ManpowerGroup 2014 Annual Report Download - page 45

ManpowerGroup | Annual Report 2014 43
the work is performed. The cost per claim is driven primarily by the severity of the injury, related medical costs and lost-time
wage costs. A 10% change in the number of claims or cost per claim would impact workers’ compensation expense in the
United States by approximately $2.9 million.
Historically, we have not had significant changes in our assumptions used in calculating our reserve balance or significant
adjustments to our reserve level. We continue our focus on safety, which includes training of contingent workers and client
site reviews. Given our current claims experience and cost per claim, we do not expect a significant change in our workers’
compensation reserve in the near future.
Social Program Remittances and Payroll Tax Audit Exposure
On a routine basis, various governmental agencies in some of the countries and territories in which we operate audit our
payroll tax calculations and our compliance with other payroll-related regulations. These audits focus primarily on
documentation requirements and our support for our payroll tax remittances. Due to the nature of our business, the number
of people that we employ, and the complexity of some payroll tax regulations, we may have some adjustments to the payroll
tax remittances as a result of these audits.
We make an estimate of the additional remittances that may be required on a country-by-country basis, and record the
estimate as a component of cost of services or selling and administrative expenses, as appropriate. Each country’s estimate
is based on the results of past audits and the number of years that have not yet been audited, with consideration for
changing business volumes and changes to the payroll tax regulations. To the extent that our actual experience differs from
our estimates, we will need to make adjustments to our reserve balance, which will impact the results of the related
operation and the operating segment in which it is reported. Other than France, we have not had any significant adjustments
to the amounts recorded as a result of any payroll tax audits, and we do not expect any significant adjustments to the
recorded amounts in the near term.
In particular, the French government has various social programs that are aimed at reducing the cost of labor and
encouraging employment, particularly for low-wage workers, through the reduction of payroll taxes (or social contribution).
Due to the number of new programs or program changes, and the complexity of compliance, we may have adjustments to
the amount of reductions claimed as a result of the audits.
In France, we currently maintain a reserve related to these programs for 2007 through 2014, which has been estimated
based on the results of past audits, changes in business volumes and the assessments related to the audit of 2009 through
2011. While some adjustment may be appropriate as we finalize the audits, we do not expect any significant adjustments to
the recorded amount in the near term.
We experienced a significant increase in client claims against us in France during the second quarter of 2013, requesting
refunds for various payroll tax subsidies that we had received dating back to 2003 related to our French temporary
associates. In March 2014, the French Supreme Court ruled in our favor on this matter, confirming that, as a matter of law,
the benefit of the payroll tax subsidies belongs to the direct employer of the temporary associates. We do not expect to
incur any losses as all of these claims have now been withdrawn as a result of this ruling.
The French government passed legislation effective January 1, 2013 to improve the competitiveness and reduce
employment costs by offering payroll tax credits to most French and foreign enterprises subject to corporate tax in France.
This law, Credit d’Impôt pour la Compétitivité et l’Emploi (“CICE”), provides credits based on a percentage of wages paid to
employees receiving less than two-and-a-half times the French minimum wage. The payroll tax credit is equal to 4% of
eligible wages in 2013 and 6% of eligible wages in 2014 and beyond. We have used, and intend to use, the credit to invest
Management’s Discussion & Analysis