I want to start hiring employees in France. What are my obligations?
Despite Macron’s push to encourage foreign investment, France’s administration system continues to be plagued by arduous formalities and laws.
The French payroll system is no exception to this and the penalties for non-compliance can be costly. Understanding your obligations as an employer is therefore crucial.
When hiring staff, the first step is to draft an employment contract. Thanks to the hundreds of collective bargaining agreements, which each specify different requirements depending on the industry and profession, this is not a simple task. There are various mandatory models of contract and all are subject to strict conditions, which are set by the law (Labour Code).
CDD: this is a fixed-term employment contract, for which an employer recruits an employee for a fixed period, specified in the contract. The purpose of a fixed-term contract is to provide employment for a temporary task.
CDI: This is an open-ended contract, which is the normal form of employment contract and there is no time limit.
To comply with French employment laws the contract must be drafted in French and state:
- The number of working hours per week
- The type of contract
- The wage rate of the employee (in France the standard minimum wage is €9.88)
- The amount of paid holiday the employee is entitled to
- The start date of the contract
- The applicable collective bargaining agreement
In France, it is not enough to send a hiring letter for someone to be hired under French law. The law says that if there is any dispute between an employee and an employer, the law will side with the employee. It is therefore important to protect yourself and provide a written employment contract. Without this agreement, the client will be very vulnerable to a lawsuit brought by any employee in the future. Without the agreement, the French administration considers that there is concealed work/abuse of the employee by the employer.
When setting up a company in France, social security formalities must be completed for each employee. Both employers and employees must pay social contributions to the relevant bodies, including the following:
- URSSAF for social security: this is mandatory for all employees. It is a criminal offence not to register employees with URSSAF.
- Retirement is mandatory; the pension fund depends on the activity.
- ARRCO: manages the supplementary pension scheme for all employees including executives working in the private sector in industry, commerce, services and agriculture.
- AGIRC: The AGIRC plan is the supplementary pension plan on top of the ARRCO plan. This plan is applicable to management employees.
- Life/Health Insurance: the coverage is chosen by the insured person/employer. Life insurance is compulsory for executives; health insurance has been compulsory for all employees since 1 January 2016. Health insurance covers the first three months of illness.
The rate of employer contributions varies but is, on average, 50% of the employee’s gross salary. Employee contributions, which are deducted at the source, are much less- approximately 20% of their gross salary. Non-French nationals who work in France and are covered by French social security are entitled to the same conditions as those of French nationals- the employer and employee must therefore still pay social contributions.
If you have any questions regarding emplyment in France, do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]. Our team of experts will happily assist you with any queries you might have.