Employer of record in France

Employers must navigate regulations regarding contracts, working hours, and benefits, making it crucial to understand the legal framework in France for successful workforce management.

Using an EOR (employer of record) can streamline a global business's entry into the country and position itself for success in this dynamic market. In this guide, we explain how organizations can efficiently and compliantly hire employees in France.

France at a glance

• Currency – Euro (€)
• Official language – French
• Employer taxes – 45%
• Public holidays – 11 days

» Hire employees fast in France through an employer of record

Key considerations for hiring in France

• Employment contracts: When hiring employees in France, there are several unique considerations that employers must keep in mind. Firstly, written employment contracts in French are mandatory, and they must specify the terms and conditions of employment, including job title, responsibilities, compensation, working hours, and duration of the contract.
• Working hours and compensation: The standard workweek in France is 35 hours, and overtime is subject to specific regulations and compensation. Additionally, France has a national minimum wage (SMIC) that is updated annually, and employers must ensure that employees are paid at least this amount.
• Social Security contributions and benefits: Employers in France must make significant social security contributions for their employees, which can add up to around 45% of the employee's gross salary. These contributions cover various benefits, such as healthcare, retirement, unemployment, and paid leave.
• Employee representation and collective bargaining: Companies with 50 or more employees must have a Works Council (Comité Social et Économique) representing employees' interests. Furthermore, many industries in France are subject to collective bargaining agreements that set specific terms and conditions of employment for the sector.
• Termination and severance: Terminating employment contracts in France can be complex and costly. Employers must follow specific procedures and justify termination. Employees are entitled to statutory severance pay based on their length of service.
• Education and language requirements: France strongly emphasizes academic qualifications, and employers should be familiar with the French education system to ensure that foreign diplomas are recognized. While not legally required, many positions in France may require proficiency in French, and employers should consider language requirements when hiring.

Entity vs. a French employer of record

In the context of France, an employer of record (EOR) and a legal entity refer to two distinct concepts related to employment and business operations.

Employer of record (EOR)

An employer of record is a third-party organization that acts as the official employer for workers on behalf of another company (the client company).

The EOR is responsible for all legal and administrative tasks associated with employment, such as payroll processing, tax withholding, compliance with labor laws, and issuing employment contracts.

They become the official employer of the workers, while the client company maintains operational control over their day-to-day activities.

Pros

• Cost-effective and quick set-up
• Well-versed in local employment laws and regulations
• Facilitates international hiring, making it easier to attract and retain talent from around the world
• Provides support handling payroll, benefits, and other administrative task

Cons

• Long-term reliance on this model may not be legally sustainable in France
• Possible tax implications for employer and employee

Legal entity in France

A legal entity, on the other hand, refers to a business structure recognized by law as a separate entity from its owners or shareholders. When established in France, it becomes a distinct legal person with its own rights, obligations, and liabilities.

This entity can directly hire employees, enter into contracts, and conduct business operations within the French legal framework.

In France, common legal entities include:

• Société à Responsabilité Limitée (SARL) – Limited Liability Company

• Société Anonyme (SA) – Public Limited Company

• Société par Actions Simplifiée (SAS) – Simplified Joint-Stock Company

• Entreprise Individuelle (EI) – Sole Proprietorship

Pros

• Gives you more control over your operations
• Can enhance your company's credibility and reputation in the eyes of employees, clients, and partners

Cons

• Complex and time-consuming process
• Ongoing costs such as taxes, compliance fees, and administrative expenses
• May limit flexibility in adapting to changing business needs or market conditions
• Ensure compliance with labor laws, social security contributions, and employee benefits yourself

» Ensure legal compliance with Papaya’s global workforce platform

Work permits

Citizens of the European Union (EU), European Economic Area (EEA), and Switzerland can work in France without a permit, enjoying freedom of movement within these regions. However, for non-EU citizens, obtaining one is generally a requirement.

All foreign nationals who wish to work in France must declare themselves to the French Immigration and Citizenship Office (OFII) to obtain the work visa they need to be legally employed.

The responsibility for initiating the application process typically falls on the employer rather than the employee.

