Leave / part-time work to create a company?
This article will explore various aspects of the Entrepreneurial Leave Law, including eligibility criteria, rights and obligations, procedures, and more, providing clear guidance for entrepreneurs.
In France, the Entrepreneurial Leave Law aims to encourage and support employees in pursuing their entrepreneurial dreams. This regulation allows eligible employees to temporarily leave their positions to start a new business or take on entrepreneurial responsibilities.
This article will explore various aspects of the Entrepreneurial Leave Law, including eligibility criteria, rights and obligations, procedures, and more, providing clear guidance for entrepreneurs.
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Table of Contents
- Who Is Eligible?
- What Are the Benefits?
- Procedure at the Start of Leave
1. Who Is Eligible?
1.1. Principles of Leave or Part-Time Work for Starting or Taking Over a Business
Employees starting or taking over a business have the right, under certain conditions of length of service:
- To take leave.
- To work part-time.
If considering part-time work, the duration of this period is provided for in an appendix to the employment contract under Article L. 3123-6 of the Labor Code. Any employee requesting an extension of the part-time work period must sign a new contract appendix under the same conditions.
These provisions also apply to employees holding management positions within the company at the time of their leave application if the company meets the criteria for a young innovative enterprise as defined by Article 44 sexies-0 A of the General Tax Code at the time of the employee's leave application.
In assessing the required length of service, any service in other companies of the same group by the employee will be taken into account. The above provisions are statutory and therefore cannot be modified by a collective agreement or industry agreement.
1.2. Length of Service
For employees eligible for leave or part-time work, the length of service required is determined by the collective agreement or agreement of the company or industry.
In the absence of a collective agreement or agreement, this period is 24 months, which can be continuous or discontinuous, within the company.
Employees should be able to understand the agreements and agreements applicable to their company. To do this, according to the provisions of the Labor Code:
- The ways in which employees and union representatives understand the industry agreement are defined by the industry agreement or professional agreement,
- In the absence of provisions of these methods by a collective agreement or agreement, the employer has the following obligations:
- Under Articles R. 1221-34 and R. 1221-35 of the Labor Code, inform employees of the agreements and collective agreements applicable to the company or institution,
- Provide employees with copies of these documents in the workplace,
- In companies with intranets, provide copies of these documents.
In addition, any communication to employees by any means includes the titles of the agreements and agreements applicable to the institution. The notification specifies the location of the documents in the workplace and the way employees can view the documents during work.
Employees can also contact representatives within the company (members of the Works Council elected, union representatives, etc.) or their Regional Directorate for Business, Competition, Consumption, Labor, and Employment (DREETS - DDETS).
Finally, it should be noted that:
- The text of the Labor Code as well as the texts of agreements signed since September 1, 2017, can be found on the Legifrance website.
2. What Are the Benefits?
2.1. Retention of Employment Contract
Employees on leave still belong to the company, but the employer is not required to pay their salary.
Employees do not accrue any seniority or paid leave. If employees choose part-time work, they are paid according to the number of hours worked during part-time. To compensate for income loss, employees can use their time savings account.
Employees can request to defer their accrued annual leave days; the conditions for this deferral are provided for in the company's collective agreement or agreement. If not provided in the collective agreement or agreement, employees can request to defer annual leave until the date of departure, and this can be deferred for up to 6 years from the end of entrepreneurial leave. If employees choose this option, they will receive a compensatory allowance calculated based on paid annual leave upon leaving during the entrepreneurial leave period.
2.2. Long-Term Leave or Part-Time Work
The maximum duration of leave or part-time work and the number of renewals of this leave or part-time work are determined by the company's collective agreement or agreement. The agreement or agreement also determines the conditions for maintaining contact between the company and the employee during the leave period and the way in which professional adaptation and return to work are handled when the employee returns.
If there is no such agreement or agreement, the following provisions apply:
- The maximum duration of leave or part-time work is one year;
- It can be extended for up to one year.
2.3. No Right to Return Early
Employees granted entrepreneurial leave do not have the right to request an early return to work before the end of the leave period. Similarly, employees who have signed a contract appendix to switch to part-time work do not have the right to request full-time work before the end of the contract.
2.4. Options at the End of Leave or Part-Time Work
Upon the expiration of leave, employees can choose to:
- Rejoin the company, allowing them to resume their previous job or a similar one, and receive equivalent pay. If it's part-time work, employees can resume full-time work after part-time work and receive compensation of at least the same as the previous salary;
- Terminate the employment relationship under the conditions provided in the employment contract (without the obligation to fulfill the obligation of prior notice). Employees are thus exempted from paying severance pay.
