Algeria

Amended Calculations of Social Security Contributions

The Executive Decree 24-49 was introduced on 13 January 2024, which, amongst other things, serves to amend the basis for calculating social security contributions for the relevant year. While this is normally based on “operating income” (ordinary income before tax) for the previous year, in cases where operating income cannot be determined, the decree outlines flat percentage rates of 25% (for individuals providing/selling goods) or 35% (for individuals providing a service) to be applied to the taxable income of the individual.

However, where the individual is self-employed, the decree provides that the individual may, at their discretion, choose to pay either an annual contribution of DA 24,000 or the contribution amount set by the decree. Where an individual fails to provide their social security contribution or the necessary income information within the required timeframe, the social security administration may provisionally base the contribution level on the base amount of the previous year, with an additional 5% added. The social security contribution of self-employed persons is made on an annual basis and declared and justified by tax or accounting documents by the taxable individual. It becomes due from 1 January each year and payable no later than 30 June each year. In relation to the self-employed persons who exclusively perform an agricultural activity, the payment deadline for the annual contribution is 30 September of the relevant year.

Exercise of Trade Union Rights

Law No. 23-02 on trade union rights was enacted in May 2023. It mentions the International Labour Organisation (“ILO”) treaties, some of which have already been ratified by the Algerian State. Significantly, the scope of the provisions of Law No. 23-02 is wider and it does not only include workers and employees, but also public servants. While Law No. 23-02 no longer makes a distinction between workers in the private sector and those in the public sector, Algeria has not yet ratified ILO Treaty No. 151 relating to labour relations in the public sector. Of particular interest, Law No. 23-02 has set out the conditions for creating trade unions. In this context, trade unions are legally constituted after: (i) filing the declaration with the competent public authority; followed by (ii) issuing a registration receipt of the file declaration within 30 days of filing; and (iii) placing a notice/advertisement in the national language with a national daily newspaper (at the trade union’s expense).

Law No. 23-02 provides specific provisions aimed at protecting workers who are trade union members. Protection is guaranteed to any worker who is a member of a trade union, whether a representative or not, and it prohibits dismissal or any other disciplinary sanction, against any member of a trade union that is linked to their membership or their trade union activity. Law No. 23-02 has established a new procedure which allows employees who are victims of discrimination in relation to their union activity to file a written request with the territorially competent labour inspectorate who will carry out an investigation. As a result of Article 89 of the new law, it is no longer the Government who unilaterally chooses the trade union that will be invited to the tripartite framework consultation, it is now the largest unions with the most members. Law No. 23-02 also contains provisions which prohibit, under threat of trade union dissolution and possibly criminal prosecution, trade unions from being associated with political activity or any rapprochement with a political party. The recent law has triggered controversy and protests due to its infringement on freedoms and liberties which is likely to continue in 2024.

New Law on Personal Data Protection

Pursuant to Article 3 of Law No. 18-07, passed in June 2018, related to the protection of individuals in the processing of personal data (“Law 18-07”), personal data is defined as any information, regardless of its medium, related to an identified or identifiable person, in a direct or indirect manner, in particular by referring to his/her identification number or to one or several specific elements of his/her physical, physiological, genetic, biometric, psychic, economic, cultural or social identity (“Personal Data”). As of 1 August 2023, all entities collecting, processing and treating Personal Data must comply with the provisions of Law 18-07, which means that the National Authority of Data Protection (“NADP”) can now supervise, control and importantly receive applications for prior declarations and/or authorisations from controllers, in order to ensure compliance with Law 18-07. Since the NADP is a newly born authority, we expect that the NADP will exercise its power of control and start imposing sanctions after Q1 or Q2 of 2024.

New Employment Legislation for Autonomous Entrepreneurs

Following the introduction of Law No. 22-23 in December 2022, certain service providers can engage with third parties as autonomous entrepreneurs, provided that certain conditions are met (for example, the annual turnover realised must not exceed a certain threshold) and new statutory instruments must be adopted. Law No. 22-23 has imposed several conditions for obtaining the status of autonomous entrepreneur, including (i) the age of working (16 years), (ii) Algerian nationality, and (iii) Algerian residence.

