more favourable), under certain conditions, after a waiting period of 3 days, at 50% of gross salary up to a limit of 1.8 SMIC, i.e. 3,144.96 euros per month as at May 1, 2023.

It should also be noted that the Social Security organization pays a maximum of 12 months' IJSS per period of 3 consecutive years in the event of incapacity for work. In the event of long-term illness (ALD), IJSS are paid for 3 years. ALDs are serious and/or chronic illnesses qualifying for 100% coverage by the French health insurance system, such as diabetes, cancer, cystic fibrosis and human immunodeficiency virus (HIV) infection. Finally, in the event of disability, Social Security once again intervenes under different conditions.

Garantie Maintien de Salaire

In the event of illness or accident, GMS (garantie maintien de salaire) obliges the employer to pay the employee's salary, sometimes independently of the daily allowances paid by Social Security. Under article 7 of the national interprofessional agreement of December 10, 1977, made compulsory by the "mensualisation" law of January 19, 1978, in the event of incapacity for work, the employer is obliged to pay employees, subject to certain conditions, continued remuneration for a fixed period, depending on the employee's seniority and the length of the benefit period.

In the absence of more favorable provisions in the branch collective bargaining agreement or a collective labor agreement, employees may benefit from the salary maintenance guarantee provided that they have one year's seniority, that their absence from work is justified, that their absence is covered by Social Security and that they actually receive IJSS, and that they are being treated in France or in one of the member states of the European Union.

Employees benefiting from the additional compensation provided by the French Labor Code are entitled to 90% of their gross salary for 30 days, and 2/3 for the following 30 days. These periods of compensation are increased by 10 days for each period of 5 years of seniority beyond the first year, without exceeding 90 days.

Disability benefit

Disability cover acts as a relay or top-up to salary continuation cover. This is the part of the daily benefits paid by the insurers in addition to the amounts paid by Social Security. It is generally used to replace the 1st or 2nd period monthly indemnity when there are two indemnity periods, or to top up the second. In addition, the deductible may be continuous or discontinuous (i.e. accumulated) over a rolling twelve-month period or a calendar year.

During this period, only Social Security reimbursements are compulsory and uniform, corresponding to a universal minimum guarantee. For the employee to be better covered, special provisions must be included in the collective agreement to which the employee may be subject, and/or supplementary cover must have been negotiated at company level.

It is important to note that supplementary provident insurance only comes into play if Social Security benefits are paid. In practical terms, Social Security recognition is a prerequisite for coverage by GMS and the employer's complementary health insurance scheme. However, there are generally solutions available to cover, for example, very short part-time work or the very start of an activity, where the minimum number of hours is not worked, i.e. when the employee does not meet the administrative conditions to benefit from these cash benefits.