Here's a breakdown of the main work permits:

• Employee (Salarié) Work Permit: The most common type. Requires a job offer from a French company. The employer initiates the application process.
• Skills and Talent Passport (Passeport Talent) Work Permit: For highly skilled workers in various fields including science, research, culture, sports, etc. There are several subcategories within this permit.
• Seasonal Worker Permit: For temporary work in specific sectors with labor shortages, like agriculture.
• Intra-Company Transfer (ICT) Permit: For employees of international companies being transferred to a French branch or subsidiary.
• Artist and Cultural Worker Permit: For people working in performing arts, film, literature, etc.
• EU Blue Card: For highly skilled workers from EU countries meeting a minimum salary threshold.
• Student Visa (with work authorization): Students on a valid student visa may work part-time under certain conditions.
• "Visitor – Business Creation" Visa: Allows entrepreneurs to conduct research and preparatory work to establish a business in France.
• "Talent Passport – Family": For spouses and dependents of holders of the Skills and Talent Passport.

Using an EOR for payroll and taxes in France

» Streamline your operations by automating your global payroll

Minimum wage

The minimum wage (SMIC) is adjusted periodically in France, often in line with inflation. Additionally, minimum wage rates for younger workers are reduced under certain conditions.

However, the gross minimum wage in France as of January 2024 is €11.65 per hour, which translates to a gross monthly minimum wage of €1,766.92 based on a legal workweek of 35 hours.

EOR employment contracts and agreements in France

EORs play a crucial role in helping companies navigate the complexities of French labor laws, particularly regarding employment contracts. As labor laws in France are known for their complexity and frequent changes, EORs can provide valuable assistance in ensuring they adhere to the latest requirements.

Here are the main things employers should include in their contracts:

• Identity and contact details
• Place of work
• Job title and description
• Start date and contract term
• Contract type (fixed-term employment or indefinite-term contract)
• Compensation
• Working hours
• Paid leave
• Probationary period (Période d'essai)
• Termination notice period
• Applicable Collective Bargaining Agreement (CBA)
• Provide contract in both French and employee’s language

Mandatory employee benefits

Employers need to ensure that employees are enrolled in social security as well as supplementary unemployment and pension schemes. Contact the National Center for Foreign Firms and complete all mandatory declarations.

Here are the main mandatory benefits employees have in France:

Healthcare

• Universal health insurance (l'Assurance Maladie): All residents of France are covered by this program. It reimburses a significant portion of medical expenses.
• Supplemental health insurance (Mutuelle): Employers must provide all employees with supplemental health coverage to bridge the gap not covered by the universal plan.

Retirement

• Basic state pension: Contributions are automatically deducted from employee salaries.
• Compulsory supplementary pension: These supplementary schemes are usually sector-specific, and both employees and employers contribute.

Disability and death insurance (Prévoyance)

• Life insurance: In the event of an employee's death, beneficiaries receive a payout.
• Disability insurance: Provides income replacement for employees with long-term or short-term disabilities that prevent them from working.

Unemployment insurance

• Unemployment benefits (Allocations chômage): These payments provide financial support to eligible workers who involuntarily lose their jobs.

Workers' compensation

• Covers medical expenses and potential income replacement if an employee suffers a work-related injury or illness.

Family benefits

• Family allowances are available depending on family size, income, and specific situations (e.g., childbirth, childcare support, etc.)

Non-disclosure agreements (NDAs)

By partnering with an EOR, companies can mitigate the risks associated with NDA and intellectual property agreements in France and create enforceable agreements that protect their interests while respecting employee rights. Here's how:

• They ensure NDAs protect valid business interests, are reasonable in scope, and provide compensation where applicable, in compliance with French law.
• EORs help balance protecting company interests with respect for employees' basic rights.
• They draft clear, easy-to-understand agreements that are more likely to be upheld by French courts.
• EORs provide legal advice and support in disputes, leveraging their knowledge of French laws and court procedures.

Here's a breakdown of the types of NDAs that are likely enforceable on employees in France:

• Confidentiality agreements: A broad category encompassing agreements where employees agree to maintain the confidentiality of specific information. These are generally enforceable when reasonable and tailored to legitimate business interests.
• Non-competition agreements: This is to prevent an employee from working for competitors for a limited time within a specific geographic area after leaving the company. These are more heavily scrutinized by French courts and have strict requirements for validity.

Paid and sick leave

• Annual leave: Employees are entitled to a minimum of 2.5 working days of paid leave per month worked. This translates to 30 working days (or 5 weeks) per year.
• Public holidays: Whether these are paid days off depends on individual company policies and collective bargaining agreements (CBAs).
• Additional leave: Some CBAs or company agreements might offer additional days of paid leave.

