Understanding Net Guarantee Processing

This section provides an overview of the net guarantee, and discusses:

  • Managing the net guarantee calculation.

  • Adding deductions to the net guarantee calculation.

  • Viewing the delivered net guarantee deduction.

French law requires employers to pay a guaranteed percentage of a payee's gross salary during the time that the payee is on sick leave, subject to certain conditions. Alternatively, some collective agreements stipulate a guaranteed percentage of a payee's net salary during a payee's sick leave.

Many collective agreements stipulate that the allowance paid to a payee during the payee's illness, after deduction of the social security daily allowances, cannot result in the payee's net salary exceeding the net salary earned when the payee is not on sick leave. This is called the guarantee on the net salary (garantie sur le net).

The law stipulates a guarantee on the gross salary. For companies not bound by a collective agreement, the guarantee on the net salary does not have to be applied. However, most companies in France are bound by a collective agreement. Also, most companies apply the net guarantee rule because it is generally considered a fair way to do business. However, in some cases, such as with small companies without a collective agreement or a collective agreement without any reference to the net guarantee, the net guarantee does not have to be considered.

Global Payroll for France provides rules to manage the net guarantee calculation.

Note: Most elements created specifically for the net guarantee calculation are named with a prefix of GEN or a suffix of GN. This enables you to easily identify the relevant elements.

The Net Guarantee Calculation

The net guarantee calculation is managed through a sub-process section (GEN SE GARANTI NET) and the following are the steps in the calculation:

  1. The net guarantee sub-process section is triggered if there are social security daily allowances (Indemnités Journalières de Sécurité Sociale or "IJSS")—that is, if the accumulator GEN AC IJSS GN SG is over zero. The condition formula GEN FM COND NET GA is used to trigger the sub-process section.

  2. The formula GEN FM INIT initializes the sub-process section. The formula populates the variable GEN VR IERE ITERAT to indicate that the system is processing the first loop.

  3. The processing loop begins. The formula GEN FM NB ITERAT is processed at the beginning of each loop. This formula populates the variable GEN VR NB ITERAT with the value of the number of iterations (for example, GEN VR NB ITERAT will be equal to five during the fifth iteration). To exit the loop, the variable GEN VR EXIT, used in the condition formula GEN FM EXIT, must be equal to FALSE.

  4. The net guarantee section GEN SE IJSS AJUST is triggered. This section stores the adjustments that are being calculated iteratively. The section GEN SE IJSS AJUST includes the deduction IJSS AJUST. This section and this deduction are also used during "normal" processing (that is, outside the sub-process section) and IJSS AJUST is equal to the adjustment calculated in the sub-process section.

  5. During the first iteration of processing, the modification of the gross salary is calculated. The formula GEN FM MODIF BRUT populates a variable with the amount of the IJSS, and this variable is a member of the accumulator GEN AC BRUT SG. Then the net salary, without the impact of the IJSS, is calculated. This produces a target net salary.

  6. The various sections created specifically for the net guarantee calculation are triggered using the same condition formula and in the same order as the regular contributions sections in the process list.

  7. The formula GEN FM RAZ VR GN is resolved, and the indicator variables are set to zero. If you create a formula using the same logic as GEN FM RAZ VR GN, the formula must resolve to set the indicator variable to zero. Your new formula must be inserted into the sub-process section immediately after the formula GEN FM RAZ VR GN.

    If you create any formulas using the same logic as the one described in the section Understanding Net Guarantee Formulas, the indicator variables you create must be set to zero. Such a formula must have the same goal as GEN FM RAZ VR NG (that is, to set the indicator variables equal to zero). Your new formula must be inserted into the sub-process section immediately after the formula GEN FM RAZ VR GN.

  8. The target net salary is calculated during the first iteration. The formula GEN FM NET GARANT calculates the target net salary and stores the result in the variable GEN VR NET A PAYER. The target net to pay is equal to net salary calculated during the first iteration (that is, gross salary, without impact of the IJSS, minus the contributions). This net salary is reduced by the amount of the net IJSS, which is the IJSS reduced by the CSG and CRDS.

