COUNTRY GUIDE
Payroll and HR in: France
France offers a thriving environment for innovation and growth. If you’re considering expanding your business into the French market, here’s what you need to know about payroll and HR in France for a smooth and successful entry.
Local currency
EUR
Dialling code
+33
Pay periods
Monthly
World Bank Ease of Doing Business
32
Capital
Paris
Timezone
UTC+1
Lanuages
French
Tax year
Jan 1st – Dec 31st
VAT
20%
Company tax
25%
Social security
9.2%
Wages tax
11-45%
Getting started with French payroll
French payroll typically follows a monthly cycle, and employee receive their pay on the last working day of the month. They also have a year-end bonus, commonly referred to as “13th month salary”—this is customary practice and is typically paid at the end of the year.
A Pay As You Earn (PAYE) system has been used throughout France since 2019. With the PAYE system, employees are taxed at the sourced of income in monthly payments, instead of filing income tax and paying what they owe for the previous year. This means, as an employer in France, you’ll be responsible for making the correct deductions from your employees pay.
Yes, to run payroll for employees working in France, it is generally necessary to set up a French bank account. This is because local regulations often require payroll payments to be made from a domestic account, and having a French bank account simplifies the process of complying with local tax and social security contribution requirements. Additionally, a local bank account can facilitate smoother financial transactions within France, such as paying employees and dealing with local vendors or authorities.
Our local partner in France offers a trust account facility so our clients can fund their account for the payment of the payroll liabilities and remove the need for the client to open a bank account.
The standard working week in France is Monday to Friday. Under French labour law, the standard working hours for all companies is set at 35 hours per week, and a single working day should not exceed 12 hours.
Any work exceeding a 35-hour workweek is considered overtime and is subject to overtime regulations.
To operate and hire in France, you’ll need to register as an employer with the URSSAF—the agency responsible for collecting social security contributions. You’ll get a 14-digit identification number, called the SIRET, from the French National Institute of Economic Studies (INSEE).
After you’ve filed all the relevant applications, received all of the appropriate information, and are a registered business in the French Commerce Register, you can hire and pay your first employee.
French wages and pay
The national minimum wage in France, known as salaire minimum interprofessionnel de croissance (SMIC), earns workers the title of ‘smi cards’. The SMIC is made up of the fundamental salary, benefits in kind, and productivity bonuses. But factors such as expense reimbursement, overtime, and additional bonuses do not contribute.
As of 2024, the gross minimum wage for full-time workers in France is €11.65 per hour, translating to €1,766.92 a month. Every year the minimum wage in France is revalued on January 1st and is indexed to inflation for the 20% of households with the lowest incomes.
Typically, overtime compensation is calculated as follows:
An additional 25% per hour for the first eight hours of overtime (from the 36th to the 43rd hour).
An additional 50% per hour for each our worked beyond the initial eight hours of overtime.
There are a few exceptions and variations to the national minimum wage in France:
Young people
The SMIC applies to all workers over the age of 18. Younger employees can receive anywhere between 80 – 100% of the SMIC, and must receive the full SMIC when they’ve been employed in the same company for longer than six months.
Apprentices
Apprentices receive a salary percentage of SMIC. The amount they get varies depending on their age and level within the individual apprentice programme. For example, a 16-year-old in their first year of training is legally entitled to 27% of the SMIC, but a 24-year-old in their third year should receive 78%. Anyone over the age of 25 must earn the full national minimum wage during the entire apprenticeship period.
Interns
Interns in France do not receive a salary. Instead, they receive financial compensation known as ‘gratification minimale’, or a minimum bonus. The legal minimum for the bonus is set at €4.35 per hour. Public organisations are unable to offer more than this sum to their interns, but private organisations can set a higher sum if they wish.
Variations by sector
Depending on the industry, collective agreements (coventions collectives) typically establish a mutually agreed-upon minimum wage and are negotiated by trade unions. These negotiated wages often mirror the job’s standing within the company’s hierarchy. If the negotiated wage surpasses the state defined SMIC, it becomes the amount the employee is entitled to receive.
Sickness-related reimbursements are paid by the Social Security office for all employees, beginning from the fourth day of illness-related absence.
Employees are entitled to 50% of their regular daily wage for a maximum of six months during their sick leave. To qualify, they need to have worked at least 150 works within a three month period prior to their leave. All employees are required to provide their employer with a medical certificated within 48 hours of falling ill (referred to as “un avis d’arr̭̭ḙt de travail”). This allows employers to issue a salary certificate that enables employees to receive social security benefits for up to 3 years.