Employees are provided with sick leave, which includes:

• Daily allowance: Employees receive a daily sick pay allowance after the waiting period of 3 days. This is usually 50% of their gross salary (with possible increases depending on seniority), but company agreements or CBAs may have more favorable terms.
• Duration: Sick leave duration depends on the employee's length of service, the nature of the illness, and the CBA.
• Short & medium-term illness: Up to 3 years of paid sick leave may be available spread across a period of time.
• Long-term illness: Longer periods can apply for serious or chronic conditions.
• Work-related illness/injury: Different rules apply with a 0-day waiting period and potentially higher compensation.

Public holidays

There are 11 official public holidays in France, with some variation depending on the region. Alsace and Moselle celebrate two additional public holidays, Good Friday and Saint Stephen's Day (December 26th).

Many businesses, shops, and services are closed on public holidays. Some public holidays always fall on specific days of the week, while others vary by year, so off days might not be on the exact date.

Using an EOR to onboard new employees in France

Before the first day

• Send a welcome email outlining the next steps and key information like start date, work hours, and dress code. The EOR will ensure this aligns with French workplace norms and regulations.
• A human resource information system (HRIS) can help employees automate onboarding and ensure all vital documents, like work permits, are collected and stored. This system sends a notification to all relevant departments.
• EORs ensure employment contracts adhere to French labor laws regarding provisions like termination policies, paid time off, benefits, non-compete clauses, and more. This protects companies from compliance risk.
• The EOR handles all payroll registration, calculations, deductions for income tax, social security contributions, and other statutory withholdings per French regulations.
• For foreign national hires, the EOR can sponsor work visas/permits and ensure compliance with France's regulations around employing foreign labor.
• Leveraging local expertise, EORs can advise clients on crafting HR policies, codes of conduct, and disciplinary procedures that align with French cultural norms and legal requirements. This helps bridge gaps between company practices and the French work environment.

The first day

• The EOR can assist with greeting new employees, making introductions to key team members and colleagues, and helping them navigate French business etiquette and communication styles.
• An EOR can help employers organize presentations on the company's mission, values, and policies, tailoring the content to the French context and ensuring alignment with local workplace norms.
• An EOR can assist with outlining company policies, dress code, work hours, and communication protocols, ensuring they comply with French labor laws and cultural expectations.
• EORs can help translate training materials and ensure the content is culturally appropriate.
• Introduce the new hire to relevant colleagues, projects, and ongoing tasks, providing context and guidance on French work culture and collaboration styles.
• Throughout the first day, the EOR can schedule regular check-ins and facilitate communication between the employee and employer, helping to address any concerns or questions and fostering a positive working relationship.

The first week

• The EOR can assist with focusing on in-depth training relevant to the employee's specific role and departmental functions, ensuring the training content aligns with French labor laws and industry practices.
• Schedule regular check-ins with the mentor or buddy familiar with French work culture to answer questions and provide support.
• Guide discussions on performance expectations, key objectives, and success metrics for the role, considering French labor laws and cultural norms. EORs can help facilitate collaborative goal-setting to ensure the new hire's targets align with local practices.
• EORs can guide French social etiquette and help the new hire build relationships with coworkers in a culturally appropriate manner.
• EORs can recommend common team-building activities in French workplaces and help the company organize events that resonate with local customs.
• An EOR can gather feedback on the onboarding experience from the new hire's perspective, providing insights into how well the process aligns with French cultural expectations. Based on this feedback, they can help adjust the onboarding process for future hires, ensuring continuous improvement.

Beyond the first week

• The EOR can help identify relevant conferences, workshops, or online courses that align with the employee's role and the company's objectives, considering French industry trends and best practices for skill enhancement.
• Advise on scheduling regular performance reviews that comply with French labor laws and cultural norms. They can guide managers in providing constructive feedback and setting improvement goals.
• Recognize achievements and maintain motivation and engagement, such as celebrating milestones or offering rewards that align with French workplace customs.
• Facilitate discussions on career aspirations and help develop a career development plan considering the employee's goals and the company's opportunities in the French market. EORs can advise on French education and training systems to ensure the plan is feasible and relevant.
• The EOR can guide the process of integrating the employee into team projects and decision-making processes, ensuring their participation aligns with French workplace hierarchies and communication protocols.
• Celebrate successes, team achievements, and individual contributions in a manner that resonates with French cultural values and traditions. EORs can advise on appropriate recognition methods and help organize events that foster a sense of appreciation.

How EORs protect your company’s IP in France

When hiring employees in France, companies must navigate the complexities of protecting their intellectual property (IP) while complying with local laws and regulations.