  9. The IJSS adjustment is calculated. The formula GEN FM GARANTI NET calculates the IJSS adjustment if there is still more than one cent of difference between the net salary and the target net salary. The adjustment calculated during each iteration is equal to the difference between the net salary and the target net salary multiplied by a contribution rate stored in the variable GEN VR TAUX FIXE. This amount is added to the previous value of the IJSS adjustment. If the difference between the net salary and the target net salary is lower than the value stored in the variable GEN VR DELTA NET, the variable used as an indicator of the last iteration (GEN VR DERN ITERAT) and the variable used to exit the loop (GEN VR EXIT) is populated.

  10. The IJSS adjustment is limited so that the IJSS plus the IJSS adjustment are not greater than the appropriate salary upholding for the month.

  11. The sub-process section is stopped, and the normal process list continues processing.

The maximum number of iterations for this process is 15. If the difference between the net salary and the target net salary is higher than the value of GEN VR DELTA NET after the fifteenth iteration, the processing loop is stopped, the IJSS adjustment is set equal to the last amount calculated, and a warning message appears letting you know that the calculation of the IJSS adjustment is inaccurate.

The variable GEN VR CALC GN is used in the condition formula GEN FM COND NET GA to trigger the calculation of the net guarantee sub-process section. By default, GEN VR CALC GN is equal to True (1), which means that the net guarantee is processed when the accumulator GEN AC IJSS GN SG is over zero.

Note: If you want to avoid the calculation of the net guarantee and want to directly enter an amount for the IJSS adjustment, override the variable GEN VR CALC GN to False (0) and enter the value of the adjustment in the variable GEN VR AJUSTEMENT.

If your organization does not want to use the calculation of the net guarantee, there are several possible solutions, some of which are:

  • Override the variable GEN VR CALC GN to false (0) at the payee level if you just want to avoid the calculation for one specific payee.

  • Override the variable GEN VR CALC GN to false at the pay entity level. Then, the adjustment will not be calculated for organizations where the adjustment does not need to be calculated (for example, when following a collective agreement).

  • Create a process list without the sub-process section GEN SE GARANTI NET and use this process list for organizations where the net guarantee does not need to be performed.

  • Modify the condition formula GEN FM COND NET GA. This formula is PeopleSoft delivered, but not maintained. Create your own logic to trigger, or not trigger, the net guarantee calculation according to your needs.

Note: PeopleSoft strongly recommends that you define the pay entity equal to Company when using the delivered rules for France.

See Setting Up Sections, Setting Up Process Lists.

Net Guarantee Formulas

PeopleSoft designed the net guarantee rules to allow the recalculation of elements in the sub-process section without excessive degradation of the system's performance.

The goal of the sub-process section is to create processing loops (or iterations) for some elements. During each loop, some of the elements have another value and must be recalculated. These elements are therefore defined to always recalculate. The rules use logic that maximizes performance during each processing loop. When formulas are used several times in the process or in the sub-process, their results are stored in variables.

When using these formulas, the system follows these steps:

  1. Test if the variable indicator is equal to True or False.

  2. If the variable indicator is equal to False, the formula is triggered and its result is stored in a variable.

  3. If the variable indicator is equal to True, the system does not trigger the formula because the system knows the formulas has already been calculated and the result has already been stored in a variable.

  4. The system uses the result stored in the variable (and not the formula itself).

  5. At the end of the sub-process section, the variable indicators are set to zero by the formula GEN FM RAZ VR GN and are then ready to be recalculated during a new iteration.

For example, the formula ARC FM BRUT ABAT is used to determine the gross salary, after reduction for specific jobs, used in the ARRCO contributions calculation. This formula needs to be recalculated during each iteration, but is used by the formulas ARC FM CALC BASE A, ARC FM CALC BASE 1, and ARC FM CALC BASE 2. The result of the formula ARC FM BRUT ABAT is stored in the variable ARC VR BRUT ABAT, and the variable indicator ARC VR BRUT ABA DC stores the value True (1) when the formula ARC FM BRUT ABAT is calculated.