It’s worth noting that this is the statutory minimum requirement, and it can be common for employers to offer sick leave benefits exceeding the standard via collective bargaining agreements or employment contracts.
The amount of daily maternity, adoption or paternity leave allowance is equal to the average income over the last three months that preceded the pre-natal leave, up to the quarterly limit set by social security (€10,998).
Because of the complexity of French labour law, redundancies can be costly and hard to navigate. The notice period and redundancy terms depend on the length of employment and can be found within the employment contract.
If the employee has an open-ended contract, the labour code has outlined minimum severance payments based on the employee’s monthly salary before termination. But be mindful that different companies may offer more than this. The minimum redundancy payments are:
- If you have worked at your organisation for 10 years, you’re entitled to 25% of your gross monthly salary multiplied by your years of service.
- If you worked at the organisation for 11+ years, you’re entitled to 33.33% of your gross monthly salary multiplied by your years of service.
In France, severance pay is provided to employees who are dismissed after at least one year of continuous service with the same employer. The amount of severance pay is calculated based on the employee’s length of service and their average salary over the last three or twelve months, depending on the circumstances of the dismissal.
The minimum severance pay is one fifth of the monthly salary per year of service for the first ten years, and one third of the monthly salary for each year of service beyond ten years. This serves as compensation for job loss and is a statutory requirement under French labour law.
French payroll and employment deductions
Personal income tax is assessed on the households total income, rather than per individual. This calculation is adjusted to personal circumstances via an income splitting system and by applying tax credits for some personal expenses. Income splitting allows for dependents to be considered and softens the impact of progressive taxation; it involves applying the progressive tax rate solely to the taxable portion of the household income. To put it simply, it means that the higher tax rates only affect the part of your income that is subject to taxation.
Income that is subjected to income tax:
- Pensions
- Annuities (reduced taxes)
- Wages
- Employment compensation and payments, including the renumeration of senior managers of joint-stock corporations and managers of limited liability companies
- At the beneficiary’s discretion, allowances paid to the holders of local elected offices.
Employers withhold income tax directly from the employees’ salary after most social security contributions have been deducted. It’s then sent to the French tax administration.
French income tax rates 2024 | French income tax bands 2024 |
0.00% | Up to 11,294 EUR |
11.00% | 11,295 EUR – 28,797 EUR |
30.00% | 28,798 EUR – 82,341 EUR |
41.00% | 82,341 EUR – 177,106 EUR |
45.00% | More than 177,106 EUR |
Married individuals file a joint tax return, with no option to file separately after the year of marriage or before the year of divorce.
Employers and employees share the burden of contributing to the social security system. The employers’ contributions depend on the business type, size and location, but on average, they are 45% of the employee’s gross salary. The employer withholds the employer’s and employee’s share of French social security charges.
For 2024,the social security (PASS) ceiling is set at €3,864 per month, or €46,368 annually.
These rates and contribution types are part of the overall framework of social security and pension contributions in France, reflecting the various components of the employee’s payroll deductions:
Rate | Contribution Type |
6.90% | Old-age insurance (ceiling of 3,864 EUR taxable income per month) |
0.40% | Old-age insurance |
9.20% | Social Security Surcharge |
4.01% | Supplementary Pension & CEG up to EUR 3,864 taxable income per month |
9.72% | Supplementary Pension & CEG from EUR 3,864 taxable income per month |
These rates highlight the different employer payroll contributions in France, all of which contribute to the total cost of employment. Here is a percentage breakdown:
Contribution | Percentage(%) |
Health insurance | 13 |
Family allowances | 5.25% |
Pension contributions | Employer contributions to basic state pension can be around 9.45%, and contributions to supplementary pension plans vary but can be in the range of 5-8%. |
Unemployment insurance | 4.05% |
Accidents at work and occupational diseases | 1-3% |
Solidarity Contributions | 7.5% |
Contribution to vocational training | 1% |
When employees travel to work via public transport employers must pay 50% of full commute season tickets. This covers the journey from their home to work. This rule applies to both full-time and part-time employees.
In addition to basic pension benefits under France’s social security scheme, employers must provide a mandatory complementary pension called Agirc-Arrco.
