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French Employment Law - FAQ's
1. If my company does not have a subsidiary or branch on French territory, can we nevertheless employ someone to work for us in France?
It is not an absolute legal requirement for a foreign company to set up a subsidiary or a branch on French territory in order to employ someone.
However, the employer has a number of statutory (and sometimes heavily sanctioned) obligations under French Law, for example to register the employee prior to him or her starting work and to pay all social security and similar contributions in regard to its employee to the French authorities, such as the URSSAF.
Your company will thus need to have a fixed address in France, and it is usually advisable that this should be a different address from the home address of the employee – thus it is often appropriate to set up a subsidiary not only from a practical point of view but also from the perspective of limitation of liability of the overseas company’s officers.
2. My corporation issues standard contracts of employment and these are subject to the law of the USA (or the UK, Ireland, Germany, Netherlands etc); can I employ someone in France under such a contract?
Theoretically, under the Rome Convention relating to the law applicable to contractual obligations, parties to a contract have freedom of choice in regard to the law applicable to the contract.
However, like many continental European jurisdictions, France has adopted a number of public policy or mandatory provisions which would generally prevail over any existing non-French contractual agreements if the local French rules were more favourable to the employee.
Thus, if the employee is to perform his or her duties in France, it is often considerably more practical to offer a contract of employment subject to French Law to the employee in question and this solution would tend to avoid doubt or misunderstandings between the employer and employee as to whether or not a specific provision of non-French agreement were applicable.
The alternative of reviewing the standard contract of employment issued by the foreign company in order to check its compliance with French Law is often unwieldy and sometimes more costly than drafting a new employment agreement in accordance with French Law.
3. Does an employment contract drafted in English comply with French law?
Pursuant to article L.121-1 of the Code du Travail (Codified Employment Statutes), any written contract of employment entered into in France must be drafted in the French language.
Thus, in the event of a dispute as to the meaning of the provisions of a particular agreement, if the contract were not drafted in French, the employer would not usually be able to rely on its content if this were not to the advantage of the employee.
It would be possible however to provide a bilingual contract of employment to the employee – for example in French and English, but it should be borne in mind that the French version would always prevail in the event of a dispute as to the scope or meaning of the agreement.
4. Must I provide French style payslips to my employee(s) in France and must they be in French?
Under French Law, it is an absolute requirement for the employer to remit a formal payslip to the employee at the end of each month.
Pursuant to article R. 143-2 of the French Code du Travail (Codified Employment Statutes), the payslip must contain a certain number of mandatory pieces of information and failure to comply with this provision could lead to a fine and possibly proceedings.
Moreover, in the event that a French Collective Bargaining Agreement were applicable to the undertaking, then there may also be specific provisions in regard to the mandatory information which should appear on the payslip.
Thus, in the light of the foregoing, it is highly advisable that all employees in France should be handed French style payslips drafted in French.
It is mentioned that the presentation thereof is extremely detailed when compared to those in a number of common-law jurisdictions and it would often be advisable to seek professional help in this respect.
5. What is the standard form of employment agreement in France - fixed term or open term?
The standard and statutory form of employment agreement in France is that of an open term contract (known in French as a Contrat à durée indéterminée or CDI).
It is important to note that a temporary or fixed-term agreement is an exception to the general norm of an open-term contract and may only be entered into in strictly limited circumstances set down by statute – such circumstances might include a temporary and objective increase in the activity of the company, replacing an employee who is on maternity leave, seasonal work etc.
The maximum term of such short term agreements (known in French as a Contrat à durée déterminée or CDD) is eighteen months and should an agreement for a shorter period then, in the event of a renewal, the combined term of both contracts may not exceed eighteen months.
6. Will the provisions of a particular collective bargaining agreement (CBA) be applicable to the relationship with my French employee?
There are a considerable number of collective bargaining agreements (CBA) in France, some for example are applicable nationally, some regionally and some to specific business sectors only.
In general terms, the provisions of such CBAs are more favourable to the employee than to the employer and constitute an improvement (from the employee’s perspective) upon the statutory of the French Code du Travail (Codified Employment Statutes).
Moreover, in a number of cases, such CBAs would be automatically applicable to undertakings in a particular industry or business sector regardless of whether the company itself were a signatory to the CBA in question.
