Employer in France: Obligations and Key Considerations

Hiring staff in France involves a number of obligations. French social and tax legislation is complex, and complying with all administrative steps is essential to avoid sanctions. Below, we explain the key steps you must take before issuing your first payslip.

1. Establishment and Registration of the Employer

Before hiring an employee in France, you must complete several administrative procedures as an employer:

• Registration with URSSAF: This is the French body responsible for collecting social contributions. Without this registration, you are not allowed to employ staff.
• Enrollment with a pension fund (AGIRC-ARRCO): This is mandatory for all employees and ensures the build-up of supplementary pension rights.
• Affiliation with a ‘mutuelle’ and ‘prévoyance’ insurance: A collective health insurance (mutuelle) and a disability insurance (prévoyance) are compulsory for employees. You can read more about mandatory social insurances in this article.
• DPAE (Déclaration Préalable à l’Embauche): Every new employee must be declared to URSSAF at least one day before their employment starts.

2. Employment Contract and Contractual Terms

French labour law has strict rules concerning employment contracts. A contract must include at least the following elements:

• Identity of the parties
• Role and responsibilities of the employee
• Salary and benefits
• Working hours and leave policy
• Probation period (if applicable)
• Applicable collective bargaining agreement (CBA)

3. Payroll Calculation and Social Contributions

The French payroll system is particularly complex due to the numerous social contributions that must be taken into account. Key points include:

• Gross vs. Net Salary: The difference between gross and net salary is significant due to high social charges. Employer contributions can amount to as much as 45% of the gross salary.
• Social charges: Employers must contribute to various funds, including pension, unemployment, health insurance, and training funds.
• Withholding tax: Since 2019, income tax has been deducted directly from the employee’s salary via the “prélèvement à la source” (withholding at the source).

4. Obligations After Hiring

In addition to the initial steps, there are ongoing obligations:

• Monthly declarations (DSN - Déclaration Sociale Nominative): This is a mandatory monthly electronic declaration of salaries and contributions.
• Additional insurance and benefits: Depending on the sector and the collective bargaining agreement, there may be extra obligations, such as supplementary pension schemes or additional insurance policies.
• Maintenance of personnel files: Employers must maintain up-to-date files for all employees, including employment contracts and payslips.

Conclusion

Hiring staff in France requires thorough preparation and knowledge of the applicable regulations. Payroll administration is complex and prone to errors, making cooperation with an expert or payroll service provider often necessary. By following the proper steps and carefully adhering to the regulations, your company can benefit from a compliant and efficient payroll system.