๐ Quick Summary
| ๐ท๏ธ Section | ๐ Summary |
|---|---|
| โ๏ธ Definition | The monthly payment law requires employers to maintain salary in case of work suspension. |
| ๐ฐ Obligations | The employer must complete the benefits paid by social security. |
| ๐ฅ Compensation | Three entities are involved: social security, the employer, and the prevention insurance. |
| ๐ Conditions | The employee must have at least 1 year of service, submit a medical leave, and be covered by social security. |
| โ ๏ธ Limitations | The compensation varies according to seniority and collective agreements. |
The monthly payment law in insurance is an important topic affecting many insured individuals. This law was implemented to enable insured persons to pay their premiums regularly and in installments throughout the year. In this blog post, we will explain in detail what the law of monthly payments in insurance is and how it works.
What is the law of monthly payments in insurance?
The law of monthly payment in insurance is a legal provision that allows policyholders to pay their premium on a monthly basis, rather than making a single payment at the start of the year. This law was introduced in France in 1972 to facilitate budget management for policyholders and prevent premium non-payments.
The monthly payment of the premium works as follows: the annual premium amount is divided into 12 equal monthly installments, which are automatically deducted each month from the insured’s bank account. Thus, the insured no longer needs to worry about paying a lump sum each year, and can spread the cost of their insurance over the entire year.
The amount of the monthly premium is calculated based on the annual premium and the number of months in the year. It is important to note that the monthly payment should not incur additional fees for the insured, unless these are explicitly mentioned in the contract.
In case of cancellation of the insurance contract during the year, the insured may be obliged to settle premiums owed up to the date of termination. Conversely, if the monthly premium is not paid, the insurer can terminate the contract after a certain period, typically 10 days after sending a payment notice.
How does the monthly payment of insurance premiums work?
The monthly payment of insurance premiums allows the cost to be spread over the year by paying regular monthly installments instead of a one-time premium at the beginning of the year. The amount of the monthly premium is calculated by dividing the annual premium by 12.
The calculation of the monthly premium can be influenced by various factors, such as the type of insurance subscribed, the policyholder’s age and profile, the coverages chosen, the geographic area, etc. Consequently, the monthly premium may vary depending on these different criteria.
The payment of monthly premiums is generally made via automatic debit from the insured’s bank account. The insurer requests the insured to sign an automatic debit mandate authorizing the insurer to deduct the premium amount each month from the insured’s bank account.
It is important to note that the monthly payment of the insurance premium should not incur additional fees, unless explicitly stated in the contract. Therefore, the insured should carefully read the general conditions of their insurance contract to understand any potential fees related to monthly payments.
In case of non-payment of the monthly premium, the insurer can terminate the contract after a certain period, usually 10 days after issuing a payment notice. It is therefore essential to ensure that the insured’s bank account is sufficiently funded to avoid missed payments.
The advantages and disadvantages of monthly premium payments
Paying premiums monthly offers several benefits for the insured:
- A better budget management: Monthly payments allow the insured to better manage their budget by spreading the cost over the year instead of paying a large sum at once.
- Ease of payment: Automatic debit of installments means the insured doesnโt need to worry about paying their premium each month.
- Changing needs: Monthly payments make it easier for the insured to adapt to evolving insurance needs and to change their contract more easily.
- Ability to add coverages: The insured can also add extra coverages to their contract throughout the year.
However, opting for monthly premium payments might also have some drawbacks:
- Additional fees: Some insurance companies may charge extra fees for monthly payments. The insured should carefully read the general conditions of their contract.
- Higher total cost: Monthly payment plans can lead to a higher overall cost, especially due to additional fees mentioned earlier.
- Faster contract termination: If a monthly premium is not paid, the insurer can terminate the contract more quickly than for an annual premium.
Itโs also important to ensure all premiums owed are paid and to check for any cancellation fees.
๐ What is the law of monthly payments in insurance?
The law of monthly payments, established in 1978, is a key legal provision to guarantee the financial stability of employees in case of work suspension due to illness or accident. It requires employers in the private sector to maintain part of their employeesโ wages in addition to the daily allowances paid by social security.
๐ A Protective Legal Framework
This law is embedded in the Labor Code and automatically applies to all employees, with some exceptions. Indeed, seasonal workers, temporary workers, and temporary agency workers are not covered by this arrangement because their activity is sporadic or irregular.
The primary goal of this law is to limit income loss for employees on temporary incapacity. Without this protection, a sick leave could cause a drastic decrease in salary, making it difficult to pay fixed expenses such as rent, loans, or daily expenses.
