Law firm specialising in employment law
and social security law.
Law firm specialising in employment law
and social security law.
Employers have a number of obligations in terms of health insurance, provident schemes and pensions. What are these obligations and what happens if the employer fails to meet them? That's the subject of this article.
Since 1 January 2016, employers have been required to offer all their employees compulsory supplementary healthcare cover that guarantees a minimum level of reimbursement of the costs incurred by the employee in the event of illness, maternity or accident. This minimum cover, known as the "minimum basket", covers all or part of the expenses listed in articles L.911-7 and D.911-1 of the Social Security Code.
What is the minimum basket?
The minimum health expenses cover offered to employees must cover the full cost of the co-payment, i.e. the part of the cost remaining to be paid by the insured on any expenditure reimbursed by social security on the basis of the conventional tariff, in particular on consultations, procedures and services reimbursable by health insurance, with certain exclusions. This supplementary scheme must also cover the full daily hospital charge, dental expenses up to 125% of the standard rate and optical expenses on a flat-rate basis, per 2-year period for adults and annually for children, with a minimum cover set at 100 euros for a simple correction and 150 or even 200 euros for a complex correction.
Financing exempt from social security contributions under certain conditions
At the very least, half of the funding for this scheme is provided by the employer, in addition to a higher contribution obligation that may arise from the collective agreement applicable to the employer's branch.
Note that to be exempt from social security contributions, the employer's contribution must finance a "responsible" contract, i.e. one that respects the reimbursement ceilings set by the regulations and encourages compliance with the coordinated healthcare pathway. The contract must also be "solidarity-based", with contributions varying according to the state of health of the individuals covered.
Compulsory nature of the scheme unless waived
Cover is compulsory for all employees, subject to the employee's right to opt out, which is provided for in the legal instrument and set out in article R.242-1-6 2° of the Social Security Code, on the one hand, and the exemptions from entitlement set out in articles L.911-7 and D.911-2 of the Social Security Code, on the other.
In principle, employers are under no obligation to take out a contract covering incapacity, invalidity and death under the collective provident scheme.
However, if the collective agreement or branch agreement to which the employer belongs mentions this, the employer is obliged to set it up.
In addition, provident cover for managerial staff is made compulsory by article 7 of the National Collective Agreement for Managerial Staff of 14 March 1947. Under this agreement, an employer's contribution must be paid in respect of each of the company's managerial or managerial equivalent employees. The contribution to the executive provident scheme is 1.50% of salary band A (up to the social security ceiling). This contribution must be devoted first and foremost to death cover. The death benefit contract therefore covers at least the death of the member employee, but may extend to cover the death of the employee's spouse, children or civil partnership partner. The employer is free to define the level of cover provided by the policy.
When it comes to pensions, employers are obliged to contribute to employees' basic pensions as well as to supplementary pensions (AGIRC / ARRCO).
Employers may sometimes set up so-called supplementary pension schemes (Article 39 or Article 83 of the General Tax Code), which require certain conditions to be met in order to be validly set up and allow exemption from the contributions paid.
It should be noted that in order to be exempt from social security contributions for provident or supplementary pension schemes, the employer's contribution must finance a compulsory collective scheme.
However, if the employer does not comply with the obligations set out above, he risks financial penalties in the event of litigation, in addition to URSSAF reassessments.
Employers who fail to meet their obligation to cover healthcare costs are liable to various financial penalties.
In the event of non-affiliation with the mutual health insurance scheme, as indicated by the Aix-en-Provence Court of Appeal, the employer may be ordered to pay damages (650 euros in this case, CA d'Aix-en-Provence, 1 July 2022, no. 19/02045, or a total of 3,000 euros including non-affiliation, CA Lyon, 5 May 2017, no. 16/00253).
The employer may also be ordered to repay the employee contributions unduly deducted for the mutual insurance scheme, as the Versailles Court of Appeal did (in the amount of €1,763.30 in this case CA Versailles, 10 February 2022, no. 19/02561).