There is a relatively simple (but not infallible) method of determining which collective bargaining agreement is applicable to a company already registered in France viz. by taking its APE code (a number allocated to the company according to its activity by the French authorities) the applicable collective bargaining agreement may usually be quickly identified online.
7. What is the “DUE” in the context of taking on a new employee in France?
The DUE (declaration unique d’embauche) is a compulsory formality which must be undertaken by all employers, of whatever nationality, prior to hiring a new employee in France.
The undertaking of this single obligatory formality is intended to ensure that the employee is registered with the French social security and other authorities as well as with the appropriate occupational health organisation(s) etc.
8. I have been told that it is often necessary for a new employee to undergo a medical examination prior to starting his or her job. Is this a legal requirement?
Undertaking a medical examination prior to starting work is indeed a legal requirement.
Pursuant to article R.241-48 of the Code du Travail (Codified Employment Statutes) every employee must undertake a medical examination (visite médicale) prior to employment or at the latest prior to the termination of the trial period.
The aim of this visit is notably to check the following:
- whether the employee suffers from a serious infection which could be dangerous for other employees,
- whether the employee is fit to perform the duties for which he or she is to be responsible,
- whether, in function of results of the medical examination, the position offered might be adapted or another position be offered to the employee
9. I want to include a non competition clause in the contract of employment – is this possible?
It is possible to include a non-competition clause in a French contract of employment, but there are a number of conditions which must be met in order for such a non-competition obligation to be valid.
It is mentioned first that, in any event, the employee is subject to an obligation of non competition during the term of the contract of employment and during the performance of his or her duties.
However, if the employment agreement provided for a non-competition obligation upon the termination of the employment contract, the restrictions must, for example, be limited in time and to a specific defined geographical territory, be necessary for the protection of the legitimate interests of the company and last but not least contain a financial counterpart.
By financial counterpart, it is meant that the company will be required to pay a certain amount each month to the former employee who is bound by the non competition obligation and this sum could often be circa 50% of the previous salary.
The clause should always be drafted in accordance with a collective bargaining agreement where applicable.
10. Should I offer my new employee(s) in France complementary schemes in terms of medical and life insurance over and above the standard French provisions?
It is worth noting that the compulsory healthcare cover in France is relatively comprehensive compared, say, to the USA or even the UK
The contributions on top of salary by the employer and the employee to French social security, pensions and unemployment schemes are however significant. There may also be top-up contributions to complementary schemes – and some of these are mandatory under the applicable collective bargaining agreement.
It follows that because the contributions to French social security, pensions and unemployment schemes in France are high, most employers do not usually offer any more than the compulsory cover. That said, it would be normal practice in France to offer mutual health insurance cover which would provide a top-up over and above the cover provided by the French social security system for managerial grade employees.
11. What would be the approximate cost on top of salary I would be required to pay to the French authorities to cover unemployment, retirement, sickness and other contributions?
Known in French as “charges sociales”; such contributions would include payments to unemployment fund, retirement fund, sickness fund etc and in France normally constitute circa 20% of salary for the employee and up to 50% for the employer. Thus the gross cost to the employer of employing somebody is situated between 150% of gross salary and 200% of net salary.
12. How many weeks vacation (holiday) must I give to my French employees?
Pursuant to article L. 223-2 of the Code du Travail (Codified Employment Statutes), the employee having built up the appropriate entitlement at two and a half working days per month of service (in the yearly reference period) is entitled to a paid vacation of 30 working days per annum (25 days per annum in terms of week days).
On top of the above paid vacation or holiday entitlement, the employee will also enjoy the statutory French Bank and National Holidays - which may, in a given year and depending on the calendar, be a further 10 days or so.
13. What is the period of reference for calculating such pay?
The normal reference period for the calculation of the vacation entitlement is from 1 June to 31 May each year
It is worth noting that holidays are usually accrued but not taken in reference year “n” (1 June to 31 May) but that the instead the entitlement may be taken in the following year “n+1”.
14. If I decide to envisage a bonus scheme – should I put this in the employment agreement? May I remove or modify the provisions of any existing bonus scheme?
It usually depends on whether or not the company opts for a discretionary bonus scheme or a regular bonus scheme.
(1) If the variable component is a totally discretionary amount, then the contract of employment would often not mention the bonus scheme at all.
