One of the most important things for global companies to understand about doing business in France or engaging their talent pool is the country’s strict labor laws.
These laws have swayed many employers to avoid French expansion altogether. Others attempt to skirt around the onerous laws by engaging independent contractors in France—but utilizing contractors creates significant risk.
While it is legal to hire contractors in France, its government does not favor their use. It’s difficult for companies to win in court if a case is properly built against them.
If businesses wish to mitigate independent contractor risk in France—and avoid the French government’s ire—there are a few key considerations to keep in mind. We outline these below.
How to Avoid Independent Contractor Risks in France
First and most critically, companies should understand that an employer must maintain a high degree of separation from contractors. Contractors in France have to complete assignments autonomously and cannot be “subordinate” to any company employee.
France also has more contractor complexities than almost anywhere else. For example, French law limits contractor functions to businesses that are unable to fill roles with its standard workforce. This often means contractors cannot help with the core functions of that business.
Companies must also ensure a self-employed contractor has proper documentation to operate as a true independent contractor in France. They are at fault if they do not register themselves properly or if they fail to make the necessary social contributions.
Other Essential French Contractor Considerations
Firms must deal with a litany of repercussions if authorities deem a contractor as a misclassified employee. First, the individual will be reclassified as an employee, forcing the firm to deal with burdensome labor laws or pay a steep severance package.
The company will also have to:
- Pay the employee a retroactive salary and employee benefits
- Pay social security contributions and taxes—all with significant interest
- Pay overtime, bonus, and other discretionary benefits arrears
A business can also be liable for criminal “shadow employment” charges, which could lead to imprisonment and steep fines. Additionally, it could be banned from using independent contractors in France for two to ten years if they misclassify their workers.
You may decide that compliantly hiring employees in France better suits your business needs and goals. If so, read our guide to hiring employees in France to understand your options.
Avoid the Risks of Misclassified Contractors in France With an EOR
Ultimately, the French government encourages employment so individuals are protected by labor rights. A quick and compliant option for hiring full-time employees in France is partnering with a global employer of record (EOR) like Velocity Global.
As your EOR partner, we offer a legal, flexible, and cost-effective solution for hiring, paying, and supporting employees in France without having to set up an entity in the country. We also help organizations seamlessly convert their contractors into employees, add them to payroll, and provide them with comprehensive benefits.
Contact Velocity Global to learn how we can help ensure compliance when building your team in France and beyond.
