French employment law may appear complex and confusing. However, in some ways there are many similarities to other countries. As the following only aim to act as a guide in the broadest sense, it is still recommended that professional legal advice be sought when employing in France.
There are several key areas to be aware of within France’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.
France requires that workers have employment contracts that meet local standards and are drafted in the French language.
The Practical Law guide states that the French Labor Code allows probationary periods to be from two to four months depending on the employee’s position. Longer periods are only allowed if it is a “more favorable” way. During probation an employer can terminate the contract without having to justify their decision. However, Practical Law warns that case law has historically limited this right by punishing terminations that were still considered abusive terminations, such as discrimination, or not relating to the employee’s skills.
According to the Practical Law guide, termination is subject to a notice period, if it is during the probationary period. The notice period depends on the employee’s length of service.
In the case of an indefinite-term employment contract, there must be real and serious grounds for dismissal or redundancy. The Practical Law guide describes the procedure; the employer must first personally deliver or send by registered mail a letter giving the employee notice of a meeting, with at least five working days worth of notice. During the meeting, the employer must state why it is considering dismissing the employee. As soon as possible (at least by the third day after the meeting), the employer must notify the employee of its final decision, specifying the grounds for dismissal in a letter sent by registered mail.
If dismissals are based on economic grounds, the employer must select which employees to make redundant by considering factors such as number of the employees’ dependants (especially for single parents), length of service, potential difficulties employees may face finding new employment (such as age or disability), employees’ professional skills.
The employer must also show it made every effort to find another position in the same company or group, worldwide. It must also try to accommodate retention of employees such as by training programs. Employees who are made redundant must be given priority if their previous, or similar, position becomes vacant during a one-year period.
If the dismissal procedure is not followed, the employee can collect indemnity of up to a month’s salary.
Severance pay is only awarded if the employee is on an indefinite-term contract, or has met a minimum length of service required by the Labor Code or applicable collective bargaining agreement.
According to the Practical Law guide, the statutory rules for amount depends on the employee’s length of service. It is generally calculated on the basis of an employee’s average salary (often including bonuses as well as basic salary) during their last year of employment. Employees receive one fifth of monthly salary for each year of service for the first ten years of service, and then one third for each additional year above ten years.
Paid holidays are calculated on a reference year, which runs from 1 June (of the previous year) to 31 May (of the current year). In principle, employees are entitled to 30 days (five weeks) holiday per year.
The Practical Law guide describes the rules concerning maternity leave as follows.
If the mother suffers an illness during pregnancy, she is also entitled to two more weeks before the childbirth and four more weeks after the childbirth.
The Practical Law guide states that male employees are granted three days’ leave on the birth or adoption of a child, and also entitled to 11 consecutive days’ paternity leave (18 days if there are multiple births or adoptions), but they must be taken within the four months following the birth or adoption.
The employer does not have to maintain the employee’s remuneration during the leave period.
The Practical Law guide reports that employees absent due to illness or injury must obtain a medical certificate covering the period of sick leave. The employee can receive paid time off provided they have at least one year’s service with the employer and provide a medical certificate within 48 hours of the absence. The amount of time is up to 90 days paid time off, depending on the employee’s seniority
During the period of illness or injury, the work contract is “suspended” but the employee cannot be dismissed unless it becomes necessary to replace them.
Just Landed states that the national retirement insurance fund is the Caisse Nationale d’Assurance Vieillesse (www.cnav.fr), however, in addition most employees contribute to a supplementary pension plan (caisse complémentaire de retraite), which may be state-funded or private, further complicating this, almost every trade or occupation has its own scheme.
There are two categories of pensions for private-sector employees in France; ARRCO, covering all categories of employees and AGIRC, covering only managerial and executive staff. According to the European Actuarial & Consultancy Services (EURACS), the standard rate for contributions is, for AGIRC, 16.24% of the wage and, for ARRCO, 6% of the wage on Tranche A earnings and 16% over that limit. Generally the employer pays 60% of those contributions and the employee pays the other 40%, although that sharing can change from one professional sector to another.
In France, employees’ healthcare and retirement coverage is financed by a combination of the employer’s and employee’s contributions which are directly deducted by the employer from the employee’s pay.
The state health system (Sécurité Sociale) is partially funded by the government and partially by contributions. Expatica reports that, as at 2014, employees paid 7.5% and employers paid 13.10% of the salary.
Employees who suffer work-related accidents are to be compensated by a lump-sum indemnity paid by the social security system and the employer, according to the Practical Law guide (however, if the employer is guilty of gross negligence or wilful misconduct, the employer fully compensates). Cleiss states that the employer must report an accident to the employee’s local Health Insurance Fund within 48 hours and give the employee a special form (“feuille d’accident”) which the employee then gives to their doctor (the employee is thus exempted from any upfront medical costs.)
Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in France. For companies which intend to employ their staff directly through their incorporated France entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in France.
As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into France.
The Shield GEO solution is an attractive alternative where
– the company is looking to employ staff quickly
– the company doesn’t have an appropriately incorporated entity in France
– the company wants to work within a defined budget
– the company wants to limit its initial commitment in France
– the company needs help with tax, employment, immigration and payroll compliance in France
Shield GEO can contract directly with the company to employ and payroll their staff in France. Shield GEO supplies local employment contracts for the staff, which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits. Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.