French national assembly adopted Thursday a series of measures on overtime hours, which recommends tax deduction on these hours from the employees' taxable payroll, and the reduction of social contributions by both the employer and the employee.
According to the French press Thursday, this system, which enters into force from October 1 2007, constitutes the first article of the labor law, employment and purchase power (TEPA) which was presented by the French minister for economy Christine Lagarde and has been debated as a matter of top priority since Tuesday by law makers.
The parliamentary session ended after the adoption of this article, which was amended about a hundred times. Deliberation on this text will resume Thursday morning, because the government has indicated its wish to have it adopted before the end of the extraordinary session on August 3.
According to this article, whose review required nearly seven hours of discussions Wednesday, the new measures envisage "to exonerate tax on salary earned on account of overtime and supplementary hours" and to "reduce social contributions by both employee and employer on account of these hours."
The law makers also passed a series of amendments, including that concerning a 25 percent hourly salary increase for overtime hours for all companies, including those with more then 20 employees, which is currently subjected to a rate of 10 percent for the first four hours.
It also proposes, in return, a fixed reduction of social contributions until December 31, 2008 which should be fixed by decree at 1.5 euros (about 2 U.S. dollars) per hour for companies with more than 20 employees and at 0.5 euros for others.
During her speech in parliament, Lagarde said the cost of overtime hours will be 6 billion euros per year for the state, or "more than half the total cost" of the draft law, estimated at between 10 to 11 billion euros."
TEPA project forecasts the putting in place of a system known as RSA (active solidarity revenue), reviewing of "golden parachutes," tax credit on property loan interest, the lowering of fiscal shield at 50 percent from the current 60 percent, and the abolishing of inheritance tax for the surviving spouse. (1 euro = 1.34 U.S. dollars)