๐ A Tripartite System
Compensation for work absences is based on a tripartite system involving three main actors:
-
Social Security: It pays daily allowances (IJSS) representing 50 % of the gross salary of the employee, after a three-day waiting period. These allowances are capped and may therefore be insufficient to maintain a decent standard of living.
-
Employer: Required by the law of the monthly payment system, the employer must partially supplement the employeeโs salary during the leave, based on their seniority and collective provisions. This supplement can reach up to 90% of the gross salary during an initial period, then 66.66% during a second period.
-
Additional supplementary insurance (if subscribed by the employer or required by the collective agreement): It can take over when the legal salary maintenance period by the employer ends. Some contracts may even guarantee 100% of the salary, thus reducing the financial impact of a prolonged work stoppage.
| ๐ฏ Actor | ๐ก Role in Compensation |
|---|---|
| ๐๏ธ Social Security | Pays 50% of the gross salary |
| ๐ข Employer | Completes the benefits to up to 90% of gross salary |
| ๐ Additional supplementary insurance | Can extend and improve the benefit coverage based on the signed contract |
๐ Variable duration of compensation
The duration of salary maintenance by the employer depends directly on the employeeโs seniority. The longer the employee has worked in the company, the longer their right to compensation is extended.
Example:
-
An employee with 2 years of seniority can receive 30 days at 90%, then 30 days at 66.66%.
-
An employee with 15 years of seniority may benefit from 50 days at 90%, followed by 50 days at 66.66%.
| โณ Seniority | ๐ฐ 90% of salary | ๐ฐ 66.66% of salary |
|---|---|---|
| 1 to 6 years | 30 days | 30 days |
| 6 to 11 years | 40 days | 40 days |
| 11 to 16 years | 50 days | 50 days |
| 16 to 21 years | 60 days | 60 days |
| 21 to 26 years | 70 days | 70 days |
| 26 to 31 years | 80 days | 80 days |
| > 31 years | 90 days | 90 days |
โ ๏ธ Obligations and Limits
Although this law efficiently protects employees, it also involves certain constraints for companies:
-
Cost for the employer: Maintaining salaries entails a financial burden for the company, especially when sick leave cases multiply.
-
Cap on benefits: The benefit paid by social security is calculated based on a capped salary, which may be insufficient for some employees.
-
Waiting period: The employee is only compensated starting from the 4th day of leave (except in cases of work accident or professional illness).
| โ ๏ธ Limitation | โ Impact |
|---|---|
| ๐ฐ High cost | The employer must bear an additional expense. |
| ๐ Benefit ceiling | Social security does not cover full salary. |
| โณ Waiting period | Benefits begin from the 4th day of leave. |
๐ Why is this law essential?
Without this law, employees on leave would only receive 50% of their salary, often an insufficient amount to cover their fixed expenses. Thanks to the salary maintenance provided by the employer and complemented by a supplementary insurance, they can access broader coverage and avoid financial difficulties.
This law is thus a pillar of social protection in the workplace, ensuring employees financial security while imposing a significant social responsibility on employers.
โ Employer obligations
The employer is responsible for paying a supplementary salary to employees on leave, to guarantee income maintenance. This arrangement is regulated by the law of monthly payments, but some collective agreements may add additional guarantees for employees.
The supplementary salary paid by the employer is added to the daily allowances paid by social security and allows covering part or all of the employeeโs salary during their leave.
๐ Conditions to benefit from salary maintenance
For an employee to benefit from salary maintenance, certain conditions must be met:
| ๐ Conditions | โ Details |
|---|---|
| ๐ข Required seniority | The employee must prove at least 1 year of service in the company on the first day of leave. |
| ๐ Valid medical leave | The leave must be prescribed by a doctor and be recognized by social security. |
| ๐ฅ Compensation by social security | The employee must be eligible for IJSS (Daily Allowances of Social Security). |
| ๐ Coverage area | Care must be performed in France or in a European Economic Area country. |
๐ Duration and amount of salary maintenance
The employer is required to complete the employeeโs salary according to their seniority and applicable legal or collective provisions.
| โณ Seniority | ๐ฐ 90% of salary | ๐ฐ 66.66% of salary |
|---|---|---|
| 1 to 6 years | 30 days | 30 days |
| 6 to 11 years | 40 days | 40 days |
| 11 to 16 years | 50 days | 50 days |
| 16 to 21 years | 60 days | 60 days |
| 21 to 26 years | 70 days | 70 days |
| 26 to 31 years | 80 days | 80 days |
| > 31 years | 90 days | 90 days |
-
First 30 days of leave are compensated at 90% of gross salary.