As regards the 2023 statutory instruments, these relate to:

• Executive Decree No. 23-196 dated 25 May 2023, which clarifies the organisation and function of the National Agency of Autonomous Entrepreneurs (“NAAE”).
• Executive Decree No. 23-197 dated 25 May 2023, which contains a list of qualifying activities to achieve the status of autonomous entrepreneur, as well as methods of subscribing to the NAAE register. Qualifying activities include: (i) counselling, expertise and training; (ii) numeric services and connected activities; (iii) services supplied within dwellings; (iv) personalised services; (v) entertainment and leisure services; (vi) services supplied to companies; and (vii) cultural, communication and audiovisual services.
• Executive Decree No. 23-198 dated 25 May 2023, which sets out an example of an autonomous entrepreneur card.

Signature of the Law on the Status of the Self-Entrepreneur by the President of the Republic

The Law on the status of the self-entrepreneur (the “Law”), initiated by the Ministry of Economy, Knowledge, Start-ups, and Microenterprises, was approved by both houses of parliament, and signed by the Algerian President of the Republic on 19 December 2022. However, the Law has not yet been published in the Official Gazette.

This Law determines the rules and conditions applicable to the performance of the activity of self-entrepreneurs and aims to organize the "new economic activities" that have developed with the emergence of the digital economy, such as the development of web and mobile applications, digital marketing, use of vehicles with drivers (such as Uber, Yassir, Kareem, Temtem) and the administration of social network platforms or computer graphics.

The Law sets out the advantages granted to self-entrepreneurs, such as simplified accounting, exemption from registration in the trade register, preferential tax treatment, social security coverage and the possibility of opening commercial bank accounts. The Law also imposes obligations on the self-entrepreneurs, such as registration in the National self-entrepreneur Register, declaration to the National Social Security Fund for Non-Salaried Workers (“CASNOS”) and declaration of existence to the tax authorities in order to obtain the Tax Identification Number (“NIF”), within a maximum of 30 days, after obtaining the self-entrepreneur’s card.

Employee's Right to Request a Leave of Absence to Start Their Own Business

Law No. 22-16 of July 20, 2022, (“Law 22-16”) has supplemented Law No. 90-11 of April 21, 1990, on Labor Relations (“Law 90-11”), by introducing new provisions allowing workers to take unpaid leave once during their professional career to set up their own business.

The worker also has the right to work part-time in order to set up his business, in accordance with the provisions of the legislation and regulations in force. The duration of the unpaid leave or part-time work for the setting-up of his/her business by the employee is fixed for a maximum period of one year. This duration may be extended, exceptionally for a period not exceeding six months, upon justification provided by the concerned employee.

However, Law 22-16 also provides that the employer may, for reasons of service, decide, after consulting the Participation Committee, i.e., elected employees’ representatives, to postpone the date of departure of the employee on leave or the use of part-time work, for a period of six months at most, if the absence of the concerned employee is likely to have major effects prejudicial to the employing organization. In addition, if a worker is placed on leave for the purpose of setting up a business, his or her remuneration is suspended and his or her rights regarding seniority and promotion cease to apply.

However, the concerned worker preserves their acquired rights relating to their position at the date of their leave for the creation of a business. During the leave for the creation of a business, the worker continues to benefit from the social security coverage, according to the modalities fixed by regulation.

If the employee’s project is not implemented within the established timeframe, the employee may request reinstatement to their job, or re-employment on a full-time basis, at least one month prior to the expiry of the leave or period of part-time work for the purpose of setting up a business.

Finally, the employment relationship is terminated, without prejudice to the laws and regulations in force, when the employee sets up a business and, where applicable, does not apply for reinstatement within the time limits established by Law 22-16.

Global Income Tax (“IRG”)

The Finance Law for 2022 (“FL 2022”) has reinstated the principle of globality of personal income taxation. This principle consists in integrating, in the taxable base to be submitted to the IRG scale, attached to the tax residence, all the incomes made by a person, except for certain incomes for which the final taxation is maintained considering the nature of these incomes.

