Employer without establishment and posted employee systems in France
There are two options for a foreign company to send an employee work in France. A posted employee or the ESEF system.
Employer without establishment in France “ESEF”
A foreign company can have an employee in France without setting up a company or a branch in France. The company then becomes an employer without establishment in France.
Once the company is registered to the French social security URSSAF by filling in an E0 form, it then becomes an ESEF.
When an ESEF hires an employee (foreign or French national), the employment is subject to the French labor law. The employment contract between the company and the employee will then be considered as a French employment contract.
The employer and the employee are also subject to the social security and all the related contributions. The mandatory contributions scope is large and includes:
- Social security (paid to the URSSAF)
- Employment (paid to the URSSAF)
- Legal retirement (paid to the URSSAF)
- Complementary retirement (paid to HUMANIS)
- Life and health insurance (paid to the insurance of your choice)
- Professional training tax (paid to the training body you are registered to)
In the ESEF system, a pay slip as well as quarterly and yearly declarations are mandatory.
Posted employee
A foreign employee can be sent by a foreign company to work in France. In this case there are two conditions that must be fulfilled by the company for the employee to be considered as posted:
- Keep a relationship of subornation with its employee
- Normally exercise an activity in the employer’s country
On his side, the employee also has to be:
- A member of the EU
- Be hired by the company for at least one month
If all the above conditions are fulfilled, the employee can be posted in France.
The standard duration of a secondment cannot exceed 24 months. Special agreement can be granted for longer periods.
When an employee is posted in France he can keep his original social security and not be subject to the French social security. To do so he and the company must fill in an A1 form. This form is to be approved by the original social security of the employee. He is then subject to his original social security for the duration of the secondment.
In this case neither the employee nor the employer are subject to the French social security and no contributions are to be paid in France. The employee is kept in the payroll of his foreign employer where is social contributions are paid.
As the employee is working in France, he will have to pay income tax in France.
In the case of a secondment, no pay slip is mandatory.
What is the best solution to be choosing?
The choice between sending a posted employee and being an employer without establishment will depend on what is the activity wanted to be made in France and the nationality of the employee.
A posted employee is a temporary solution for a specific job or operation taking place in France. It is limited in time and it cannot apply to French employees and outside EU employees.
An ESEF is a more lasting solution. It has no time limitation. Also, this system allows hiring a French employee. The constraint is to be subject to the French labor and social security laws and contributions.
As listed in this article, posting employees or becoming an employer without establishment in France may be an administrative complex task with many different declarations to be made and legal obligations to fulfill. If you need assistance to help you with all these processes, please feel free to contact us.
