Notes about overtime

 "Waqas🔶

@m0w4q45 · May 24 France already tried “tax-free overtime” back in 2007. By 2012 they’d binned it no extra hours worked, just high earners relabelling their normal pay as “overtime” to dodge tax, while the taxpayer picked up the tab. So spare us the “reward hard work” speech. The only truly tax-free reward going was Nigel’s £5m from a crypto geezer. How much overtime did he clock for that one? 🇬🇧 Quote Zia Yusuf @ZiaYusufUK · May 24 It’s time to stop PUNISHING people who work the hardest and drowning them in taxes like the Tory Labour uniparty. A Reform government will ABOLISH INCOME TAX on overtime pay. " is this true?

Short answer: Yes — the substance of the claim about France’s 2007 “tax‑free overtime” policy is true, according to multiple independent economic studies. The political jabs about Nigel Farage are commentary, not fact‑claims, so I’ll stick to the verifiable part.

🇫🇷 What actually happened in France (2007–2012)

France introduced tax‑free overtime under the TEPA law in October 2007. The goal: “work more to earn more” — increase total hours worked by removing income tax and some social charges from overtime pay.

What the evidence shows

Across several authoritative studies:

• No increase in actual hours worked Multiple analyses found no significant rise in real overtime worked.

• Large increase in declared overtime Skilled and higher‑earning employees were able to relabel normal hours as “overtime” to benefit from the tax break.

• Cost to the taxpayer: ~€4.5 billion per year The policy caused major revenue losses without delivering its intended labour‑supply effect.

• Abolished in 2012 The French government scrapped the measure after concluding it was expensive and ineffective.

Summary of the academic consensus

Economists Pierre Cahuc and Stéphane Carcillo — the main researchers on this — found:

The reform increased declared overtime but did not increase actual work. Employers and employees could easily manipulate the system because hours are hard to verify.

This matches the claim in the tweet almost exactly.

🇬🇧 What this means for the UK claim

Reform UK’s proposal to “abolish income tax on overtime” is not unprecedented — France tried it, and the evidence strongly suggests:

• It did not reward hard work

• It did not increase productivity or hours worked

• It mainly benefitted higher earners able to reclassify pay

So the tweet’s argument — that France tried this and it failed for the reasons stated — is accurate.

If you want, I can also break down:

• how the French system worked mechanically,

• why it was so easy to game, or

• whether the UK labour market would behave differently.

Just pick one: mechanics, why_it_was_gamed, or UK_comparison.

Explain mechanics of French tax free overtime

France’s 2007 “tax‑free overtime” system (the TEPA law) worked through a very specific set of tax and payroll exemptions. Here are the mechanics, step‑by‑step, based strictly on the official legislation and economic evaluations. (You should still confirm details with a trusted source.)

🔧 How the French tax‑free overtime system actually worked (2007–2012)

1️⃣ Overtime pay was boosted and made tax‑free

From 1 October 2007, all overtime hours received:

• A 25% pay premium (standardised across all companies)

• Full exemption from income tax

• Exemption from employee social‑security contributions

• Reduced employer social‑security contributions

This meant overtime became 30–50% more lucrative for workers depending on salary level and firm size.

2️⃣ Employers also benefited financially

The TEPA law cut employer social charges on overtime, lowering labour costs. This was intended to encourage firms to offer more overtime hours.

3️⃣ The policy sat on top of the 35‑hour week

France’s legal working week remained 35 hours. Any hours above that were “overtime” and eligible for the tax break — without changing the underlying labour law. This was politically important: it let the government promote “work more to earn more” without touching the 35‑hour statute.

4️⃣ The tax break applied automatically

Employers simply declared overtime hours on payslips, and the exemptions applied. There was no strong verification mechanism, which later became a major problem.

5️⃣ Annual cost to the state: ~€4.5 billion

The French government lost around €4.5bn per year in revenue due to the exemptions. This figure comes directly from the IPP evaluation.

6️⃣ What actually happened (according to the evaluations)

✔️ Declared overtime increased

Skilled and higher‑earning employees reported more overtime hours — because they could. The system was easy to game: employers and employees could relabel normal hours as “overtime”.

❌ Actual hours worked did not increase

The reform had no significant effect on real labour supply. Workers earned more, but not by working more. This is the central finding of the Cahuc & Carcillo study.

✔️ Some workers’ desired hours even fell

A later study (Pousse, 2025) found the reform reduced desired working hours among some groups — suggesting it may have unintentionally reduced motivation to work more.

7️⃣ Abolished in 2012

The policy was scrapped because it was expensive and ineffective — it increased pay but not productivity or hours.

If you want, I can now explain why it was so easy to game, or compare it to how the UK labour market would respond.