Contract of Hiring Employees in France
Written contracts are not required when hiring employees in France, but it is advised. The most common contract in France Employment contracts is Open-ended contracts (the most common contract in France). This is not required to be in writing.
Immigration Requirements
A French employer must obtain a work permit for a non-EEA national before employment begins. EEA nationals do not need a work permit.
HR & Labor in France
Working hours: Employees who work 35 hours a week are considered full-time employees. Employees cannot work more than 10 hours in a workday, with 48 hours being the maximum for a workweek. The first 8 overtime hours will be paid at 125% of the set wage, while any additional hours will be paid at 150% per hour. Yearly bonuses include 13th and 14th-month salaries.
Minimum working age: The minimum age is set at 16 years old, although there is a possibility of employment for individuals under 16. Employers should strictly follow guidelines for employees under 16.
Payroll in France
Salaries are disbursed every month at the end of each month. Employees will be paid for the period between the first and last day of the month.
Social Security in France
The French social security system is composed of various insurance/benefits schemes. The social security system includes coverage for sickness, maternity, disability, death, work-related accidents, old age state pension, unemployment benefits, compulsory retirement plans, and complementary health coverage.
Employees often enjoy lunch vouchers (for companies without cafeterias), health insurance, and compensation for transportation costs.
Social Security Deductions in France
France labor law sustains for any employee who carries out a salaried activity in France, the employer must withhold the employer’s and employee’s share of French social security charges on a monthly basis.
Contributions are shared between the employee and the employer. Contributions may vary based on various ceiling rates and pensions.
Contribution Rates in France
Employee:
- Social Charges (CSG): 9.7% of employee’s monthly gross salary.
- Unemployment benefit: 0.95% of employee’s monthly gross salary.
- Main pension: 7.30% of employee’s monthly gross salary.*
- Complementary pension: 11.20% of employee’s monthly gross salary.*
- Accident at work: n/a
- Health/Sickness: n/a
- Family benefits: n/a
- Total cost: 29,15%
Note:
- Approximation pension payments vary based on price ceilings and pension plans.
Employer:
- Social Charges (CSG): n/a
- Unemployment benefit: 4.05% of employee’s monthly gross salary.
- Main pension: 10.45% of employee’s monthly gross salary.*
- Complementary pension: 17% of employee’s monthly gross salary.*
- Accident at work: 3% of employee’s monthly gross salary.
- Health/Sickness: 13% of the employee’s monthly gross salary.
- Family benefits: 5.25% of employee’s monthly gross salary.
- Total cost: 52,75%
*Note:
- Approximation pension payments vary based on price ceilings and pension plans.
Individual Income Tax & Benefits in France
Individual Income Tax
For salaried employees of French companies, taxes are withheld by the employer based on a monthly pay-as-you-earn (PAYE) system. Individuals must submit a yearly income tax return in the year following the year in which the income was received.
Employee’s personal income taxes are withheld based on the following table:
Personal Deductions
Taxpayers are entitled to one or more of the tax credits or general deductions listed below:
- General deductions are available for child support and alimony payments
- Charitable contributions- Charitable contributions made in France to qualified philanthropic, educational, scientific, social, religious, political, or cultural organizations, non-profit making organizations recognized as being of public benefit (d’utilité Publique)
- Child care expenses- Taxpayers (whether single, married, divorced or widowed) who carry out an employed or self-employed activity are entitled to a tax credit of up to 50% of childcare expenses incurred for each dependent child under seven placed at nursery school or with non-domestic help, up to a ceiling of expenses of EUR 2,300 per child and per annum.
- Schooling expenses– A tax reduction for schooling expenses is granted to taxpayers whose dependent children study in secondary schools, ‘collège‘ (EUR 61), ‘Lycèe‘ (EUR 153), and university (EUR 183).
Domestic help expenses – A taxpayer who employs housekeeping help can benefit from a tax credit of 50% of the expenses incurred, up to the limit of EUR 12,000 per year (i.e. a maximum tax credit of EUR 6,000) or of EUR 15,000 for the first year of employment, increased by EUR 1,500 per dependent child and dependents over 65 years old, but limited to EUR 15,000 (or EUR 18,000 for the first year of employment). There are specific provisions for invalid taxpayers.
Personal Allowances
Total taxable income is divided into the number of shares (‘parts’) that reflects the taxpayer’s marital status and the number of dependents. Children under 18 years of age and disabled children of all ages can be claimed as dependents.
Children from the ages of 18 to 21, as well as children from the ages of 21 to 25 who are full-time students, can, upon request, be claimed as dependents. The tax benefit per additional half-share for dependent children is limited to EUR 1,527 (limit) for each of the first two children and EUR 3,054 for each additional child.
VAT/ GST Rates
VAT is assessed on goods sold and services rendered in France. The normal VAT rate is 20%. Sales of certain kinds of medicines, transports of persons, and sales of books are taxable at a 5.5% reduced rate.
Food products, subscriptions to gas and electricity, and products and services provided to disabled persons are taxable at a 5.5% rate. Exports and certain specific services invoiced to non-French residents are zero-rated.
Employee Termination Policies in France
Hiring employees in France means they may be dismissed for personal reasons or economic reasons.
Under dismissal for personal reasons, the employer is required to have a pre-dismissal meeting with the employee at least five working days after the invitation for the pre-dismissal was delivered.
As the France labor law sustains, the employer is then required to send the employee a detailed dismissal letter at least two working days after the meeting.
Dismissal for economic reasons is complex and varies based on the number of employees within the company.
An employer is required to give notice of termination. The notice period commences on the day on which the letter of dismissal is presented to the employee. The notice period is one month for six months to two years of seniority and two months’ notice for more than two years of seniority.
If the employment relationship is terminated at the request of the employee, the notice period depends on the employee’s seniority in the company and professional status.
Details are determined by sectoral collective agreements but the notice period is generally between one and three months.
Severance Pay
An employee who has worked for one year or more for the same employer on an open-ended contract is entitled to legal severance compensation of a fifth of the monthly salary per year of service, to which two-fifteens of the monthly wage is added per year of service over 10 years.
Probationary Period in France
Unless the employee’s employment agreement states otherwise, the employment contract can be terminated during the probationary period without cause and at no additional cost to the employer beyond providing the mandated notice.
Maximum probationary periods are two months for “blue-collar workers” and clerks, three months for technicians and supervisors, and four months for cadres (mid- to high-level executives and professionals).
They may be renewed once, but such renewal must be explicit and not implied.
The following table shows the notice required for terminating during a probationary period:
Time worked by the employee
At least 8 days / Notice required 24 hours
8 days- 1 month/ Notice required 48 hours
1 month- 3 months/ Notice required 2 weeks
Over 3 months/ Notice required 1 month
Rest & Holiday Leaves in France
Annual Leaves
France labor law sustains that employees are entitled to a minimum of five weeks’ paid holiday per year.
Public Holidays
New Year’s Day – January 1
Good Friday – March 30
Easter Monday – April 2
Labour Day – May 1
Victory in Europe Day – May 8
Ascension Day – May 10
Whit Monday – May 21
Bastille Day – July 14
Assumption Day – Aug 15
Armistice Day – Nov 11
Christmas Day – Dec 25
St Stephen’s Day – Dec 26
NNRoad covers everything from employment solutions, HR outsourcing, entity set up, payroll and tax services, and benefits administration in France. Contact us for more information on how NNRoad can help you successfully expand your business to France!
