One of the most important things for firms to understand about doing business in France is its strict labor laws (see a thorough explanation of employment regulations on our France International PEO page).
These laws have swayed many employers to avoid French expansion altogether. Others attempt to skirt around the onerous laws with independent contractors—but utilizing independent contractors creates significant risk.
While it is legal to hire independent contractors in France, its government does not favor their use. It’s incredibly difficult for companies to win in court if a case is properly built against them. If businesses wish to mitigate independent contractor risk—and avoid the French government’s ire—there are a few key things to keep in mind.
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 independent contractors. Independent contractors have to complete assignments autonomously and cannot be “subordinate” to any company employee.
Moreover, France has more independent contractor complexities than almost anywhere else. For example, French law limits independent contractor functions to businesses that are unable to fill roles with its standard workforce. This often means independent contractors cannot help with core functions of that business.
Companies must also ensure a self-employed contractor has proper documentation to operate as a true independent contractor. They are at fault if they do not register themselves properly or fail to make the necessary social contributions.
Other Essential French Independent Contractor Considerations
Firms must deal with a litany of repercussions if authorities deem an independent contractor as a misclassified employee. First, the individual will be reclassified as an employee, forcing the firm to deal with the burdensome labor laws or pay a steep severance package. The company will also have to:
- Pay the employee a retroactive salary, benefits, social security contributions, and back taxes—all with significant interest
- Pay overtime, bonus, and other discretionary benefits arrears
- Potentially be liable for criminal “Shadow Employment” charges. A firm’s legal representative could serve up to three years in prison and be personally fined up to €45,000. An additional fine of €225,000 may be handed down to the company itself.
- Finally, a business can be banned from using independent contractors for two to ten years
Avoid the Risks of Misclassified Contractors in France with the Help of an Experienced Expansion Partner
Ultimately, the French government encourages employment so individuals are protected by labor rights. One option firms have is “portage salarials”, which are, in effect, Professional Employer Organizations (PEO). Using these eliminates independent contractor risk, yet is more flexible and more cost effective than traditional employment options. Many expanding businesses choose to rely on the experience and expertise of these international expansion partners.
Through our International PEO solution, Velocity Global has helped hundreds of companies source and employ top talent all across the globe. And, with global expansion capabilities in more than 185 countries (including France), we can help your firm pursue its global expansion goals—and ensure compliance in virtually any country.
Ready to learn more about how Velocity Global’s International PEO solution has changed the way businesses expand overseas, or how we can help you realize your French expansion goals? Let’s get started.