-
Following 30 days are compensated at 66.66% of gross salary.
-
The period of compensation increases by 10 days every 5 years of seniority, up to a maximum of 90 days.
๐ Example:
An employee with 12 years of seniority will receive 50 days of compensation at 90%, then 50 days at 66.66%.
Particular cases and collective agreement improvements
Some collective agreements provide for more favorable conditions, including:
-
Elimination of the waiting period: Compensation begins from the first day of leave instead of the eighth day.
-
Extension of salary maintenance: Some agreements provide for compensation up to 150 days or more.
-
100% compensation: Some companies guarantee an entire salary maintenance for their employees during absence.
Examples:
-
The CCN 66 (social sector) provides 100% of salary during 3 months.
-
The Esthetics Collective Agreement guarantees 90% of salary during the first 30 days, then 80% (instead of 66.66%).
โ ๏ธ Limitations of salary maintenance
Although this obligation protects employees, it also imposes constraints on employers:
| โ ๏ธ Limitation | โ Impact |
|---|---|
| ๐ฐ High financial burden for the employer | The obligation to maintain salary represents a significant financial cost for companies. |
| ๐ Benefit cap | Social security does not cover the entire salary. |
| โณ Waiting period | The employee only receives compensation starting from the 8th day of leave (except in specific cases). |
๐ก Solution: To reduce these costs, some companies subscribe to a group insurance plan, which covers part or all of these expenses.
๐ฅ Who pays for salary maintenance?
The compensation for work stoppages relies on a tripartite system, involving three main actors:
-
Social Security: It pays daily allowances (IJSS) covering 50% of the gross daily salary, after a three-day waiting period. These allowances are calculated based on the average salary of the last three months, but they are capped, which can lead to income loss for high-earning employees.
-
Employer: Responsible for completing the salary to ensure partial income maintenance, based on seniority and collective agreements. This supplement can provide up to 90% of the salary during the first 30 days, then 66.66% for an additional period.
-
Additional supplementary insurance: If the company has taken out a comprehensive insurance, it can take over benefits once the legal salary guarantee period by the employer ends. Some plans may even guarantee 100% of the salary, thus reducing the financial burden of a prolonged work stoppage.
| ๐ฐ Payment Source | ๐ Details |
|---|---|
| ๐๏ธ Social Security | 50% of the daily gross salary, after a 3-day waiting period. |
| ๐ข Employer | 90% of the gross salary during the 30 days, then 66.66% for the following 30 days. |
| ๐ Supplementary insurance | Can extend benefits and cover up to 100% of salary. |
๐ Detailed functioning of each actor
๐๏ธ The role of Social Security
Social Security plays a fundamental role in compensating employees on leave.
-
It pays daily allowances (IJSS), calculated based on the gross salary of the last three months.
-
The amount is capped at 1.8 times the minimum wage (about 62.46 โฌ gross per day in 2024).
-
The waiting period is 3 days, except in cases of work accident or occupational disease, where compensation begins from the first day.
-
Compensation can last up to 360 days over a 3-year period, or 3 years in case of Long-Term Illness (LTI).
๐ Example: An employee with a gross monthly salary of โฌ3,000 will receive social security benefits amounting to 50% of their gross daily salary, approximately โฌ32 per day.
๐ข Employerโs intervention
The employer must partially maintain the salary, alongside the daily allowances from Social Security.
-
This maintenance is mandatory for employees with at least 1 year of seniority.
-
Compensation follows a progressive scale based on employee seniority.
-
The first 30 days are compensated at 90% of gross salary, then at 66.66% of gross salary for the following 30 days.
๐ Example:
A employee with a gross salary of โฌ3,000 will receive:
-
โฌ2,700 gross during the first 30 days.
-
โฌ2,000 gross during the next 30 days.
However, some collective agreements provide for more favorable conditions, such as full salary compensation or a waiver of the waiting period.
๐ Role of supplementary insurance
When the employer’s compensation period ends, a supplementary insurance contract can extend coverage.
-
This coverage is not mandatory, except for executives, for whom a death insurance is required by the National Collective Agreement for Executives (article 7 of the agreement of March 14, 1947).
-
The coverage can guarantee up to 100% of salary, preventing significant income loss in case of extended leave.
