Short-time work / Furlough in France: increasing numbers of checks are being carried out

50,000 checks of employers’ compliance with the short time work scheme in France are expected to be carried out before the end of the summer.

These checks take the form of visits - scheduled or unannounced - or telephone or electronic checks.

They are carried out by officials from Direccte (Regional Departments of Business, Competition, Consumer Affairs, Labor and Employment), who have strengthened their resources by taking on additional labor inspectors.

The labor inspectors will usually target a particular category of employees.  Statistically the group targeted most often are employees who are on an annualized hours or days contract.

The employer is generally required to disclose to the authorities:

• The company's internal rules and regulations and, if it exists, the company's IT policy;
• The employment contracts and pay slips of the employees covered by the audit;
• The email mailboxes of the employees concerned; and
• For each employee, records of each log in to and log out from the employer’s network, Internet connections, emails received and sent, and telephone calls (including detailed phone bills).

Some labor inspectors ask the employer to sort employees’ email inboxes before the inspection into professional and personal emails.

Employers cannot refuse to allow the labor inspectors access to information on the grounds of confidentiality, other than where the information is protected by legal privilege between lawyers and clients, confidential banking information and information between medical professionals and their patients.

The Labor inspectors will appreciate an employer who has a system in place to allow the labor inspector to carry out their work efficiently and without having to look at irrelevant material.

The employer should highlight to the labor inspector any temporary internal procedures for monitoring working time specifically for the purposes of the short-time work scheme.  The same applies to any management communications to explain to employees the importance of scrupulously respecting the hours off work. This will demonstrate the good faith or, at least, the absence of fraudulent intent on the part of the employer. An explanation of the economic rationale for the use of the short-time work scheme will also be helpful even if experience shows that this may not carry much weight with the inspectors.

To date, the majority of checks have resulted in a reassessment. The weak point for SMEs and groups of companies seems to be employees who are used to having a great deal of flexibility in the organization of their working time. The situation of parents of young children and so-called "vulnerable" people also seems to be an area of non compliance with the scheme.

It may be helpful for employers to conduct a mock inspection to enable the employer to be better prepared for an inspection by Direccte.  If the mock inspection reveals any shortcomings, the employer then has an opportunity to correct these before any inspection, and thereby avoid the application of a sanction.

If fraud in the short-time work scheme is discovered, the risks incurred by the company and its legal representative or delegate of criminal liability are mainly:

• Full reimbursement of the allowances wrongly received for the short-time work (for each employee irregularly employed);
• Payment to the employee of salary arrears, together with penalties for late payment and, if applicable, damages;
• The offence of falsification, punishable by two years' imprisonment and a fine of EUR 30,000, which may be combined with any additional penalties, including in particular: a ban on practicing, exclusion from public markets, placing under judicial supervision, administrative closure, a ban on making a public offer of financial securities or having financial securities admitted to trading on a regulated market or a ban on receiving any public aid;
• The offence of undeclared work, punishable by three years' imprisonment and a fine of EUR 45,000 for individuals and EUR 375,000 for corporate bodies, with the same additional penalties as those mentioned above for falsification.

With regard to the criminal charges, the choice is left to the Public Prosecutor's Office.

Employees may be disciplined if they have voluntarily broken the rules established by their employer for the short-time work scheme and/or have made false declarations to their employer.

They could even be reported to the social protection bodies, which could take disciplinary action against them.

There are strategies and methods which employers can use to prepare for and deal with an audit in the best possible way.

The Dechert team is available to discuss the most appropriate one for your company.