How to hire and pay independent contractors in France

Finding the best talent regardless of location has never been easier. France has an educated and skilled workforce, which makes it an attractive option for hiring independent contractors. 

However, France's labor laws can make hiring a laborious process for foreign companies. Hiring independent contractors in France requires navigating their complex employment regulations. Employees and independent contractors are also treated differently in France, so you have to ensure that you’re not misclassifying your worker to avoid fines and penalties.

This guide will walk you through all aspects of hiring independent contractors in France to help you avoid the disastrous effects of unintended noncompliance. We'll cover the relevant aspects of French employment law and take you through the process of ensuring correct worker classification. We'll also explain relevant tax and labor regulations that you have to be aware of while hiring contractors in France.

Unique considerations of managing contractors in France

You have several options when it comes to hiring contractors in France. Options are based on the business model used by the contractor and include: 

Freelancer. Some freelance workers are self-employed contractors. These workers are referred to as auto-entrepreneurs or microentrepreneurs in France. Freelance contractors will invoice you for their work, and they're free to work for others simultaneously. 

Limited company. Contractors with more experience often opt to form their own limited companies. In this model, the business technically provides the contractor to work for you. There isn't much practical difference for your business, as their company will invoice you just as a freelancer would do. However, a limited company does offer some assurance for you as the company will be registered as a business in France and can be verified. 

Umbrella company. An umbrella company acts as a bridge between you and the contractor. You pay the umbrella company, which handles all the payroll, taxes, work permits, and benefits for the contractors. This gives contractors employee-like status and saves you the hassle of setting up a foreign business entity to comply with French laws. The umbrella company is also responsible for ensuring the terms of the contract are fulfilled, leaving you less reliant on an individual contractor. 

As a hiring manager or founder, the most important things for you to be aware of when hiring a contractor in France are how workers are classified — independent contractors versus employees — and how to avoid triggering permanent establishment. Permanent establishment refers to business activity that generates local revenue for your company. Though permanent establishment is unlikely to be triggered by a contractor, it is possible to do so.

Employees and independent contractors are treated differently in France, so understanding the classification system and compliance requirements is critical to avoid expensive fines and penalties. 

How do I pay an independent contractor in France?

You pay the independent contractor directly or through their limited company. Independent contractors are responsible for paying their taxes, and you incur no tax liability in France from hiring them. 

You can't pay a fixed amount to your contractors (such as a salary) because this might imply employee status. You can also pay an independent contractor through an umbrella company. 

Remote takes the risk out of paying independent contractors through its contractor management platform. You don't have to worry about legal issues because Remote has local experts in French law who manage contracts and ensure you're in compliance with France's complicated labor laws. You can onboard, pay, and manage contractors with Remote's simple tools. 

What differentiates an employee from an independent contractor? 

In France, an independent contractor provides services to another party in an independent and non-subordinate manner. An employee performs work under the authority of an employer who has the power to give orders, supervise their performance, and issue sanctions for poor performance. 

The requirements for classification as an independent contractor in France are stricter than in many other countries. 

In order for someone to be classified as an independent contractor, there has to be a separation between the contractor and the business. The contractor can't be subordinate to any company employee. Subordination is defined based on the nature of the relationship, not on how you classify it. If you closely supervise how an independent contractor performs their work, their relationship with you will be deemed subordinate, even if you claim otherwise.

Additionally, independent contractors can only perform work that you can't accomplish with your regular company workforce. This often restricts them from doing the primary work of a business. 

Some other conditions that French courts look at to determine whether a contractor has been misclassified include:

• If the contractor is free to set their working hours and schedule

• If the contractor uses their own equipment to perform their work

• If the contractor can work for other companies

• How the contractor is paid

• If benefits are offered

French workers who feel they have been misclassified as independent contractors can file a claim with the court to be reclassified. This may be an issue if you don’t fully understand the level of autonomy expected of independent contractors in France. 

If a misclassification claim is upheld, the worker can be classified as your employee. Should that happen, you would be liable for back pay, benefits, taxes, significant fines, and possible criminal charges. 

Working with a global contractor management partner like Remote will help you avoid misclassification risks and help you hire and pay international contractors all over the world — quickly and compliantly. 

What are the risks of misclassifying independent contractors in France as employees? 

