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France
Three options of registering a company in France are available.
1.Market overview
2.Entering the marke
3.Costs to the employer
4.Pay and taxes
5.Payroll timeline
6.Leave Policies
7.Termination Policy and severance
8.Time off during the year
9.Onboarding of employees
Market overview:
| Currency | Corporate Tax | VAT | Workforce Size |
|---|---|---|---|
| EUR | 28% | 20% | 29.7 million |
Total Estimated Cost = between 15% and 45% depending on base salary
Pay and taxes:
Minimum wage: The minimum wage in France is 1,709.28 EUR monthly.
Overtime: Standard working hours are considered to be 35 hours a week or 7 hours a week from Monday to Friday. Employees on full-time contracts are not entitled to overtime pay. Employees on part-time contracts, however, are entitled to overtime pay for hours worked outside of the hours specified in their employment agreement. The overtime hours must not exceed 10% of the hours worked weekly by an employee. Overtime hours are paid at a rate of 110% of a base hourly rate.
Bonuses: Employees are not legally entitled to any bonuses in France. Nevertheless, bonuses can be awarded at the discretion of the employer and are thus taxed as bonuses at a progressive rate in accordance with British tax regulations.
Income tax: Individual income tax is progressive in the France as per the table below:
| Annual Income (Gross) | Tax Rate (percentage) |
|---|---|
| Below EUR 10,225 | Tax-free |
| EUR 10,225- EUR 26,070 | 21% |
| EUR 26,070 – EUR 74,545 | 30% |
| EUR 74,545 – EUR 160,336 | 41% |
| Above EUR 160,336 | 45% |
Payroll timeline:
| Schedule | Date |
|---|---|
| Payroll Cycle | Monthly |
| Payroll Cut off date | 20th of the month |
| Invoice issuance date | 26th of the month |
| Payment date | Last date of the month |
Leave Policies:
The maternity benefit paid by the employer and then refunded by the state in full. The same applies to sick leave.
| Type of Leave | Policy |
|---|---|
| Maternity Leave | Pregnant employees can take up to 16 weeks of leave, 6 weeks of which must be claimed before the child’s birth. An employee on maternity leave will receive 100% of the average pre-tax pay from the last 3 months or EUR 3,428/month whichever is lower. The benefit can be claimed if the employee had worked for at least a year for the current employer. |
| Paternity Leave | Eligible employees are entitled to 25 days of paternity leave. Five days have to be claimed before the child’s birth, and the rest can be divided into two periods both of which must occur before the child reaches 6 months. The employee is entitled to the average pre-tax salary from the last 3 months or 89 EUR per day, whichever is lower. |
| Shared Parental Leave | Employees are entitled to up to a year of parental leave. Employees can also choose to work 16 hours per week and be on partial leave. Parental leave is unpaid; only if the 16-hour option is chosen payments will be made in the same manner as it is in the case of paternity leave. |
| Sick Leave | Employees who worked at least 150 hours in the first 3 months of the year are eligible for unlimited paid sick days. The first 3 days of sick leave are unpaid, and all days that follow are paid at a rate of 50% of base salary by the social security. |
Termination Policy and severance:
An employee may only be terminated for cause, unless in the probation period when he can be terminated at will.
Termination rules in France are particularly complex, for more insight please contact Bizky.
Notice:
Notice for employees during their probationary period may range between 24 hours and 30 days depending on how much of the period has already passed. For regular contracts the timing of notice is often included as a custom clause specific to each instance, however, its generally accepted that employees with a tenure of over 2 tears are entitled to no less than 60 days notice.
Severance: All employees are entitled to severance payments, even those who are being terminated for breach of contract. The amount of payments will be based on the employee’s tenure, seniority, and contract clauses. It’s a common practice in France to provide severance payments that far exceed the minimum required amounts, which are in the table below:
| Age | Amount of severance payment |
|---|---|
| Below 10 years of service | 25% of the monthly salary per year of service |
| More than 10 years of service | 33% of monthly salary per year of service |
Time off during the year
Paid: Both full-time and part-time employees are entitled to a minimum of 25 paid days off during the year. Unused PTO cannot be carried into the next year. Moreover, employees cannot use all 25 days in one period, as at least 5 must be used separately.
