Employer of Record (EOR) in France

As an Employer of Record in France, Mercans manages the following:

• Ensuring compliance with French labor laws throughout the employment lifecycle.
• Overseeing local payroll processes.
• Filing employment-related taxes and required documentation.
• Providing workers with detailed payslips.
• Ensuring timely salary payments.

Simplify your global expansion with Mercans’ Global PEO services, offering a seamless solution without the need to establish a local entity. Choose Mercans as your trusted Employer of Record in France, ensuring legal compliance, protection of intellectual property, and a smooth global mobility experience. We manage work visas and support the creation of a diverse, effective global workforce, allowing your business to focus on its core objectives. Partner with Mercans for a compliant, efficient employment solution for your international workforce.

Things you need to know before hiring in France

Employment Contracts in France

In France, employment contracts govern the relationship between employer and employee, regardless of the type or duration of the contract. While permanent contracts (“Contrat à Durée Indéterminée” or CDI) are not always required to be in writing, they must comply with the applicable collective agreement of the company, which may stipulate mandatory information to be included.

However, for fixed-term contracts (“Contrat à Durée Déterminée” or CDD), written documentation is mandatory, and certain information must be clearly outlined.

When a permanent contract is in written form, it typically includes the following key details:

• The identity and address of both parties.
• The employee’s job title and professional qualifications.
• The place of work.
• Working hours and conditions.
• Salary details, including bonuses.
• Paid leave entitlements.
• Notice periods for contract termination.

Additionally, the contract may include various clauses to address specific aspects of the employment relationship, such as:

• Probationary period.
• Terms for contract fulfillment.
• Remuneration structure.
• Conditions for contract termination.

Employers must also take into account the collective agreement applicable to their sector or company. These agreements can introduce additional terms, obligations, or restrictions, such as requirements for permanent contracts to be in writing, the length of the probationary period, rules for a non-competition clause, and the structure of a mobility clause.

What is a Collective Agreement?

A collective agreement is a legally binding agreement between employer organizations and employee representatives within a specific sector. It governs essential employment conditions, including the specifics of contract clauses, health and safety standards, leave entitlements, remuneration, and rules for dismissal. Employers are required to adhere to the terms of the collective agreement applicable to their sector.

Working Hours in France

While the legal 35-hour workweek was introduced nearly two decades ago, it is not the standard for many employees in France. In practice, many employees work 39 hours or more per week. For certain professions, agreements may be made on a set number of annual working hours or even a fixed number of annual working days, offering more flexibility.

Probationary Period

The length of the probationary period in France varies depending on the employee’s role and level within the company. According to the French Labor Code, the probationary periods are as follows:

• Two months for blue-collar and office workers who work under direct supervision.
• Three months for supervisors and technicians who possess specialized skills and operate with a level of autonomy.
• Four months for executives who have full managerial responsibility and perform their duties independently.

13th Month Salary

In France, many companies offer a “13th-month” salary as an additional bonus to help employees manage their expenses, often timed around tax season. This bonus is typically equivalent to one month’s salary or four weeks’ pay, depending on the company’s payroll structure.

Termination, Severance Pay, and Notice Periods

Notice Periods

The notice period for employment termination in France depends on the employee’s length of service and the terms outlined in the applicable collective bargaining agreement:

• 6 months to 2 years of service: One month’s notice.
• More than 2 years of service: Two months’ notice.
• Executive-level employees: Three months’ notice.

Severance Pay

Severance pay is based on the employee’s length of service and average salary. The calculation is generally as follows:

• For the first 10 years of service: A quarter of a month’s salary for each year.
• After 10 years of service: A third of a month’s salary for each year.

The average salary used for calculating severance pay is based on the employee’s gross earnings over the previous 3 or 12 months, whichever results in a higher figure.

Overtime Pay in France

In France, any hours worked beyond the 35-hour workweek are classified as overtime. According to French labor law, overtime is compensated with an additional surcharge:

• 25% for the first 8 hours of overtime per week.
• 50% for any further hours beyond that.

Certain collective bargaining agreements may specify different overtime pay rates.

It is common for employment contracts to specify a workweek exceeding 35 hours. In such cases, the additional hours must be clearly stated in both the employment contract and reflected on the employee’s payslip.

Furthermore, there is an annual overtime quota, typically 220 hours per year. Once this limit is reached, employees are entitled to additional rest time in compensation for any extra hours worked beyond the quota.