It is also generally the case that a discretionary bonus is not considered to be an integral part of the salary and thus the employer is often held to be able to modify the details of the bonus or commission package at his or her discretion.
(2) However, if it is a clear agreement between the parties that the employee is entitled to a variable bonus or commission on top of his or her fixed salary, then the variable component would normally appear in the contract of employment.
In this case, the employer may not at his or her discretion modify the rate and the details of the variable component.
This is because the variable component, paid on a regular basis, is considered to be an integral part of salary and thus the prior written agreement of the employee is required for any modification thereof.
15. May I envisage stock options for employees in France?
A French company may offer shares to its employees in the form of stock-options. However only certain types of French company (a société anonyme (S.A.), a société en commandite par actions (SCA) or a société par actions simplifiée (SAS)) may do this. Other forms of French company (e.g. a société à responsabilité limitée) may not do so.
A parent company may also grant stock-options to employees of one of its French subsidiaries, provided that, directly or indirectly, it controls 10% of the share capital of the employee’s company. The parent may be a foreign company. The foreign stock-option scheme must however meet French law requirements.
In all cases, the beneficiaries may be employees or officers of the French company and a choice may be made between granting the stock-options to all members of staff or only to certain categories (e.g. cadres or management level executives).
16. My employee’s contract states that either party may terminate the agreement subject to three months’ notice; can I therefore simply give such notice to my employee at any time?
The short answer is ‘no’ and in France, great circumspection should be shown when envisaging the termination of an employment contract.
Under French Law, and notwithstanding the clause relating to notice, an employer may not dismiss an employer without establishing formal objective cause or grounds which come within the scope of statute or case law requirements.
In respect of such grounds, a general distinction is made between dismissing an employee on personal grounds (poor professional performance of his/her duties, insubordination, disciplinary problems etc) and dismissing an employee on economical grounds (termination of activities of the company, company losing money, reorganisation of the company etc).
In the event that it is held that the employer terminated the employee’s contract without cause the employee may bring the matter before the Employment courts and seek damages, reinstatement etc..
In addition, there are a number of situations where a dismissal might simply be held to be null and void as a matter of law e.g. dismissal of an employee who is pregnant or of a person who has been subject to sexual or moral harassment.
In addition to the above, the employer must always comply fully with the procedural rules on dismissal and failure to do so could expose the employer to claims for damages and possibly render the dismissal null and void.
17. If I do decide to dismiss an employee, are there any particular procedures under French Law to comply with?
Under French law, the employer must always follow a specific and exacting procedure in order to dismiss an employee on whatever grounds.
For example, the employer should invite the employee to a formal initial meeting during which he or she explains to the employee the grounds for the measure envisaged
The notice of the meeting must be sent by recorded mail with proof of delivery slip or be handed to the employee against a counter signature. It should contain the information required under the applicable provisions of the French employment code. The employer should also comply strictly with the provisions of the French employment code in regard to the period of time between (a) the sending of the letter of summons and the meeting date and (b) the meeting date and the sending of the dismissal letter. The dismissal letter should be sent by registered post with proof of delivery slip. The dismissal letter should give details of the grounds of the dismissal measure.
A further example of a procedural and substantive requirement would be that even in respect of a single redundancy, the employer should seek out (and be seen to have sought out in writing) any other possible position for the employee in France or within the group elsewhere before considering redundancy. In the event that such redeployment were not possible, then the employer may envisage making the employee redundant and summon the employee to an initial meeting.
Moreover, if the company employs less than 1000 people, it will have to offer the employee a personal special training leave agreement “convention de reclassement personnalisé”. If the company employs more than 1000 persons, it will have to offer the employee a special training leave “congé de reclassement”.
Finally, in that virtually all types of staff representatives are held by law to be protected employees, any possible measure of dismissal of such protected personnel requires prior authorization from the Works inspectorate.
18. What are the minimum legal or severance costs for the company which dismisses its employee?
There is unfortunately no statutory ‘one-size-fits-all’ provision and the legal and severance costs will vary considerably according to many different criteria, however each employee who is subject to dismissal would in theory be entitled to payments under the following heads
Compensation for the notice period,
Compensation for holiday/vacation not taken,
Statutory Compensation for dismissal - or if more favourable to the employee, compensation for dismissal provided by the applicable Collective Bargaining Agreement (usually as from two years of service with the company).
