Previously, overtime hours were exempted from taxes for the employee and benefited from a partial reduction of social security contribution for employees and employers.

The public finance act modifying the 2012 budget, dated August 16, 2012, modifies this treatment:  

  • As of August 1, 2012, overtime hours are subject to tax;
  • As of September 1, 2012, overtime hours are subject to social security contributions for the employees.

Specific rules are provided to determine the date of application of the Act in the cases where the employee working time is not calculated on a weekly basis.

However, companies with less than 20 employees will continue to benefit from the social security standard deduction, provided that they meet the requirements set forth in article L. 241-18 of the French Social Security Code (the employer has complied with the requirements stated in the Act and/or in the relevant collective bargaining agreement regarding working time, etc.).  

A decree dated September 21, 2012, confirms that the standard deduction will still amount to €1.50 per hour (or €10.50 per day for the employees who are subject to an annual number of working days).