Employees vs Independent Contractors

In France, the distinction between employees and independent contractors is crucial for both legal compliance and tax purposes. French labor law provides protections and benefits for employees that do not apply to independent contractors. However, determining the status of a worker can sometimes be complex. The primary differentiating factor is the relationship of subordination. Employees perform their duties under the authority and control of an employer, while independent contractors operate autonomously, setting their own working conditions. This framework defines various legal, tax, and social distinctions between the two categories.

Below is a detailed comparison between employees and independent contractors:

Social Security in France

The French social security system offers comprehensive coverage through various schemes, providing benefits such as healthcare (sickness, maternity, disability), work-related accident compensation, unemployment benefits, and pensions. This system also includes compulsory complementary schemes for retirement, health coverage, and death/disability benefits.

Social security contributions in France are shared between the employer and employee. On average, the employer’s share amounts to around 45% of the gross salary. In 2022, the employee’s contribution is approximately 20% to 23% of their gross salary. However, these contributions are subject to salary ceilings, meaning that the effective contribution rate decreases as the employee’s salary increases.

Employers are also responsible for contributions to collective supplementary medical coverage schemes, which are mandatory and taxable.

For employees working in France, the employer is responsible for withholding and paying both the employee and employer’s share of social security contributions. However, under agreements with over 40 countries, expatriates temporarily posted to France may remain under their home country’s social security scheme, exempting them from French contributions, provided they have a valid certificate of coverage. These exemptions depend on the specific terms of the applicable bilateral agreement.

Payroll in France

Minimum Wages

Starting January 1, 2024, the minimum wage in France is set at €11.65 per hour, equating to €1,766.92 per month for a full-time employee working 35 hours a week. This figure represents the gross wage before deductions.

Payroll Cycle

In France, the payroll process generally operates on a monthly basis, with employees receiving their salaries on the last working day of each month.

Personal Income Tax in France

In France, personal income tax is calculated using a progressive tax scale, which consists of several brackets, each assigned a different tax rate. This structure ensures that individuals are taxed based on their ability to pay.

How to Calculate Your Income Tax

To determine your income tax liability, follow these steps:

• Determine Your Family Quotient: Divide your net taxable income by the number of shares in your family quotient.
• Apply the Progressive Tax Scale: Use the result from the first step to find the applicable tax bracket for your income.
• Calculate Total Tax Due: Multiply the tax amount from the brackets by the number of shares in your family quotient to arrive at your total tax due.

2024 Tax Scale for 2023 Income

For income earned in 2023, which will be declared in 2024, the tax brackets have been adjusted upward by 4.8% to account for inflation. The new tax scale is as follows:

• Up to €11,294: 0%
• From €11,295 to €28,797: 11%
• From €28,798 to €82,341: 30%
• From €82,342 to €177,106: 41%
• Over €177,106: 45%

Example Calculations

Example 1: A Single Person Earning €35,555

For a single individual with a net taxable income of €32,000, the calculation would be:

• Divide by 1 (one share): €32,000
• Apply the tax brackets:
  • Income up to €11,294: 0% = €0
  • Income from €11,295 to €28,797: 11% = (28,797 – 11,294) x 11% = €1,925.33
  • Income from €28,798 to €32,000: 30% = (32,000 – 28,797) x 30% = €960.90

The total tax before multiplying by the family quotient is €0 + €1,925.33 + €960.90 = €2,886.23. Since the family quotient has only one share, the final tax remains €2,886.23.

Example 2: A Married Couple with Two Children Earning €55,950

This couple has three shares (two for the couple and one for the children). The calculation is as follows:

• Divide the income by 3: €55,950 / 3 = €18,650
• Apply the tax brackets:
  • Income up to €11,294: 0% = €0
  • Income from €11,295 to €18,650: 11% = (18,650 – 11,294) x 11% = €809.16

The couple’s total tax before any discounts is €809.16 x 3 = €2,427.48. Because their income tax is below the threshold of €3,191, they qualify for a discount. The discounted amount is calculated as €1,444 – (€2,427.48 x 45.25%) = €346. Hence, the final tax owed after applying the discount is €2,427.48 – €346 = €2,081.48.

To assist with calculations, individuals can use the simulator available on the impots.gouv.fr website.

Adjustments to Net Tax Payable

The net tax payable can be adjusted based on various factors, including:

• Capping of the Family Quotient: Limits the tax benefits from the family quotient for higher incomes.
• Discount for Low Incomes: Reduces tax for households with modest incomes, with specific income thresholds established.
• Tax Reductions and Credits: Deductions from gross tax, with an overall cap in place for most households.
• Contribution on High Incomes: An additional contribution applies to high-income households, based on their reference tax income, with varying rates.