Redundancy compensation (if applicable)
19. Can the employee continue to enjoy benefits in kind during the notice period from which he/she is released?
The employee who has been given benefits in kind during the course of his or her employment; for example a company car for both business and private purposes should be able to enjoy these benefits in kind during the whole of the notice period even though he or she has been released from working the full notice period.
20. If the employee decides to take his or her dispute French Employment Courts, what heads of compensation he or she may claim?
The employee may claim compensation for dismissal on unjustified grounds as well as for a non compliance with the procedure.
For example, if the company employs at least 11 people and the employee who is dismissed has at least two years of service, then the employee would be entitled to compensation of at least 6 months’ salary if the dismissal is held not have been justified.
If certain procedural requirements have not been complied with, the employee could claim up to one month’s salary. It is worth noting that the compensation due for non compliance with the procedure can only be granted if the dismissal is held to be justified. Compensation for unjustified dismissal and the compensation for non compliance with the procedure cannot both be granted in the same action.
21. What is the “DIF” in an employment context? And how should it be paid?
The DIF (droit individuel à la formation) is an individual right for each employee to seek further training and under French law every employee has the right to up to 20 hours of such training per calendar year.
The employer must inform its employees each year of the number of hours they have accrued under this individual right to training.
If the employee undertakes his/her training during working hours, the employer must nevertheless continue to pay him/her his normal salary.
If the employee undertakes his/her training outside working hours, the employer must pay the employee an allowance for such training which corresponds to 50% of the net amount of salary.
22. Is settling out of Court possible in Employment disputes?
It is always possible to settle out of court, even up to and including the date of the trail hearing, but it great care should be taken as to the method of achieving this. Depending upon the circumstances, a simple waiver signed between the parties is often held to have no value.
23. My employee is talking about resigning – what steps should I take?
Under French law, an employee has the right to terminate his/her contract of employment at any time. However, from the employer’s perspective, care should be taken to avoid any complaint of constructive dismissal, and for example the resignation decision must be seen to be clearly expressed and non equivocal, preferably in writing and sent to the employer by recorded mail. The employee should in normal circumstances nevertheless carry out his or her full notice period which starts from the date of notification of the resignation.
24. Should there be a staff representative or works council in my French entity?
It is a legal requirement for private companies to organize elections to enable employees to elect:
(a) Staff representatives if the company employs at least 11 persons (article L.421-1 of the Code du Travail [Codified Employment Statutes]).
(b) A Works Council if the company employs at least 50 persons (article L.431-1 of the Code du Travail [Codified Employment Statutes]).
25. Should I envisage putting in place an in-house rule and procedure book?
It is compulsory for companies employing at least 20 persons to put in place an in-house rule and procedure book (article L.122-33 of the Code du Travail [Codified Employment Statutes]).). It is however possible to envisage putting in place an in-house rule book in companies employing less than 20 persons.
It should be noted that the scope of in house working rules is strictly defined by the French employment code (article L.122-34 of the Code du Travail [Codified Employment Statutes]).) and that there is a specific procedure to follow before the in-house rules become operational.
26. What is the statutory minimum amount of maternity leave I must give my employee?
An employee who is pregnant is entitled to maternity leave for a fixed period before and after the assumed date of the birth of her child.
Thus, a woman who is pregnant with her first child has a right to maternity leave for a period which starts six weeks before the date of the assumed birth and which ends ten weeks after the birth of the child.
The length of the maternity leave may be increased in a number of circumstances e.g. in the event of either multiple births or when the birth brings to three or more the number of children of the employee in question.
27. Can I make an employee who is pregnant redundant?
Pursuant to article L 122-25-2 of the French Employment code, no employer may terminate the employment contract of a person who is pregnant and any attempt to terminate the employment contract of a person who is pregnant would usually be held to be null and void.
28. My employee wishes to change from the status of an existing employee to that of being freelance or self employed – Is it possible?
Such a change could constitute a risk from the employer’s perspective as the French Courts could hold that the de facto relationship has not changed i.e. if the alleged freelance person has only one principal and accepts instructions therefrom as to the day to day organisation of the his or her work, then this relationship could be re-qualified by the Courts as a contract of employment. This could bring about a number of serious consequences for the employer, for example payment of social security and other contributions (backdated), application of French employee dismissal and disciplinary provisions to the relationship etc
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