Agirc-Arrco contribution rates are proportional to salary and employee status. Both employer and employee contribute to Agic-Arrco through payroll taxes, employers contribute a minimum of 1.9% and employees contribute a minimum of 0.4% of total earnings.
In the French pension system, the legal retirement age is 64. This is the age at which individuals are eligible to retire and start receiving pension benefits. However, there is a distinction when it comes to full automatic pension enrolment.
The age for fully automatic pension enrolment is set at 67. This means that individuals will be automatically enrolled in the pension system and receive their full pension benefits when they reach the age of 67. Until that age, individuals may need to take specific steps or actions to initiate their pension enrolment if they wish to retire before the automatic pension enrolment age.
So, while the legal retirement age is 64, individuals will automatically be enrolled in the pension system and receive full benefits at the age of 67.
French payroll and HR compliance
France payroll filings
In France, employers are required to make regular submissions to various authorities regarding their employees’ earnings, taxes, and social contributions. Here are some key elements related to full payment submissions in France:
The DSN is a monthly electronic declaration that includes information about employees’ salaries, social security contributions, and various other elements related to employment. All private sector employers to pay employees must submit a monthly DSN to inform French social security organisations such as medical, disability, and pension providers.
If your business employees less than 50 people, you must make your declaration before the 15th of the month following the period of pay. If you employ 50 or more employees, your declaration must be made no later than the 5th of the month following the period of pay. You must use a DSN compliant payroll software.
Employers must provide each employee with an individual payslip monthly, detailing salary and deductions. This can be electronic or paper.
All new hires must be registered to URSSAF via a hiring declaration called a DPAE (Déclaration Préalable à l’Embauche).
This is a mandatory declaration that must be submitted before the employees start date. The purpose of this declaration is to inform the authorities of the hiring of the employee and to facilitate the processing of social security.
When an employee leaves, various documents are required, including a final payslip, Solde de tout compte (a calculation of all payments made to the employee), Certificat de travail (a confirmation of the employment period), and Attestation pôle emploi (a document for the unemployment organization if the employee is eligible for an unemployment allowance).
Certain declarations, such as ASSEDIC unemployment contributions bases for expatriates, and nominative declarations for medical and life insurance, must be made quarterly. Yearly, there are taxes on training, building, apprentices, and disabled employees that need to be declared and paid.
In France, payroll data legislation is primarily governed by data protection laws and regulations, including the General Data Protection Regulation (GDPR) and the French Data Protection Act (Loi Informatique et Libertes).
Commercial code sets a 10-year retention period for all company data, otherwise GDPR rules apply.
In France, the termination of employment can occur either unilaterally (dismissal or resignation) or by mutual agreement between the employer and employee. Termination by mutual agreement, known as “rupture conventionnelle,” involves a formal process where both parties agree to the termination terms, including severance pay. This process is formalized by a contract and must be approved by the French labor authorities. For dismissals, employers must provide a valid reason related to the employee’s performance or economic reasons concerning the company, and follow strict procedural rules, including:
- Valid Reason: You must have a valid reason for dismissal, either related to the employee’s performance or conduct, or due to economic reasons.
- Preliminary Meeting: You must invite the employee to a preliminary meeting, providing notice of this meeting in writing, stating the subject, and allowing the employee to be assisted by a representative.
- Notification: After the meeting, you must wait for a specific period (usually a few days) before sending a formal dismissal letter. This letter must detail the reasons for dismissal.
- Notice Period: Except in cases of gross misconduct, the employee is entitled to a notice period before the termination takes effect, the length of which depends on their tenure.
- Severance Pay: If the employee has been with your company for more than one year, they are generally entitled to severance pay, calculated based on their salary and length of service.
- Right to Challenge: Employees have the right to challenge the dismissal in labour courts if they believe it is unjustified.
Notice periods in France are structured as follows:
- For the initial six months of service, the notice period is determined by the relevant collective agreement or employment contract.
- Employees leaving after the first six months and up to two years of service are required to provide one months’ notice.
- Those with more than two years of employment must give a notice of two months before leaving.
- Executives are subject to a notice period of three months.
Probation periods in France vary depending on the employee’s category and seniority. Manual labourers typically have a two-month probation, technicians and supervisors undergo a three-month probation, while management roles entail a four-month probation.
During the probation period, both the employee and the employer have the freedom to terminate the employment contract without specifying reasons and without requiring compensation, unless stipulated otherwise in the agreement. The usual procedural dismissive rules do not apply.
