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Frequently Asked Questions

French Employment Law :

What is the URSSAF ?
Does PAYE (i.e. personal income tax paid monthly by the employer on behalf of the employee) exist in France ?
Should I give a share option to my French (senior) employees ?
What is the standard notice period in Employment French law ?
What is the standard number of hours worked per month ?
Can a Director of a French company also be a salaried employee ?
How should I go about dismissing an employee ?
What is the distinction cadre/employee ?
Can an employee be paid in a foreign currency ?
Can an employee be paid in foreign bank account ?
Is an employee obligatorily subject to French Law if working in France ?
Can an employee work in France directly for an entity based outside France ?
What is the extra cost of Social Security and other State and assimilated contributions ?
What is the competent jurisdiction for Labour Law litigation ?






What is the URSSAF ?

The URSSAF (Union pour le Recouvrement des cotisations de Sécurité Sociale et d'Allocations Familiales) is a French quasi-state body which is responsible for collecting the multiple employee and employer contributions for health cover, unemployment insurance, retirement and pension plan etc. The burden falls upon the employer to declare and remit the relevant sums each month to the URSSAF.



Does PAYE (i.e. personal income tax paid monthly by the employer on behalf of the employee) exist in France ?

The onus to declare personal annual income to the French Tax Authorities falls upon the employee who is alone liable for payment thereof. The system is essentially one of self assessment and a declaration must be made by most employees in March of each year, in regard to income earned during the previous calendar year. The employer, in general terms, has no obligation to remit amounts corresponding to Income Tax to the French authorities and simply makes an annual overall declaration as to sums paid out of salary.



Should I give a share option to my French (senior) employees ?

Subject to a limited number of exceptions, the granting of share options to employees is not as widespread as within a number of common-law jurisdictions, not least because it is very difficult to recover shares in the event that the employee in question were to leave the corporation. The concept of shadow-share options is not widely known of in France, but does exist within certain French entities.



What is the standard notice period in Employment Law ?

It is somewhat difficult to generalise, but an important distinction exists between ordinary salaried employees (in French "employés" – nota that the generic word in translation for all employees would be "salariés") and executives (cadres) the former would tend to enjoy a one month notice period and the latter a three-month notice period.



What is the standard number of hours worked per month ?

Salary is paid monthly in France and will normally be based on a number of hours per month. The standard number of hours worked per month is 151.67 hours, based on a standard working week of 35 hours. This standard number of hours worked per month is very flexible. Employees' monthly working time may be raised up to 170 hours or more, although an employee may not work over 180 extra hours per year in the absence of a Collective Bargaining Agreement.



Can a Director of a French company also be a salaried employee ?

A Director of a French Company, (viz. in translation an "Administrateur" and not a "Directeur" which generally means a Manager) is not generally held to be a salaried employee. He does not therefore receive a salary, but instead agreed net compensation for his attendance of Board Meetings and related work. Thus, as a matter of legal construction, he does not benefit from statutory Employment Law provisions nor enjoy social security, health, unemployment or retirement cover which normally flow from a salaried activity. Subject to certain restrictions, he may also hold a separate technical or other post within the company of which he is a Director for which he concludes a contract of employment and which entitles him to the full protection of French Employment Law provisions.



How should I go about dismissing an employee ?

Click here to consult the relevant point under the Employment Law head.





What is the distinction cadre/employé ?

The distinction between a "cadre" and an "employé" is very important in France, not only in legal terms, but also culturally and socially. Roughly speaking a "cadre" would correspond to a category of employees at an executive level within a corporation, and the French word "employé"(,) (not to be confused with employee in English), would correspond to the remaining category of workers who came beneath this level. The technical translation of "employee" in English would be "salarié" in this context. Great care should be taken prior to appointing or promoting an employee to the status of cadre, as it could engender a number of legal ramifications for the employer, for instance relating to notice period, retirement benefits, health cover etc.



Can an employee be paid in a foreign currency ?

Generally, no and his salary must be able to be expressed in Euros.



Can an employee be paid in foreign bank account ?

Generally, no.



Is an employee obligatorily subject to French Law if working in France ?

In general terms, the public policy provisions of French Employment Law which are to the advantage of the employee, as opposed to the employer, would be applicable in respect of all contracts of employment if working in France. Thus agreements, in whatever language, drafted between parties, neither of which were French, and made subject to an applicable law other than that of France might nevertheless be susceptible to a construction wherein French public policy rules would prevail.



Can an employee work in France directly for an entity based outside France ?

Subject to a number of caveats, it is possible for an employee to work directly in France as a salaried employee of an entity based outside France. Nevertheless, social security, health, retirement and other such contributions would usually be payable in France to the competent authorities and an employee resident in France would normally be required to make a declaration of his income to the French Tax Authorities.



What is the extra cost of Social Security and other State and assimilated contributions ?

Social security contributions are levied on gross salaries at approximately 50% for the employer, and circa 20% for the employee. Thus on a gross salary of 100, the overall cost to the employer would be circa 150, whereas the net salary received by the employee would be circa 80.
A separate general social security contribution is levied on all income at a rate of 7.5% in most cases, together with a social debt repayment tax is due on all income at the rate of 0.5%. These contributions are included in social charges on salaries, but can apply separately to severance packages for instance.
A specific local business tax, known in French as the Taxe Professionnelle (T.P.), is due by all French business entities, be they companies or individual undertakings. The calculation thereof is based upon the annual rental value of their tangible assets linked to a proportionate amount of the overall salary bill, (although the component based on salaries is gradually disappearing).The average annual rate is 22%, but it varies according to the geographical location of the business entity.



What is the competent jurisdiction for Employment Law litigation ?

The Conseil de Prud’Hommes (from old French meaning Council of the Wise Men) is the specific French jurisdiction dealing with all Labour Law matters. Its bench is made up of elected Judges from two electoral colleges, i.e. representing respectively the employees and the employers as two separate notional groupings. Its decision are susceptible to Appeal before the Cour d’Appel.







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