Onboarding of employees:
Time: 2 business days from the moment when the employee signs the Statement of Work – a document where his responsibilities are outlined.
Medical: A medical check is required within the first 3 months of employment.
Documents: Passport or ID, proof of required qualifications, Social security Card, Health Insurance form, Attestation de carte vitale.
Employment agreement: Every contract must be in Frenc English, signed by both parties on paper.
Due to the above-mentioned characteristics of the French market, apart from standard clauses such contract must include:
- Termination conditions
- Collective bargaining agreement
- Obligatory training and whether it’s paid for by the employer
- Additional workplaces if applicable
- Specified working hours and whether they may include weekends and nights
Largest industries by employment: health & social care, retail, manufacturing.
Most rapidly growing industries: financial services (due to London losing its prominence), technology
Largest employment hubs (by city): Paris, Lyon, Toulouse, Marsille, Bordeaux, Nantes
Workers to job postings ratio = 38
Entering the market:
Three options of registering a company in France are available:
| Name | Requirements | Implictions |
|---|---|---|
| Branch Office | A certificate of incorporation or registration of the parent company.The appointment of a legal representative in France who can act on behalf of the branch.A description of the planned activities of the branch in France.Information about the branch’s registered office in France (address).Audited financial statements of the parent company | The parent company assumes unlimited liability for the branch’s debts and obligations in France.The branch office is required to comply with French accounting and tax regulations.It must also register with the French Commercial Court and be listed in the Registry of Trade and Companies (RCS).The branch must appoint a statutory auditor if it exceeds certain size criteria. |
| Representative Office | A notarized and translated copy of the parent company’s articles of association.A certificate of incorporation or registration of the parent company.A description of the representative office’s intended activities in France.Information about the representative office’s registered address in France. | The representative office cannot engage in commercial activities or directly generate revenue.It is not considered a separate legal entity, so it operates under the legal identity of the parent company.The office’s activities must remain non-profit and limited to the scope defined during registration. |
| Subsidiary | A minimum share capital, which varies depending on the type of company (e.g., SAS, SARL).A registered office address in France.The appointment of a director or manager for the subsidiary.Notarized and translated articles of association or company bylaws.Shareholders’ agreement and details of the parent company’s ownership structure. | The subsidiary has its own legal identity and limited liability, separate from the parent company.It is subject to French corporate taxation and accounting regulations.A subsidiary can engage in profit-generating activities and has the ability to enter into contracts independently. |
Costs to the employer:
As a percentage of the employee’s salary:
| Cost | Amount |
|---|---|
| Sickness Maternity Invalidity Death | 7% for salary < 4,273.30 EUR 13% for salary over 4,273.30 EUR |
| Workplace accidents | 0.75% |
| Social Security ‘capped’ | 8.55% (for a salary below 3,666 EUR) |
| Social Security ‘uncapped’ | Social security ‘capped’ + 1.9% |
| Family Benefits | 3.45% for <5,982,60 EUR13% for >5,982,60 EUR |
| Unemployment Insurance | 4.2% |
| Pension Fund | 6.26% |
| Occupational Medicine | 0.41% |
Total Estimated Cost = between 15% and 45% depending on base salary
Pay and taxes:
Minimum wage: The minimum wage in France is 1,709.28 EUR monthly.
Overtime: Standard working hours are considered to be 35 hours a week or 7 hours a week from Monday to Friday. Employees on full-time contracts are not entitled to overtime pay. Employees on part-time contracts, however, are entitled to overtime pay for hours worked outside of the hours specified in their employment agreement. The overtime hours must not exceed 10% of the hours worked weekly by an employee. Overtime hours are paid at a rate of 110% of a base hourly rate.