The family quotient cap is set at €1,759 for each additional half-share and €880 for each additional quarter share.

The discount applies automatically to those with gross income tax not exceeding certain thresholds (€1,929 for singles and €3,191 for married couples). The contribution on high incomes affects those with reference incomes exceeding €250,000 for singles or €500,000 for couples, following a progressive rate structure.

France Employee Hiring Cost

When considering the cost of employing an individual in France, several factors contribute to the total expense beyond just the gross salary. For example, for an employee with a gross annual salary of €105,000, the employer incurs additional costs in the form of social security contributions and other employer-related expenses. In this case, the annual employer costs amount to €47,664. Therefore, the total annual cost of employing this individual in France would be €152,664. This total includes the gross salary and the employer’s additional costs, showcasing the overall financial commitment required for employment in the French labor market.

Employee Benefits in France

In France, employee benefits encompass both mandatory and supplementary offerings designed to support workers’ welfare throughout their careers and into retirement. Below is an overview of the key mandatory employee benefits.

Mandatory Employee Benefits

• Old-Age Pension: The legal minimum retirement age is 62, while the age for full pension entitlement is 67. The qualifying period for a full pension varies based on the insured’s date of birth. Individuals can receive coverage credits for unemployment benefits or disability pensions, with provisions for women who have given birth. Special conditions apply to individuals with disabilities, long careers, and war veterans.
• Solidarity Allowance for the Elderly: Paid to low-income pensioners starting at age 65 or those assessed as unable to work with a disability of at least 50%.
• Long-Term Disability Pension: Available to individuals under the normal retirement age who demonstrate a significant loss of earning capacity and meet specific coverage criteria.
• Short-Term Disability Pension: Employees can qualify for short-term sick leave benefits after meeting minimum work-hour requirements. The daily allowance is set at 50% of the employee’s reference salary, with higher benefits available after 30 days of sick leave if the employee has dependent children.
• Spouse’s Pension: Surviving spouses aged 55 or older, or those with disabilities, may be eligible for pension benefits. Additional child supplements are available under certain conditions.
• Death Grant: A grant for beneficiaries if the deceased was employed or receiving specific social benefits at the time of death.
• Worker’s Compensation: Covers occupational accidents and diseases, with pensions determined based on the assessed incapacity rate.
• Medical Insurance: Mandatory medical care benefits are provided through France’s social security system, ensuring coverage for all employees. Those with very low incomes are covered under additional provisions.

Supplementary Employee Benefits

In addition to the mandatory benefits, French employees may also receive supplementary benefits:

• Retirement and Death in Service Benefits: These are managed through the National Old-Age Insurance Fund (CNAV) and supplementary plans such as ARRCO and AGIRC. Employers are obligated to pay death-in-service benefits, and additional allowances may apply according to collective bargaining agreements.
• Short-Term and Long-Term Disability: The minimum daily allowance for short-term disability is set by collective bargaining agreements, while long-term disability pensions are provided for employees under 60 who meet specific criteria.
• Medical Insurance: All employees are qualified for medical care benefits through a national agreement that mandates a minimum level of coverage. Employers typically cover at least 50% of the premiums.
• Worker’s Compensation: Permanent disability pensions and survivor benefits may also be included under collective bargaining agreements.
• Retirement: The General Scheme and supplementary plans operate on a pay-as-you-go basis, with funds sourced from the contributions of current employees and employers.
• Career Termination Indemnities: Employees with at least one year of service are entitled to termination indemnities, which are calculated based on their length of service and prior salary.

Work Permit in France

Recruiting foreign employees in France involves navigating specific regulatory requirements, particularly regarding work permits. Any foreign national without a visa or residence permit that allows paid employment in France must obtain a work permit. The responsibility for applying for this permit lies with the employer, whether based in France or abroad.

For British citizens, following the expiration of the post-Brexit transition period on December 31, 2020, it is essential to apply for a work permit based on their arrival date in France and individual circumstances. Additional information on this subject can be found in the dedicated resource, “Fact sheet: British nationals and their family members.” Employers are advised to submit the work permit application at least three months before the prospective employee is expected to start work.

Before submitting the application, employers must show that they have made reasonable efforts to hire from the local labor market. This involves attempting to find a suitable candidate already residing in France, utilizing government agencies such as Apec (Association pour l’emploi des cadres) and France Travail, or private organizations to explore local talent.