The conditions for notifying the employer whether they wish to continue or terminate their employment contract are determined by the company's or industry's collective agreement or agreement.
If there is no agreement or agreement, employees must notify the employer in writing at least 3 months before the end of entrepreneurial leave by any means (e.g., email with receipt or read receipt, fax, registered letter with acknowledgment of receipt, return of registered letter with acknowledgment of receipt...).
2.5. Guarantees Upon Return to the Company
Employees returning to work after the expiration of entrepreneurial leave are entitled to the following guarantees:
- They can resume their previous job or a similar one and receive at least equivalent pay,
- When necessary, they are entitled to professional adaptation, especially when there are changes in work techniques or methods.
If it's part-time work, employees can resume full-time work after part-time work and receive compensation of at least the same as the previous salary.
3. Procedure at the Start of Leave
3.1. Employee's Application
Company or industry collective agreements or agreements provide:
- The employee notifies the employer of the date on which they wish to start leave/part-time, the desired reduction in working
time/extent, and the expected duration of the leave or part-time work.
- Conditions and deadlines for extending leave or part-time work.
If there is no agreement or agreement:
- The employee must notify the employer in writing at least 2 months before the start of entrepreneurial leave or part-time work, expressing their desire to enjoy this leave or part-time work. It should be specified: the nature of the business planned to be started or taken over, the duration of the leave, or the desired reduction in working time,
- Requests for extension of granted leave or part-time work must be communicated to the employer in writing at least two months before their expiry, specifying the exact date.
3.2. Employer's Response
Agreement or disagreement
If the employer does not respond within 30 days after the employee's initial leave or renewal request, it is considered that the employer has agreed to the employee's request.
6-month unconditional extension
Upon receipt of the employee's request, the employer may postpone the start of the employee's leave or part-time work for up to 6 months, which does not affect the possibility of subsequent postponement or refusal.
The employer notifies the employee in writing with an exact date.
Conditional postponement
Employers can postpone the start of the employee's leave or part-time work in two ways (these provisions are statutory):
- When the employee's leave would result in the simultaneous absence of too many employees or too many days of absence due to leave and annual leave exceeds the maximum percentage of the total number of employees and working days of the company, the employer can postpone the employee's leave.
- In companies with at least 300 employees, if the number of employees on leave at the same time is too high and increases the proportion of part-time employees hired, the employer can postpone the start of part-time work. The employer notifies the employee of their intention to postpone signing the appendix allowing the switch to part-time work in writing with an exact date.
These conditions are determined by the company's collective agreement or agreement. If there is no agreement or agreement, the following provisions apply:
- Employers can postpone the employee's leave to ensure that the proportion of employees absent at the same time due to leave or holding management responsibilities for young innovative enterprises does not exceed 2% of the total number of employees in the company until the date or planned leave period during which the days of absence due to leave or leave do not exceed 2% of the total number of days worked in the last 12 months. This 12-month period can be extended to 48 months to allow employees to take leave.
- In companies with at least 300 employees, employers can postpone the start of the employee's part-time work if the simultaneous participation of employees in part-time work exceeds 2% of the total number of employees in the company until the date on which this ratio is met.
Refusal
In companies with fewer than 300 employees, employers can refuse to provide leave or part-time work (these provisions are statutory):
- If, after consultation with the Works Council, the employer believes that such leave or part-time work would adversely affect the company's normal operation;
- If the employee requests leave or part-time work less than 3 years after a previous entrepreneurial endeavor or taking over, or assuming management responsibilities for young innovative enterprises.
Employers need to state the reasons for refusal and inform the employee. This notification should be in writing with an exact date.
Employees have 15 days after receiving the refusal to challenge the employer's decision.
In case of dispute, the Labor Court will expedite the procedure based on the final outcome.
The Entrepreneurial Leave Law provides valuable support and protection for French entrepreneurs. By allowing employees to temporarily leave their jobs to pursue entrepreneurial endeavors, this law fosters innovation and entrepreneurship. While enjoying entrepreneurial leave, employees should adhere to the relevant conditions and procedures to ensure a smooth return to their jobs or an opportunity to reintegrate into the workforce.
We hope this article has been helpful in understanding the Entrepreneurial Leave Law, and we wish you success in your entrepreneurial journey!
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Whether you're a freelancer, startup, or established enterprise, Micco offers the tools and support needed to streamline financial operations and drive business growth. Check out Micco today to discover how it can complement your business banking needs.