An EOR can provide valuable support in this process, helping companies safeguard their sensitive information and trade secrets while respecting employee rights.

1. Draft compliant NDA clauses and implement data protection policies

• An EOR can assist with drafting NDA clauses that comply with French law, ensuring they are enforceable and tailored to the company's specific needs.
• They can also advise on implementing data protection policies and systems that align with France's strict data privacy regulations, such as the GDPR, helping ensure the company's practices meet legal requirements.

2. Secure devices and provide employee training

• The EOR can guide the use of company-issued devices with security software, considering French employee privacy rights and legal restrictions on monitoring.
• They can also assist with employee IP training and provide regular reminders, ensuring the content and delivery method align with French learning styles and communication norms.

3. Manage data access and permissions

• An EOR can advise on limiting access to data and information based on job roles and responsibilities, ensuring these restrictions comply with French labor laws and don't infringe on employee rights.
• They can also help review permissions periodically to maintain data security, considering French regulations on employee privacy and data protection.

4. Monitor data access and handle employee departures

• The EOR can recommend best practices for proactively monitoring unauthorized data access that complies with French employee surveillance and privacy laws.
• They can also assist with reminding departing employees of their confidentiality obligations under French law and help ensure exit procedures align with local regulations.

5. Enforce agreements and seek legal remedies

In case of violations, an EOR can advise on enforcing agreements and seeking legal remedies through the French legal system, leveraging their knowledge of local laws and court procedures.

How EORs ensure compliance with labor laws in France

Understanding the French Labor Code and collective bargaining agreements (CBAs) and addressing specific challenges like language barriers and cultural nuances are essential. French employment law's complexity necessitates thorough planning and ongoing diligence to avoid penalties and legal disputes.

Utilizing EORs can benefit smaller companies or those lacking established French infrastructure. Regular reviews, manager training, and transparent employee communication are vital for maintaining compliance and fostering a positive work environment.

Additionally, leveraging country-specific resources like government websites and engaging local experts such as employment law specialists, accountants, and HR consultants ensures tailored guidance and ongoing compliance.

Offboarding and terminating employees in France

Foreign companies terminating employees in France can be complex due to strict regulations outlined in the French Labor Code (Code du Travail). Here's a breakdown of how to ensure compliance with local legal considerations:

1. Understand valid reasons for termination

• Personal grounds: Employee misconduct, incompetence, inability to fulfill duties, repeated absences.
• Economic grounds: Economic difficulties that force restructuring or downsizing.
• Force majeure: Unforeseen circumstances beyond the employer's control that make it impossible to maintain employment.

2. Meticulous procedural requirements

• Pre-dismissal meeting: A mandatory discussion with the employee regarding the reasons for dismissal.
• Notification letter: A formal letter sent by registered mail detailing the reasons for dismissal and employee rights, all in French.
• Notice period: The employee is entitled to a notice period as stipulated in their contract or financial compensation. (1-month notice for employment from 6 months to 2 years, two months' notice for employment over two years, and three month's notice for executive-level roles).
• Severance pay: In many cases, severance pay is calculated based on salary and tenure is mandatory.

3. Special cases

• Protected employees: Additional protections apply to certain categories of employees (pregnant women, employee representatives, etc.), requiring further procedural steps and possible authorization from labor authorities.
• Mass layoffs: Collective dismissals trigger additional obligations, including specific notification procedures, a social plan, and redeployment support.

4. Country-specific considerations

• Potential litigation: Employees in France frequently challenge dismissals through labor courts. Be prepared for the possibility of litigation.
• Language: All documentation and communications related to termination should be in French to ensure clarity and legal enforceability.

5. Seek expert guidance

Partnering with an experienced French employment lawyer is crucial throughout the termination process. They can provide guidance, draft essential documents, and help you handle disputes.

Consider partnering with an EOR with French employment law expertise. An EOR acts as the legal employer, handling termination procedures, severance calculations, and social security contributions, simplifying the process and minimizing compliance risks for foreign companies.

Use an EOR to start hiring in France today

Expanding your workforce into France presents both opportunities and challenges. With its complex legal landscape and stringent labor laws, navigating the intricacies of hiring, managing, and terminating employees effectively is essential.

That’s why partnering with an EOR solution like Papaya Global can streamline the process, providing comprehensive workforce management and regulatory compliance services. With the right strategies and support in place, your business can embark on its hiring journey in France with confidence and success.

» Consult with a country expert to discuss labor laws in France

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