If the employment levels in a specific sector must be assessed prior to hiring a foreign employee, the employer must post the job offer with a public employment agency for a minimum of three weeks. This step ensures compliance with local hiring regulations and confirms that all avenues have been explored to recruit a candidate from the French labor market before proceeding with the work permit application.

EOR Solutions in France

Mercans stands out as a top Employer of Record in France for several compelling reasons:

• Regulatory Compliance: Mercans strictly adheres to all regulatory standards set forth by the French Ministry of Labour. This ensures complete compliance with labor laws and social security requirements.
• Independent Entity: Operating as a standalone organization, Mercans offers reliable and customized employment services tailored to meet specific client needs.
• Versatile Employment Solutions: Mercans efficiently manages a range of employment types, including full-time employees, freelancers, contractors, and expatriates. This flexibility allows us to cater to diverse business requirements.
• Enterprise-Ready Services: Designed with large enterprises in mind, Mercans provides scalable and sophisticated services that align with complex organizational structures, enabling seamless integration within existing systems.
• Multi-Currency Payroll Management: Mercans facilitates payroll processing in multiple currencies, streamlining financial operations for global and multinational companies.
• Global Network and Payroll Expertise: With an extensive international presence, Mercans excels in managing multi-country payroll, ensuring smooth and efficient operations across borders.
• Data Protection and Compliance: Mercans is committed to upholding stringent data protection standards. We are GDPR certified and compliant with SOC 1 and SOC 2 regulations, ensuring the highest level of security for our clients’ data.
• ISO Certifications: Our commitment to quality is demonstrated by our ISO 20000 and ISO 27001 certifications, showcasing excellence in IT service management and information security.
• OWASP ASVS 3.0 Compliance: Mercans meets OWASP ASVS 3.0 standards, ensuring robust security practices in application development and management.
• HRBlizz: Our proprietary HRBlizz platform is a global payroll and talent management SaaS solution designed to streamline payroll processes while ensuring compliance with local regulations. With a team of over 1,000 in-country specialists, we provide expert guidance on labor laws and business protocols.
• G2N Nova: G2N Nova is our advanced global gross-to-net payroll processing engine, operational in over 100 countries. Available as either a SaaS or service delivery platform, it can function independently or integrate seamlessly with major Human Capital Management (HCM) and Workforce Management systems.

Best Employer of Record France

Mercans stands out as a top Employer of Record in France for several compelling reasons:

• Regulatory Compliance: Mercans strictly adheres to all regulatory standards set forth by the French Ministry of Labour and is compliant with Inspection du Travail. This ensures complete compliance with labor laws and social security requirements.
• Independent Entity: Operating as a standalone organization, Mercans offers reliable and customized employment services tailored to meet specific client needs.
• Versatile Employment Solutions: Mercans efficiently manages a range of employment types, including full-time employees, freelancers, contractors, and expatriates. This flexibility allows us to cater to diverse business requirements.
• Enterprise-Ready Services: Designed with large enterprises in mind, Mercans provides scalable and sophisticated services that align with complex organizational structures, enabling seamless integration within existing systems.
• Multi-Currency Payroll Management: Mercans facilitates payroll processing in multiple currencies, streamlining financial operations for global and multinational companies.
• Global Network and Payroll Expertise: With an extensive international presence, Mercans excels in managing multi-country payroll, ensuring smooth and efficient operations across borders.
• Data Protection and Compliance: Mercans is committed to upholding stringent data protection standards. We are GDPR certified and compliant with SOC 1 and SOC 2 regulations, ensuring the highest level of security for our clients’ data.
• ISO Certifications: Our commitment to quality is demonstrated by our ISO 20000 and ISO 27001 certifications, showcasing excellence in IT service management and information security.
• OWASP ASVS 3.0 Compliance: Mercans meets OWASP ASVS 3.0 standards, ensuring robust security practices in application development and management.
• HRBlizz: Our proprietary HRBlizz platform is a global payroll and talent management SaaS solution designed to streamline payroll processes while ensuring compliance with local regulations. With a team of over 1,000 in-country specialists, we provide expert guidance on labor laws and business protocols.
• G2N Nova: G2N Nova is our advanced global gross-to-net payroll processing engine, operational in over 100 countries. Available as either a SaaS or service delivery platform, it can function independently or integrate seamlessly with major Human Capital Management (HCM) and Workforce Management systems.