Payroll in France: good preparation is the key to success!

The correct legal structure, company number and activity code  

You don't necessarily need to set up a separate legal entity in France to start hiring employees. This is also possible as a company not based in France. That being said, officially setting up a ‘succursale’ (branch) or separate company in France can offer certain advantages.

Regardless of chosen structure, your company will be assigned a company number. This unique number allows the company to be registered with the relevant French services. In addition, the company will need to be assigned the correct activity code (NAF code or APE code) to classify its activities. This code will determine your choice of collective labour agreement.

Defining your collective labour agreement and drafting employment contracts

When drafting your employment contracts, you will need to take into account a series of mandatory provisions under French labour law. These provisions are determined not only by law, but also by the collective agreement itself. In addition, French law requires employment contracts to contain a certain number of mandatory disclosures, including the nature of employment contract, identifying information for both parties, commencement date, length of probationary period, place of employment, working hours, position, salary, etc.

Application to the URSSAF

Any employer wishing to hire an employee for the first time must notify the French Social Security Administration (URSSAF – Union de Recouvrement des cotisations de Sécurité Sociale) in order to obtain employer status in France. As well as your company number, you will then also be issued an identification number by the same body.

Affiliation with occupational health service

 As part of any employer's obligation to ensure the health and safety of their employees in the workplace, employers in France are required to affiliate themselves to an occupational health service (Service de Prévention et de Santé au Travail).

On the one hand, this obligation fulfils a preventive function, particularly in informing employees and making them aware of the professional risks of their job. On the other hand, it also fulfils an advisory function, which consists of assessing the fitness to work of employees who have been absent for long periods, periodic monitoring of employee health, assistance in mitigating certain risks, etc.

Employee recruitment

Application to the URSSAF

Before starting employment, employees must be registered with the URSSAF through a DPAE or 'Déclaration Préalable à l'Embauche'. Through this declaration, each employee is also covered by French statutory workplace accident insurance, meaning you do not need to take out separate insurance for this purpose. Contributions pertaining to statutory workplace accident insurance are included in your total monthly social security contributions.

A DPAE must always be submitted both on time and as accurately as possible, starting eight days prior to the commencement of employment. Should this not prove to be the case, any employment will be qualified as undeclared work when checked by the labour inspectorate.

Compulsory social insurance

Every employer, regardless of whether their company is based in France or not, must provide three compulsory social insurance policies for their employees: ‘retraite’ (pension), ‘prévoyance’ (provident fund) and ‘mutuelle’ (health insurance).

Pension insurance involves supplementing the statutory basic pension. The provident fund is there to intervene in case of long-term, albeit temporary incapacity for work, disability or death. As for the compulsory health insurance, this is designed to cover medical expenses for hospitalisation, routine care, optical and hearing aids, dental treatment, etc. In addition, a range of basic health products (e.g. medicines and medical devices) are also reimbursed through this insurance fund.

While the law or the collective labour agreement always stipulates a level of minimum coverage in France, if desired, you as an employer can also provide more extensive coverage.

Monthly payroll information

Not every month includes the same information for processing payslips, with variables somewhat frequent. This might include overtime, for example, which is not structurally provided for within the employment contract. In addition, there are also workplace premiums, bonuses, commissions, reimbursement of employer expenses, absences due to illness, leaves of absence, short leave, teleworking days, etc. A thorough preliminary analysis of the various possibilities and optimisations in France ensures a smooth start for any employee.

Collective obligations

Under the same context of ensuring the health and safety of employees at work, employers also have a legal obligation to communicate certain information to their employees via so-called ‘affichages’. These include, on the one hand, the contact details of the labour inspectorate, the occupational health service and certain emergency contact numbers. On the other hand, this also applies to the legal provisions on professional equality and equal remuneration between men and women, banning moral and sexual harassment in the workplace, etc.

In addition, an analysis should also be carried out of any potential risks arising within the workplace. This analysis is formalised in a ‘DUERP’, or ‘Document Unique d'Evaluation des Risques Professionnels’ (Workplace Risk Assessment Form). When drawing up this form, you can call on a specialised service or carry out an initial analysis of the employee workplace yourself and, if necessary, further refine it in consultation with the occupational physician.

Looking for a local partner to help you get started with payroll for your French employees? Don’t hesitate to get in touch with one of our experts.