The applicable tax scale is the following:

The segments of the annual scale were also revised, while the threshold of non-taxation from 10.000 DZD to 20.000 DZD was raised.

The FL 2022 has thus reinforced the progressiveness of the IRG, by revising the segments of the scale and the related marginal rates and aligning the upper limit of the first segment of the IRG scale on the updated national minimum wage (“SNMG”) amounting at 20.000 DZD per month, as a threshold for non-taxation.

Reduction to Global Income Tax

Due to inflation and loss of purchasing power, there has been a reduction to global income tax (“IRG”). It is anticipated that this will have the following impact for employees and employers: (i) for the employee, if the agreed salary in the employee’s employment contract is stated in its gross amount, the employee will receive a higher take-home payment, and (ii) for the employer, if the agreed salary in the employee’s employment contract is stated in its net amount, the employer will pay less IRG.

Overhaul of Algerian Legislation

Since 1988, Algerian legislation has undergone a total overhaul in areas affecting economic and social life, particularly with regard to labour law.

These changes were implemented with a view to opening up the Algerian market to the international market and to potential national and foreign investors. Thus, labour relations have been redefined in relation to the old texts, which gave a great deal of power to structures and bodies representing workers, or the provisions relating to labour discipline and the powers of trade unions in private enterprises.

Under the influence of the old texts, it was difficult to separate from a worker, for both disciplinary and economic reasons, without incurring the wrath of the single union. There was a so‑called "managerial" trade unionism in the sense of the socialist ideas in vogue at a certain time. "Reinstatement of the worker" was the sentence most often pronounced by the social courts.

This legislation has therefore undergone a major overhaul and several texts have therefore been adopted, which are more liberal and more flexible for the employer. For example, Algeria adopted new regulatory texts and laws on occupational hygiene, safety, and medicine; on prevention and settlement of collective labour disputes and the exercise of the right to strike and in particular Law 90‑11 on labour relations which is fully in line with the process of overhauling the labour legislation resulting from the political and economic reforms and marks a decisive turning point in the management of employment and working conditions for several decades and therefore heralding a new era in the evolution of labour law accompanying the end of the socialist economy and participating in the implementation of the economic reform to move to a market economy.

The legislative framework enshrined in this new legislative corpus replaces the law on the general status of workers and the ordinance on the socialist management of enterprises and draws its main foundations from the Constitution of February 1989, the ILO Conventions ratified by Algeria and the laws on the autonomy of enterprises.

In particular, Law 90‑11 of 21 April 1990 on labour relations reaffirms the fundamental rights of workers and sets out their obligations, enhances the economic content of the employment relationship and encourages the promotion of qualifications, effort and merit. It also introduces flexibility in the use of fixed‑term and part‑time work, facilitates the integration of the disabled into the world of work, sets a maximum rate of authorized overtime, makes the preservation of employment an essential element of consultation and ensures the protection of workers' rights in the event of changes in the legal status of the employing body.

New Labour Code Being Drafted

A new Labour Code is being drafted which strengthens and enshrines workers' rights and trade union freedoms and includes proposals for the consolidation of social dialogue at all levels and others on the consecration and preservation of the freedom to exercise the right to organize. It also includes new articles on combating and preventing illegal work, proposing the establishment of a national commission composed of representatives of several sectors and ministerial departments and wilaya sub‑commissions, responsible for combating this and monitoring the activities of the world of work. The draft labour law will also finally introduce: (i) a new case of recourse to fixed‑term employment contracts, which will be limited, to avoid abuse; and (ii) specific provisions relating to the protection of workers in the workplace, particularly against sexual harassment.

There is nothing precise as to the final content of the draft law nor the final provisions provided therein nor the date of its entry into force. However, we believe that the year will expedite the process of its adoption given the pressure exercised by the unions and the OIT, as well as the consequences of the pandemic that require —the implementation of new measures for force majeure situations.