Claude Monet. Marcel Proust. Serge Gainsbourg. If you're interested in art, literature, or music, you likely view France as a world leader in producing great artists, authors, and musicians.
But did you know that a wealth of freelance talent calls the country home, too? CEOs across many industries certainly do. The reason: France is one of the largest economies in Europe. Not only that, more than three million self-employed contractors live and work in France — about 10% of all EU contractors.
It's a dynamic base of workers skilled in everything from copywriting to visual effects to coding. However, like many countries, France has specific rules you must follow to stay compliant when hiring freelancers.
Key takeaways:
- French labor law includes multiple categories for freelance workers and independent contractors, including specific designations for low-revenue individuals and one-person companies.
- Misclassification of independent contractors who the French government determines to actually be full-time employees can cost employers hundreds of thousands of Euros in penalties.
- Contract terms that clearly define the employment relationship can help employers ensure talent is compliantly employed.
Understanding France's Legal Definition of an Independent Contractor
A freelancer (or travailleur indépendant) is defined by local labor laws as someone who works for themselves, is not subordinate to a client, and may conduct their business as a registered micro-entrepreneur.
The Code du Travail Defines Differences Between Contractors and Employees
French law, as outlined in France's labor code, the Code du Travail, distinguishes how contractors differ from employees, including the fact that contractors control when they work, use their own tools and resources, and typically have the autonomy to work for multiple clients.
In contrast, employees operate under their employer's direction, use company resources, receive a fixed wage, and are integrated into the company's structure and hierarchy.
The Code du Travail mandates numerous employee benefits for French workers, such as paid vacation (congés payés), sick leave (arrêt maladie), and unemployment benefits (allocation chômage). These types of benefits are not available to independent contractors.
Consequently, French authorities closely monitor worker classification to prevent companies from circumventing their obligations and depriving individuals who should be employees of their legal rights.
French Contractor Categories: What Employers Should Know
French contractors typically operate under one of several legal categories, including:
- Micro-entrepreneur: A status reserved for freelancers who meet low annual revenue thresholds
- EURL or SASU: One-person companies governed by a unique tax scheme
- Portage salarial: A model in which a contractor is technically employed by a third party, such as an Employer of Record
Companies should verify that the contractor is compliantly registered and meets all local tax and social contribution requirements.
This information may need to be verified via an Attestation de vigilance, which confirms that a contractor is current on their income tax and social obligations.
Worker Misclassification Risks & Penalties in France
Misclassifying a worker may be your most significant risk when employing an independent contractor.
That’s because if government authorities determine that a contractor is working under conditions similar to those of an employee — say, they use a company computer and complete tasks during regular working hours — the French labor authorities may reclassify them as an employee.
This could lead to significant financial penalties, including:
Back Payment of Social Security Contributions
- The company may be found responsible for the employer's share of Social Security contributions, typically more than a third of the gross salary, that should have been paid during the entire period of misclassification.
- The authorities may also expect the employee's share of contributions, which the company should have been withholding from the payments made to the contractor.
- Late payment penalties (5%) and interest (0.2% monthly) can be applied to any outstanding amounts.
Back Payment of Salary and Benefits
- The reclassified employee may be entitled to retroactive salary, including bonuses, for the difference between the amount they were paid as a contractor and what they would have earned as an employee.
- This can also include compensation for paid holidays they should have received as an employee.
- Back payments may also be subject to interest.
Fines
- Administrative fines: The Institutions for the Collection of Social Security and Family Benefit Contributions (URSSAF) can impose significant administrative fines for undeclared work (travail dissimulé), including misclassification.
- Non-compliance with hiring declarations: Failure to file the required pre-hiring declaration (Déclaration Préalable à l'Embauche, or DPAE) for an employee can result in significant fines.
To avoid these costly consequences, be sure not to give contractors tasks or instructions that give even the appearance that they could be your employees. Maintain clear contractual boundaries and allow them autonomy in how they deliver the work.
All that said, there's a significant upside. By staying compliant, you're avoiding financial penalties and significantly reducing the risk of serious legal consequences, including potential criminal charges or even jail time.
How to Pay Contractors in France
Prepayment? Net payment? Retainers? To work with freelance talent compliantly, you must also figure out how to pay them. This includes the payment frequency and method (e.g., transfers to their bank account or via apps like PayPal).
Be sure to:
- Choose a secure payment method.
- Determine the currency you will use to pay the contractor.
- Pay the contractor on time.
- Keep a record of all payments made.
Additionally, consider running a background check before paying a contractor for the first time. Why? Verifying the identity of your independent contractors helps avoid fraud and other potential crimes, like money laundering.
Complying With French Tax Obligations
While French law typically places the responsibility on independent contractors for withholding their own taxes and social security contributions, companies that employ contractors must be mindful of their obligations.
This includes retaining contracts, invoices, proof of payments, and verifying any necessary registration that the contractor must complete with local tax authorities.
Records such as invoices and emails between you and the contractor help substantiate the independent nature of the working arrangement and safeguard against allegations of undeclared work.
Mitigate Risk With Clear and Comprehensive Contracts
We've said it before, and we'll say it again: written contracts are essential. Here's a checklist for what to include in an employment contract for freelancers in France:
- The exact scope of work and the deliverables expected
- The length of the contract
- The schedule and terms for payment
- Intellectual property, confidentiality, and non-compete protections
- How potential disputes will be resolved (e.g., mediation)
- How, when, and why the agreement can be terminated
Comprehensive contracts help safeguard you and the talent that works for you. If the French government audits your employment records, the contract will help support your contractor's classification as truly independent.
Consider Seeking Help From Employment Experts
Navigating the compliant employment of independent contractors in a strictly regulated environment like France can be challenging.
However, if you team up with an Employer of Record (EOR), the process becomes much smoother. An EOR handles contract management and payments and ensures full legal compliance with local employment laws.
An EOR can take a lot of the legal and admin stress off your plate when hiring contractors in France, but it's still up to you to ensure the working relationship looks like an independent one. That's what keeps you on the right side of local laws.
Employ and Pay French Contractors With RemoFirst
Ready to tap into France's wealth of freelance expertise but worried about navigating the nuances of the French legal landscape? As an EOR, RemoFirst offers a straightforward solution for compliantly managing and paying global contractors in 150+ countries.
Our contractor management and payment plan costs $25 per contractor per month and offers features such as contract creation, streamlined international payments, automated invoicing, and comprehensive reporting.
With RemoFirst, you can confidently build your global workforce and minimize the risk of misclassification under French law and in other jurisdictions.
To explore how RemoFirst's full suite of services, including our comprehensive EOR options, can streamline your international talent acquisition, schedule a demo today.
.png)
.png)