On the other hand, when the employer is not responsible for the lack of affiliation, case law does not, in principle, require the employer to reimburse the costs incurred by the employee or to pay damages. This was the case, for example, in a ruling by the Amiens Court of Appeal in which the signed documents had never been returned by the employee (Amiens Court of Appeal, 18 November 2021, no. 20/05322).
Where affiliation is only late, the courts are more lenient with companies. In a ruling by the Paris Court of Appeal, a company was ordered to pay damages representing 50% of the amount the employee had paid to join a mutual insurance scheme on his own initiative (Paris Court of Appeal, 31 March 2022, no. 19/08207).
Obviously, when late affiliation is the result of a lack of diligence on the part of the employee, the employer is not at fault (CA Aix en Provence, 2 June 2022, no. 21/07376).
Lack of cover for executives
In the event of the death of a manager who is not affiliated to a provident scheme, the loss suffered as a result of non-compliance with this obligation is compensated by the payment of a lump sum equal to 3 times the annual social security ceiling (hereinafter "PASS") provided for in article 7 of the National Collective Agreement for Managers of 14 March 1947, i.e. 139,104 euros in 2024. Although not specified in the text, it is settled case law that compensation for this loss should be accompanied by compensation for the loss of opportunity to receive a death benefit and one or more education annuities.
The Douai Court of Appeal ordered an employer to pay this compensation for the loss of chance of receiving a lump-sum death benefit amounting to 146,808 euros and for the loss of chance of receiving an education annuity amounting to 41,585 euros (Douai Court of Appeal, 20 May 2021, no. 17/06918).
Case law is changing!
In a recent ruling (Douai Court of Appeal, 8 February 2024, no. 22/03391), the Douai Court of Appeal ordered an employer to pay 5,000 euros in full compensation for the victim's non-material loss "without loss or profit to the victim", in a situation where the employee demonstrated that she had suffered both non-material loss and financial hardship as a result of not joining the provident scheme following the death of her husband.
It remains to be seen whether this case law, which is still isolated, will be applied more widely when the claimant highlights a moral prejudice.
Where the employer has not fulfilled its obligation to join the provident scheme for managerial staff and the employee is still alive, the employer must rectify the situation, and must therefore pay any overpayments that have not been remitted to the insurer, as well as damages for failure to join the provident scheme for managerial staff.
Lack of cover imposed by the collective agreement
As explained above, the obligation to take out provident cover may also result from the collective agreement applicable to the company. In this case, case law provides for sanctions similar to those mentioned above:
However, where failure to join the scheme causes no harm to the employee, the employer may not be liable to pay any compensation, as indicated by the Reims Court of Appeal in a case where the employee should have been covered by a provident scheme from the start of his contract but did not suffer any harm as a result (Reims Court of Appeal, 7 October 2020, no. 19/01321).
Failure to pay pension contributions may also result in the company being fined.
Where the employer is late in paying pension contributions, it may be ordered to pay damages and to regularise the missing pension contributions. In this regard, the Amiens Court of Appeal ordered the company to pay damages of €500 and to pay the outstanding contributions (CA Amiens, 18 November 2021, no. 20/05322).
Similarly, where contributions have simply not been paid by the employer, the company may be ordered to pay damages to compensate for the loss suffered. The Aix en Provence Court of Appeal ordered the employer to pay the sum of €1,500 in this respect (CA Aix en Provence, 26 January 2023, no. 20/05046).
In a ruling handed down on 20 September 2023, the Lyon Court of Appeal also pointed out that the failure to take into account several quarters constituted a loss of opportunity, compensation for which should be assessed in the light of the opportunity lost and could not, on the other hand, be equal to the advantage that this opportunity would have provided if it had been realised. In this case, the company was ordered to pay the employee the sum of 10,000 euros in compensation for his loss (which included various losses) (Lyon Court of Appeal, 20 September 2023, no. 21-06860).