Unemployment insurance: compensation, affiliation, reform…


UNEMPLOYMENT INSURANCE. Private employees contribute to unemployment insurance. This allows them to receive an allowance in the event of job loss. The government is considering a new reform.

Unemployment insurance is an allowance paid to private sector employees who have lost their jobs. The rights to compensation are calculated on the basis of the unemployed person’s former salary. Unemployment insurance plays two roles: it helps an unemployed person financially to manage his loss of employment, by maintaining his purchasing power and his living conditions. It also offers a solution for returning to work through personalized support. The allowances are paid during periods of training, business creation or retraining.

Unemployment insurance reform: what changes for the unemployed?

The unemployment insurance reform has been underway since 2019, but new changes are applicable in 2021 and 2022. Here are the four main points of the unemployment insurance reform:

  • new calculation of the allowance;
  • reduction in unemployment benefits (degressivity) for high incomes;
  • bonus-malus on the unemployment contribution;
  • change in the minimum working time to receive unemployment insurance.

This reform provides for the compensation of self-employed workers and resigning employees with a retraining project, under certain conditions. The minimum duration of work to benefit from unemployment benefit increases from 4 months to 6 months of work over the 24 months preceding the end of the last contract.

A new reform in 2022?

LThe executive explained in the summer of 2022 a “rapid return to employment” for the long-term unemployed, indicated the Minister of Labor, Olivier Dussopt, in the columns of Le Parisien. “There is an urgency: that the unemployment insurance reform, decided in 2019 and implemented in 2021 due to the Covid, see its rules extended, he underlined. They expire on November 1, 2022 We want to extend them, to allow this reform to continue to produce its positive effects and to think about the next step.”

The Minister also wishes to modify the unemployment insurance compensation rules, taking into account the economic situation, on the model of what has been put in place in Canada. Several avenues are on the table:

  • Change the duration of compensation for jobseekers
  • Gradually reduce the amount of compensation

“These parameters will be discussed within the framework of the consultation, underlines Olivier Dussopt, attesting that no modality has been decided. As for the transition from a good situation to a degraded situation, it must be objective. This evaluation will pass either through criteria , such as a number of consecutive quarters with an improvement in employment, or by a committee which gives us an opinion.”At the end of the questions to the government in the Senate, the minister reiterated his remarks on Wednesday July 27, 2022.

Unemployment insurance and compensation

Unemployment insurance or ARE (return to work allowance) is calculated on the income of the last 12 months, taking into account the days worked. The unemployment insurance reform provides for new calculation rules, establishing an average monthly income including working days and periods of inactivity. For high salaries, a degressivity may apply to the amount of the allowance, with a reduction of 30% after 8 months of compensation.

Private unemployment insurance

A private unemployment insurance is an insurance which makes it possible to compensate for the drop in income following a loss of employment. It is aimed at business leaders as a main insurance, the latter not benefiting from aid from Pôle Emploi. It can also concern employees, who want help in addition to traditional unemployment insurance.

Affiliation to the unemployment insurance scheme

Unemployment insurance is compulsory for all private sector employees and is financed by them in the form of payroll deductions. All private employers must join the unemployment insurance scheme. Solidarity, the allowance makes it possible to best support former employees with low incomes, who are favored over those who benefited from a high salary.

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