Compulsory personal protection insurance and the 1.50% contribution on bracket 1 salaries

Ever since the signing of the 14 March 1947 National Collective Agreement (CCN ) on pensions and personal protection insurance for managerial staff , the question of compulsory personal protection insurance and an interpretation of the 1.50% rule for Tranche 1 (bracket 1) salaries has continued to raise questions and fuel debate, within consultancy firms and, more recently, before the courts.

Under Article 7 of the 14 March 1947 CCN, reiterated in Article 1 of the 17 November 2017 Inter-professional National Agreement (INA[1]) relating to personal protection for managerial staff, an employer undertakes to pay contributions to an insurer for “managerial and similar” staff (as defined in article 2 of the 17 November 2017ANI, formerly articles 4 and 4 bis of the 14 March 2017 CCN ). This compulsory contribution, exclusively at the employer’s expense, amounts to 1.50% of Tranche 1 and is allocated as a priority to cover death benefits. [1] Accord national interprofessionnel – ANI. The 17 November 2017 agreement merged the supplementary pension schemes for managerial staff (Agirc) and non-managerial staff (Arrco)  into a body to be known as Agirc-Arrco.

For over 75 years now, this obligation has fuelled controversy over application of the contribution. The term “personal protection”, used in the founding text, left room for interpretation. Should it be taken to mean only serious risks (death, incapacity and disability) or could this term include other risks? Such as healthcare?

Both in the original text and its repetition in the 2017 ANI, the authors only specify that the 1.50% contribution for compulsory personal protection must be allocated “as a priority” to cover benefits in the event of death. There is no mention as to what proportion nor any definition of what the 1.50% is calculated on.

Such questions on compulsory personal protection have not been brought up before the courts and, for a long time, have merely been regulated by a letter on 26 August 1994 from the organisation AGIRC specifying that “as a priority means that more than half of the 1.50% compulsory contribution must be devoted to covering the death risk…“, i.e. a minimum contribution of 0.76% of Tranche 1.

0.74% remains then to be allocated, thereby fuelling debate, right up to the present time, as to doctrine and market issues.

The distinction between “personal protection” (death, incapacity and disability risks) and “complementary health insurance” (medical expenses) has led some legal writers to consider, prudently, that the remaining 0.74% could only be allocated to serious risks (such as incapacity or disability). By extension, only the personal protection contribution should be taken into account to assess compliance with the employer obligation.

The teams at Gerep, based on our expertise in analysing regulations, believe that the above-mentioned distinction is merely common terminology but in no way inherent in the founding texts, and therefore does not prevent taking into account the employer’s contribution to a health insurance scheme. This is the basis of the advice we give to our clients when putting in place their social insurance schemes.

This analysis has now, firstly, been borne out by the Paris Court of Appeal[1], which took a broad view of the notion of compulsory personal protection noting that, despite a distinction made in 2013 by the legislator between Health costs and Serious personal protection risks, the 14 March 1947 CCN and the subsequent 17 November 2017 ANI do not exclude health costs from the benefits of compulsory personal protection to be financed through the employer’s minimum contribution. This ruling, one of the first on the issue (and the first based on the 17 November 2017 ANI), has set a precedent – in the absence of any decision by the Court of Cassation[2]. [1] Cour d’Appel de Paris (Paris Court of Appeal), 6 February 2020, no. 18/20112 Pôle 6 – Chamber 2 [2] The Cour de cassation (Court of cassation) is the highest court in the French judiciary.

There has now been a recent High Court[1] decision, which has validated the interpretation adopted by the Paris Court of Appeal. [1] Decision by the Court of cassation, social chamber on 30 March 2022, no. 20-15022, “Syndicat Avenir v Sopra Steria”.

The Court of Cassation has adhered to the interpretation that neither the 14 March 1947 CCN nor the 17 November 2017 ANI excluded healthcare schemes from the notion of personal protection, but merely provided for priority allocation of contributions to the death risk. It has therefore approved that, in order to assess an employer’s compliance with the obligation to contribute to personal protection cover, “the employer’s contribution to financing healthcare cover must be taken into account“.

This decision confirms the practical approach taken by Gerep over several years and thus protects our clients’ existing schemes.

Other questions remain unresolved and will most certainly generate new case law, such as the case of a managerial employee who claims to be exempt from affiliation – far from being a textbook case – or an updating of AGIRC’s 1947 position, to better reflect current thinking and insurance needs.

Cour d’Appel de Paris (Paris Court of Appeal), 6 February 2020, no. 18/20112 Pôle 6 – Chamber 2

The Cour de cassation (Court of cassation) is the highest court in the French judiciary.

Decision by the Court of cassation, social chamber on 30 March 2022, no. 20-15022, “Syndicat Avenir v Sopra Steria”.