-
It generally takes over after 90 days of work stoppage, but some plans provide for immediate coverage after employer intervention.
๐ Example:
An employee with additional coverage insurance can receive 100% of their salary after 60 days covered by the employer.
โ Limitations of salary maintenance
Although this system protects employees, it also has certain limits:
| โ ๏ธ Limitation | โ Impact |
|---|---|
| ๐ฐ High cost for the employer | The obligation to maintain salary entails a significant financial burden. |
| ๐ Benefit ceiling | Social security does not cover high wages. |
| โณ Waiting period | The benefits are only paid from the 8th day of leave, except in special cases. |
๐ Role of supplementary insurance
The supplementary insurance plays an essential role in maintaining salary during prolonged work stoppages. It allows employers to protect financially against costs related to benefits and helps employees maintain a stable income.
This contract may be mandatory or optional depending on the status of the employee and the collective agreements applicable within the company.
๐ Why subscribe to group insurance?
Supplementary insurance complements benefits paid by social security and the employer, especially when the legal salary maintenance period ends. It helps prevent income loss during extended leave and reduce costs for the company.
๐ก Example: Without supplementary insurance, an employee off work for more than 90 days only receives social security daily allowances, which are often insufficient to cover their usual salary.
| โ Advantages of supplementary insurance | ๐ Details |
|---|---|
| ๐ฐ Income maintenance | Completes benefits up to 100% of salary. |
| ๐ข Financial protection for the company | Limits costs related to salary maintenance. |
| ๐ Long-term coverage | Provides coverage for absences beyond the legal employerโs maintenance. |
| โณ Flexibility of coverage | Adapts to the specific needs of each company. |
๐๏ธ Obligation for executives, optional for other employees
-
For executives, a group insurance contract is mandatory. Article 7 of the National Collective Agreement for Executives (March 14, 1947) requires employers to subscribe to a death coverage insurance for executives, with a company contribution of at least 1.50% of gross salary.
-
For other employees, the insurance remains optional, unless a sector agreement or collective agreement mandates it.
๐ Types of franchises in insurance
A group insurance contract includes various franchises, defining when and how compensation is triggered after a work stoppage.
| ๐ท๏ธ Type of franchise | ๐ Explanation |
|---|---|
| โณ Fixed franchise | The insurer covers benefits after a set delay (e.g., 30, 60, or 90 days). |
| ๐ Discontinuous franchise | It covers repeated absences by accumulating them over a specific period. |
| ๐ Relay franchise | The insurance takes over after the end of the employerโs salary maintenance. |
๐ก Example:
-
An employee with a fixed franchise of 90 days will only receive benefits from the insurance after 3 months of leave.
-
With a relay franchise, the benefits will be paid immediately after the 60 days of employer compensation.
โ ๏ธ Points of vigilance for the employer
Subscribing to a group insurance is a strategic decision for the company. Here are some key points to watch:
-
Cost of the premium: The broader the coverage , the higher the insurance cost.
-
Franchise delay: Too long a delay can leave the employee resource-less before the contract is activated.
-
Benefit level: Some insurances cover 100% of salary, others only 70% or 80%.
๐ Beneficiaries of the law of monthly payments
โ Who is affected by this law?
The law of monthly payments applies to all employees in the private sector, regardless of their contract type (permanent, fixed-term, full-time, or part-time). It concerns all companies, as long as they employ staff, whether small, medium, or large organizations.
It requires employers to ensure salary maintenance for employees on sick leave or accident leave, in addition to the daily allowances of social security (IJSS).
โ Excluded employees
However, certain employees are not covered by the law of monthly payments:
-
Seasonal workers: Their employment is limited in time, so they are not eligible for salary maintenance.
-
Intermittent workers: Since their activity is based on sporadic missions, they do not qualify for this guarantee.
-
Temporary workers: Although they are employees of a temporary work agency, they are not directly covered by the law of monthly payments.
๐ Specific cases
Some employees may fall into a grey area regarding the application of the law:
-
Telecommuters: The law generally applies, unless specific provisions are in their employment contract.
-
Executives and equivalent: They are covered by the law and, in some cases, by more favorable guarantees through their collective agreement.
-
Apprentices and interns: Apprentices benefit from salary maintenance, but interns do not, as they are not considered employees in the strict sense.
