Hiring employees shouldn’t be taken lightly in France and must be taken into account before starting a business. There are around 1.4 million companies in France without employees – and not without reason, as many successful small businesses become less so as soon as they start to recruit!
You must enter into a contract under French labour law and employees enjoy extensive rights. It’s also very expensive to hire employees: in addition to salaries, you must pay a 13th month’s salary, five weeks’ paid annual holiday and 40 to 60 per cent in social security contributions, although there are reductions for hiring certain categories of unemployed people.
There are tax ‘holidays’ for limited periods for newly formed companies, particularly regarding the first employee. During their first two years’ trading, most new businesses are required to pay only around 10 per cent of their first employee’s wages in social security contributions. Note, however, that the managing director’s spouse doesn’t count as a first employee! Neither does a shareholder in the company (or the spouse of a shareholder).
General rules and regulations governing the employment of staff are set out in the French Labour Code ( Code du Travail) as well as collective agreements ( conventions collectives de travail); specific rules are contained in an individual employee’s contract ( contrat de travail) and the employer’s in-house rules and regulations ( règlements intérieurs/règlements de travail).
Employees have extensive rights under the French Labour Code. The Code details the minimum conditions of employment, including working hours, overtime payments, holidays, trial and notice periods, dismissal conditions, health and safety regulations, and trade union rights. The French Labour Code is available online at the Legifrance website (www.legifrance.gouv.fr ).
Collective agreements ( conventions collectives) are negotiated between industry associations ( syndicats) and employers’ associations in many industries. These specify the rights and obligations of employees and employers in a particular industry or occupation and cover around 75 per cent of the workforce. If an employer doesn’t abide by the laws or the regulations in a particular industry, employees can report him to the works council or work syndicates. When an employee is wrongfully dismissed, he’s awarded damages based on his length of service.
Regulations are supervised by local work inspectors ( inspecteur du travail) and the Direction Départmentale du Travail et de l’Emploi et de la Formation Professionnelle (DDTEFP). They’re also consultants and can provide information and advice on employer (and employee) rights and obligations; they can be contacted via the DDTEFP.
Employment laws cannot be altered or nullified by private agreements. In general, French law forbids discrimination by employers on the basis of sex, religion, race, age, sexual preference, physical appearance or name, and there are specific rules regarding equal job opportunities for men and women.
Salaried foreigners are employed under the same working conditions as French citizens, although there are different rules for certain categories of employee, e.g. directors, managers and factory workers. Part-time employees are entitled to the same rights and benefits (on a pro rata basis) as full-time employees.
You’re required to notify the government employment service, the Pole Emploi , which has some 600 offices throughout France, of all job vacancies, but you’re generally free to recruit staff as you wish. You can, of course, make use of the services of the Pole Emploi or you can place job advertisements in newspapers, on the internet and even on television and radio. But most recruiting in France is done on a personal ‘word-of-mouth’ basis, so local networking should be an essential part of your early business plan. Whichever method you use, you must be absolutely sure you’re engaging the right person, as firing employees is difficult.
A recruit must be declared to URSSAF using a document unique d’embauche ( DUE), which must be submitted not more than a week before the employee is due to start work. This is known as the déclaration préalable à l’embauche ( DPAE), which must be acknowledged by URSSAF before employment can start. URSSAF pass the DUE on to the organisations responsible for registering the employee with social security and for health and safety. Details of the DUE can be found on URSSAF’s dedicated website (www1.due.urssaf.fr ).
Many French employers ‘hire’ students on training courses ( stagiaires). Nearly all training programmes, including those at university level, involve several periods of ‘employment’ – usually for a period of three to six weeks, but sometimes as long as six months. In the vast majority of cases, these short-term ‘employees’ aren’t allowed to accept payment (or only a limited amount, e.g. the statutory minimum wage) and their social charges are covered by the school or university (or their parents).
There are some tax benefits to hiring stagiaires or apprentices ( apprentis). Businesses often re-engage the same stagiaire for the whole of their training/school career and then make them an offer of permanent employment when they finish school. By the time they graduate, they know your business reasonably well and can start doing some ‘real’ work the moment you have to start paying them ‘real’ money!
For all recruitment, candidates submit a CV or résumé (the French use the same two terms), which often includes a photograph of the candidate. French CVs are relatively conservative, without the hype and hard-sell commonly found on American résumés, although the format is much the same. If your business is listed in any sort of local guide or even just in the yellow pages you will receive unsolicited applications from would-be stagiaires and from those looking for permanent employment. You don’t need to respond to these, but a candidate might be just the person you’re looking for.
Salaries above € 3,000 per month must be paid by cheque or direct transfer (not cash). You must issue employees with a pay slip ( bulletin de paie) itemising their salary and deductions.
Computerised payroll programs are widely available, usually as part of a ‘management software’ package ( logiciel de gestion), including accounting, payroll, and gestion commerciale, which combines purchasing, inventory, and accounts receivable and payable. Among the cheapest are Ciel and ESB, which can even be bought in hypermarkets; one of the most popular programs is Sage (not to be confused with the English software package).
Expenses ( frais) paid to employees may include travel costs from their home to work, usually consisting of a second-class rail season ticket or the equivalent amount in cash (paid monthly with their salary). Travelling expenses to and from a place of work are tax deductible. Companies without a restaurant or canteen may pay a lunch allowance or provide lunch vouchers ( chèques or tickets restaurant) for use in local restaurants and some food shops.
Permitted expenses should be listed in your employment conditions. Expenses paid for travel on company business or for training and education may also be detailed in your employment conditions or listed in a separate document.
Employees pay their own tax, as France has no pay-as-you-earn (PAYE) system. There has been periodic debate on the introduction of a PAYE system, but the idea has had little support, especially from employers, who are reluctant to ‘do the government’s work for it’, and tax authority employees, who don’t want to give the government any excuse for thinning their ranks! It’s even unpopular with employees, who consider it a violation of their private lives for their employer to calculate how much tax should be withheld from their pay. As an employer, you must of course declare and pay your own income tax.