When Global Payroll for France needs the gross salary for ARRCO contributions in the formula ARC FM CALC BASE A, for example, the system firsts tests the value of the variable indicator. If this variable is equal to False, the system triggers the calculation of the formula ARC FM BRUT ABAT and then uses the result stored in the variable ARC VR BRUT ABAT. If the variable ARC VR BRUT ABA DC retrieves the value True, the system does not trigger the formula ARC FM BRUT ABAT and can instead use the result already stored in the variable.

Formula Name

Variable Result

Variable Indicator

AGI FM BRUT ABAT

AGI VR BRUT ABAT

AGI VR BRUT ABA DC

AGI FM CALC BASE B

AGI VR CALC BASE B

AGI VR CAL BA B DC

ARC FM BRUT ABAT

ARC VR BRUT ABAT

ARC VR BRUT ABA DC

URS FM BASE A

URS VR BASE A

URS VR BASE A DC

URS FM BRUT ABAT

URS VR BRUT ABA 2

URS VR BRUT ABA DC

This section discusses how you add deductions to the net guarantee calculation.

Creating Deductions

If you create any deductions that need to be included in the net guarantee calculation and need to use formulas triggered several times in the process, apply the same logic (explained in the previous section) as the PeopleSoft-delivered elements.

If you need to use the results of the formulas AGI FM BRUT ABAT, AGI FM CALC BASE B, ARC FM BRUT ABAT, URS FM BASE A, and URS FM BRUT ABAT, use the logic developed by PeopleSoft.

If you create new deductions and have formulas that must be recalculated during each iteration, but that are used several times, you can use the delivered PeopleSoft logic. But if you need to create a formula with the same function as the formula GEN FM RAZ VR GN (that is, to set the variable indicator equal to zero), insert the new formula in the sub-process section after the formula GEN FM RAZ VR GN.

Creating Sections

You can create your own sections referencing your deductions and then include them in the sub-process section. The deductions that need to be included in the sub-process section are the deductions that impact the net to pay salary. This is the case for a payee's contributions. But this is also the case for some employer's contributions and particularly the deductions used to calculate the contributions exemption limits.

Creating or Updating the Sub-Process Section

The setup of the sub-process section must reflect the process list you define. The sub-process section provided by PeopleSoft is based on the process list REGLEMENTAIRE PAIE. In the sub-process section, the system uses certain sections (with the suffix GN) patterned after the sections used in the normal process list. The system also uses the same conditional formulas.

If you have a process list with some differences in the order of the sections, in the sections themselves, and/or in the conditional formulas, update the sub-process section provided by PeopleSoft or create your own sub-process section. If your company has its own unique process list, create sub-process sections that correspond to your own unique process list.

Note: For example, PeopleSoft provides some specific sections to manage the contributions due for the different categories for the retirement and contingency contributions. There are two ways of managing the triggering of the deductions depending on the payee's category (employee, Article 36, or Article 4&4bis). This can be done through eligibility groups or through sections.

The process list REGLEMENTAIRE PAYE provided by PeopleSoft uses eligibility group management of the deductions triggering. For companies that choose to manage the triggering through sections, those companies need to create sub-process sections that follow the same logic as their process lists.

The calculation of some benefits in kind (meal and lodging) depends on the value of the gross salary. Because the gross salary varies during the iterative calculation, if the benefits in kind calculation were included in the net guarantee sub-process section, this could cause instability in the adjustment calculation. To avoid this, PeopleSoft has placed the benefit in kind section IND SE AVT NATURE after the IJSS section GEN SE IJSS but before the net guarantee sections GEN SE GARANTIN NET and GEN SE IJSS AJUST.

PeopleSoft delivers and maintains the deduction element IJSS AJUSTEM to accommodate the net guarantee calculation. This deduction stores the value of the adjustment calculated in the sub-process section. To find out the specifics of an element's definition, use the Global Payroll core application online element definition pages to display the element's definition.

Note: PeopleSoft delivers a query that you can run to view the names of all delivered elements that are designed for France.