It is possible to recruit an employee in France without setting up an establishment there. However, this does not mean that French rules can be circumvented.
Below are the 5 main mistakes to avoid when a foreign company recruits in France.
1. Assuming that a French company must be set up
A company established abroad may hire employees in France without having a French establishment.
URSSAF (Union de Recouvrement des cotisations de Sécurité Sociale et d’Allocations Familiales, the French body responsible for collecting social security contributions) has a department specifically dedicated to foreign companies with no establishment in France, known as the “Firmes étrangères” (Foreign Companies) department, which handles the administration of employees of foreign companies.
2. Believing that “no establishment” means “no obligations in France”
This is probably the most significant misunderstanding. The principle is rather to allow a foreign company to recruit in France without necessarily setting up a French establishment, while complying with the French obligations that apply to its activity as an employer.
Any company employing a member of staff in France must comply with:
- the necessary registration formalities;
- the pre-employment declaration (déclaration préalable à l’embauche, DPAE);
- the obligations arising from the employment contract;
- social security declarations;
- the payment of social security contributions and levies;
- the French rules applicable to the employment relationship.
3. Using an employment contract from the country in which the company is registered
Another common mistake is to take the employment contract template used in the home country and simply translate it into French.
However, when an employee works in France, the employer must take into account the French rules applicable to the employment relationship.
This applies in particular to the essential elements of the contract and of the employment relationship: remuneration, working hours and organisation of work, probationary period, leave, social protection, termination of the contract, and any applicable collective agreement provisions.
The hiring procedure itself involves specific formalities. For example, the employer must submit a DPAE for each employee before they take up their position.
The employment contract must therefore be designed for the French context, and not simply imported from the home country.
4. Underestimating French social security contributions and obligations
For a foreign company, French payroll can be difficult to grasp.
Gross salary is, of course, not the only cost to be taken into account. Where the employee falls under the French social security system, the foreign employer must, in particular, file social security declarations and pay social security contributions.
This means that a recruitment budget based solely on the gross annual salary may be incomplete.
Before finalising a job offer, it is advisable to draw up a full estimate of the employer cost in France, including in particular: remuneration + employer contributions + any benefits + employment-related administrative costs.
5. Neglecting French payroll management
Another mistake is to assume that French payroll can be managed with the same tools and methods as in the home country.
Employing a member of staff in France means complying with a set of rules and formalities specific to the French system.
In particular, payroll must make it possible to calculate remuneration and the applicable contributions correctly, to produce the mandatory documents and to file the corresponding social security declarations.
Do you require assistance in hiring one or more employees in France under ESEF status? Please do not hesitate to contact us to benefit from specialist support.