Bonuses: Employees are not legally entitled to any bonuses in France. Nevertheless, bonuses can be awarded at the discretion of the employer and are thus taxed as bonuses at a progressive rate in accordance with British tax regulations.
Income tax: Individual income tax is progressive in the France as per the table below:
| Annual Income (Gross) | Tax Rate (percentage) |
|---|---|
| Below EUR 10,225 | Tax-free |
| EUR 10,225- EUR 26,070 | 21% |
| EUR 26,070 – EUR 74,545 | 30% |
| EUR 74,545 – EUR 160,336 | 41% |
| Above EUR 160,336 | 45% |
Payroll timeline:
| Schedule | Date |
|---|---|
| Payroll Cycle | Monthly |
| Payroll Cut off date | 20th of the month |
| Invoice issuance date | 26th of the month |
| Payment date | Last date of the month |
Leave Policies:
The maternity benefit paid by the employer and then refunded by the state in full. The same applies to sick leave.
| Type of Leave | Policy |
|---|---|
| Maternity Leave | Pregnant employees can take up to 16 weeks of leave, 6 weeks of which must be claimed before the child’s birth. An employee on maternity leave will receive 100% of the average pre-tax pay from the last 3 months or EUR 3,428/month whichever is lower. The benefit can be claimed if the employee had worked for at least a year for the current employer. |
| Paternity Leave | Eligible employees are entitled to 25 days of paternity leave. Five days have to be claimed before the child’s birth, and the rest can be divided into two periods both of which must occur before the child reaches 6 months. The employee is entitled to the average pre-tax salary from the last 3 months or 89 EUR per day, whichever is lower. |
| Shared Parental Leave | Employees are entitled to up to a year of parental leave. Employees can also choose to work 16 hours per week and be on partial leave. Parental leave is unpaid; only if the 16-hour option is chosen payments will be made in the same manner as it is in the case of paternity leave. |
| Sick Leave | Employees who worked at least 150 hours in the first 3 months of the year are eligible for unlimited paid sick days. The first 3 days of sick leave are unpaid, and all days that follow are paid at a rate of 50% of base salary by the social security. |
Termination Policy and severance:
An employee may only be terminated for cause, unless in the probation period when he can be terminated at will.
Termination rules in France are particularly complex, for more insight please contact Bizky.
Notice:
Notice for employees during their probationary period may range between 24 hours and 30 days depending on how much of the period has already passed. For regular contracts the timing of notice is often included as a custom clause specific to each instance, however, its generally accepted that employees with a tenure of over 2 tears are entitled to no less than 60 days notice.
Severance: All employees are entitled to severance payments, even those who are being terminated for breach of contract. The amount of payments will be based on the employee’s tenure, seniority, and contract clauses. It’s a common practice in France to provide severance payments that far exceed the minimum required amounts, which are in the table below:
| Age | Amount of severance payment |
|---|---|
| Below 10 years of service | 25% of the monthly salary per year of service |
| More than 10 years of service | 33% of monthly salary per year of service |
Time off during the year
Paid: Both full-time and part-time employees are entitled to a minimum of 25 paid days off during the year. Unused PTO cannot be carried into the next year. Moreover, employees cannot use all 25 days in one period, as at least 5 must be used separately.
Onboarding of employees:
Time: 2 business days from the moment when the employee signs the Statement of Work – a document where his responsibilities are outlined.
Medical: A medical check is required within the first 3 months of employment.
Documents: Passport or ID, proof of required qualifications, Social security Card, Health Insurance form, Attestation de carte vitale.
Employment agreement: Every contract must be in Frenc English, signed by both parties on paper.
Due to the above-mentioned characteristics of the French market, apart from standard clauses such contract must include:
- Termination conditions
- Collective bargaining agreement
- Obligatory training and whether it’s paid for by the employer
- Additional workplaces if applicable
- Specified working hours and whether they may include weekends and nights
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