The penalties for misclassifying an employee as an independent contractor in France are stiff. The status of the contractor will be changed to an employee. You may be: 

• Responsible for paying retroactive salary, benefits, overtime, and taxes as well as interest and penalties.

• Possibly charged with criminal liability for “Shadow Employment,” which carries a sentence of up to three years in prison and a fine of up to 45,000 Euro along with a company fine of up to 225,000 Euro.

• Banned from using independent contractors for two to ten years

An additional issue of misclassifying an independent contractor that is of particular concern to startups and software companies is that of intellectual property(IP) rights. A dispute about employee status may leave your business open to questions about who owns the work that was produced. It's vital that your employment agreements and contracts address intellectual property and secure your rights. 

If you sign up for contractor management with Remote, our services can help you create fully compliant contracts that offer maximum protection against risks to your intellectual property and invention rights. Remote constantly monitors IP laws to ensure you stay compliant with classification regulations, helping you to protect your IP.

What are the labor laws in France?

French labor law is comprehensive and complicated. 

The French Labor Code details the rights and responsibilities of individuals, trade unions, and companies. France offers significant protections for employees, including the “right to disconnect,” which gives employees the right not to respond to business communications outside working hours. It's also more difficult for employers to dismiss employees in France than in many other countries. 

The standard workweek in France is 35 hours, and the minimum wage is 11.27 Euros/hour. However, different industries may be subject to collective bargaining agreements reached by trade unions. Additionally, employees are entitled to: 

• Five weeks of paid leave yearly

• Double pay for working on public holidays

• Maternity leave of up to 46 weeks

• Paternal leave of up to 28 days

Employers must pay payroll taxes on wages, anywhere from 4.25% to 13.60%, depending on the employee's salary. Employers also pay social taxes for employees, which include: 

• Old age pension, starting at 8.55%

• Health insurance, 7% to 13% of employee's wages

• Supplementary pension, from 4.25% to 12.95%

• National Housing Assistance fund, from 0.1% to 0.5%

• Unemployment insurance, 4.05%

• Work accident insurance, which varies based on risk

• Family allowance, from 3.45% to 5.25%

The robust protections for employees and tax obligations for employers make it particularly important that you are aware of and remain in compliance with French labor laws regarding independent contractors. 

Tax and compliance practices for hiring independent contractors from France

Independent contractors in France are responsible for filing and paying their taxes. However, US-based companies that hire French contractors have specific obligations to the Internal Revenue Service. 

Companies that work with non-resident aliens (NRA) — non-citizens living outside the U.S. — must collect Form W-8 BEN from contractors who live outside the US.  If you're working with an international contractor who bills through their entity, you'll need to use Form W-8BEN-E. 

Remote has added a tax compliance feature to its contract management platform that makes it simple to collect information from contractors and determine if taxes need to be withheld. By automatically requesting information from your new French contractors as you onboard them, Remote saves you the hassle of trying to track down the information when it’s tax season.

How do I convert an independent contractor in France to an employee?

Although it might be easier and cheaper to pay independent contractors than it is to pay employees, it's not always the right decision. As we've discussed above, misclassifying French workers carries severe penalties. The long-term consequences you may face, in terms of fines, penalties, loss of IP protection, and possible criminal charges, are certainly not worth it. 

Additionally, converting your independent contractor to an employee will benefit your company in the long term. Though you'll have to pay more in employee benefits and taxes, you'll be less likely to lose time to contractor attrition and onboarding new contractors. 

When you're ready to transition your contractor to an employee, Remote helps you make the switch easily and quickly using the same platform you've used to manage them as a contractor. 

The best way to hire international contractors in France

Hiring contractors in France isn't easy, but if you're looking for the best talent for your business, regardless of location, it may be the right step for you. Understanding French labor law and the essential differences between employees and contractors is the first step toward making sure you’re avoiding the harsh penalties associated with noncompliance. 

If you want to make your life easier and get some help with the challenging process of hiring and onboarding French contractors, Remote’s contractor management platform has all the features you need. With Remote, you get the peace of mind that comes with knowing that your contracts have been vetted by French law and IP experts.

Here's our simple, five-step process for managing your French contractor

1. Onboard your contractors

2. Sign a contract (use ours or develop your own)

3. Your contractors submit an invoice

4. Approve and pay the invoice

5. We pay your contractors in their local currency.

It's that easy. Reach out today to get started. If you’re ready to start hiring and onboarding your contractors in France, sign up with a few clicks.