๐ Calculation of salary maintenance
โ Detailed explanation
The amount of salary maintenance depends on several factors:
-
Employeeโs seniority
-
Reference salary (typically the last 3 months of gross salary before the leave)
-
Social security daily allowances (IJSS)
-
Company or branch collective agreements
๐ Differences between gross salary and net benefits
Compensation is calculated based on the gross salary, but the benefits received are often lower than the usual net salary.
๐ก Calculation details:
| ๐ท๏ธ Element | ๐ Calculation |
|---|---|
| IJSS (Social Security Daily Allowances) | 50% of the daily base gross salary, capped at 1.8 times the minimum wage |
| Employerโs supplementary (90% of salary) | 90% of gross salary โ IJSS |
| Employerโs supplementary (66.66% of salary) | 66.66% of gross salary โ IJSS |
๐ Numbered examples
Case 1: An employee earning โฌ3,000 gross per month with 5 years seniority.
-
IJSS (50% of the daily salary) = โฌ1,500 / month
-
Employerโs salary maintenance (90% – IJSS) = โฌ1,200
-
Total income = โฌ2,700 for 30 days, then โฌ2,000 (66.66% – IJSS) for the next 30 days.
โ๏ธ Evolution of the law of monthly payments
๐ History and reforms
The law of monthly payments was established in 1978, but it has undergone several developments:
-
1978: Adoption of the law of monthly payments, requiring employers to maintain salary.
-
2008: Changes to waiting periods and improvement of benefit conditions with the law of June 25, 2008.
๐ Recent modifications
-
Reduction of waiting periods in certain sectors.
-
Harmonization of benefit rates with collective agreements.
๐๏ธ Prospects for evolution
-
Reform proposals to extend the salary maintenance period.
-
Reducing inequalities among different employee categories.
๐ Administrative obligations of the employer
๐ Procedures to follow
The employer must:
โ
Declare the work stoppage to the CPAM within 48 hours.
โ
Provide a salary certificate for calculating IJSS.
โ
Pay the salary supplement according to the modalities defined by law.
โ ๏ธ Sanctions for non-compliance
-
Late declaration = financial penalties.
-
Non-payment of benefits = labor tribunal dispute.
๐ Practical advice
-
Use an absence management software.
-
Ensure that sector agreements are properly taken into account.
๐ Economic impact on companies
๐ฐ Cost of salary maintenance
Maintaining salaries is a significant expense for employers.
| ๐ Element | ๐ Potential Cost |
|---|---|
| Maintaining at 90% of salary | Can represent 40 to 50% of total cost |
| Maintaining at 66.66% | Lower burden, but still impactful |
๐ข Strategies to limit costs
-
Subscribe to a group insurance plan.
-
Adjust sector agreements for better cost distribution.
๐ Comparison with other European countries
| ๐ช๐บ Country | ๐ฐ Benefit rate | โณ Maximum duration |
|---|---|---|
| ๐ซ๐ท France | 90% then 66.66% | Up to 180 days |
| ๐ฉ๐ช Germany | 100% | 6 weeks, then 70% for 72 weeks |
| ๐ช๐ธ Spain | 75% | Up to 365 days |
| ๐ฌ๐ง United Kingdom | About 50% | 28 weeks |
๐ก Analysis:
Germany offers a more generous compensation.
The United Kingdom has a more limited coverage.
๐ Recourse in case of disputes
โ๏ธ Employees’ rights
If an employer fails to pay salary maintenance, the employee can:
-
Send a formal notice.
-
Bring a claim to the labor tribunal.
-
Alert the URSSAF in case of irregularities.
๐ Procedures to follow
-
Average delay for filing a claim with the labor tribunal: 6 to 12 months.
-
Retroactive compensation is possible if successful.
๐ก Advice for employers
-
Verify the applicable collective agreement.
-
Keep a record of payments to prevent disputes.
๐ Conclusion
The law of monthly payments in insurance protects employees in cases of illness or accident. It requires employers to maintain a part of the salary, in addition to the social security daily allowances.
The supplementary insurance can provide additional protection, but involves a cost for the company. It is therefore essential to carefully compare offers and analyze collective agreements before choosing an appropriate contract.
๐ Key points:
โ
The monthly payment system guarantees a minimum income in case of work stoppage.
โ
The employeeโs seniority determines the duration of compensation.
โ
A prevention contract helps secure the companyโs finances.
Further reading
Conclusion
The law of monthly payments in insurance is an important topic for all insured individuals. It allows them to pay their premiums regularly and in installments throughout the year. In this blog post, we have explained in detail what the law of monthly payments in insurance is and how it works. We hope that this article has helped you better understand this subject.
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