Nevertheless, in some cases, the employer and the employee are obligated to provide notice. According to Articles L. 1121-19 to L. 1221-24 of the Labour Code, the employee must receive a notice of at least 24 hours for less than 8 days of employment, 48 hours doe employment lasting between 8 days and 1 month, 2 weeks after 1 month of employment, and 1 month after 3 months of employment.
French employee benefits
Mandatory employee benefits in France
Employees in France are entitled to a range of statutory benefits. The country as a whole is known for prioritising work-life balance, so alongside their generous paid leave policies, the mandatory benefits you’ll have to provide are:
- Health insurance
- Old-age pension
- Life and disability insurance
- Death insurance
- Paid leave
- Workers' compensation
Supplementary employee benefits
It’s common for businesses in France to offer additional employee benefits at their discretion, so it’s important to create a competitive benefits package to stand out as an employer in the French market. Common supplementary benefits include:
- 13th month pay
- Supplemental health insurance
- Supplemental parental leave
- Flexible working hours
- Additional transportation reimbursements
- Gym allowance and wellness benefits
French Statutory Leave and Time Off
In France, employees are entitled to 30 days of annual leave (working days – jours ouvrables) per year—a generous allowance compared to other places around the globe.
Annual leave is accrued at a rate of 2.5 days per month of actual work with the same employer, for both full time and part time employees. The holiday calendar runs from June 1st to May 31st and employees are not allowed to take more than 24 working days off at once, but must take at least 12 consecutive working days off at one time.
Depending on the employees job level and collective bargaining agreement some employees are also entitled to RTT days (rest days). It is mandatory for annual leave and RTT to be recorded on the payslip in France.
The official public holidays in France are:
Holiday | Date |
New Year’s Day | January 1 |
Easter Monday | April 1 |
Victory in Europe Day/End of World War II | May 8 |
Ascension Day | May 9 |
Whit Monday | May 20 |
Bastille Day/National Day | July 14 |
Assumption of Mary | August 15 |
All Saints’ Day | November 1 |
Veterans Day/Armistice Day/Remembrance Day: End of World War 1 | November 11 |
Christmas Day | December 25 |
Pregnant women have the right to a maternity leave of up to 16 weeks, with six weeks taken before the birth and ten weeks after. In cases of expecting a third child, this leave can be extended to 26 weeks, further extending the 34 weeks for multiple births (twins), and 46 weeks for triplets or more. If the expectant mother faces health issues, the maternity leave can be extended by an additional two weeks before the birth and four weeks after.
Maternity benefits are provided by the Social Security employees. To be eligible, the employee must have been registered with the Social Security for at least six months before the due date, taken at least eight weeks of maternity leave, and worked a minimum of 150 hours in the 90 days prior to the leave.
In France, paternity leave is set at 28 days for fathers or second parents following the birth of a child. This leave includes a mandatory period of 3 days immediately after the birth, which is covered by the employer, and an additional 25 days funded by the French social security system.
In France, paternity leave begins with three days of time off following the birth of a child. They’re then entitled to an addition 25 days for births of a single child, 4 of which are compulsory and 21 of which are optional. In the case of multiple births, the optional allowance increases to 28 days. Any paternity leave used must by taken within the first four months of the birth of adoption.
Parental leave (conge parental d’education) is accessible to all employees with a minimum of one year of service at the time of their child’s birth, subject to their employer’s approval. This leave is unpaid and grants employees the option of taking up to one year of parental leave or adjusting to part-time work (if feasible within the company’s structure). Employees with more than one child and over two years of service are eligible for a monthly allowance known as the ‘allocation parentale d’enfant.’
In the event of a child’s illness, employees can request a form of parental leave lasting between 3 and 5 days, depending on the number of children they have and the child’s age. Should the child experience a severe illness, accident, or disability, parents can seek special family care leave, lasting up to 310 days, to provide ongoing parental care.
In France, when facing the loss of an immediate family member, employees have the right to take a three-day bereavement leave.
Setting up a legal entity in France
Expanding into France is a structured and fairly intricate process. Initially, you must choose an appropriate legal structure for your business, such as SARL, SAS, or SA. Then, you have to register your company with the Centre de Formalités des Entreprises (CFE). The CFE acts as a central body coordinating with various authorities, facilitating crucial steps like obtaining a SIRET number for business identification.
You’ll also need to register your business with the French social security system to manage employee contributions. Corporation tax registration is conducted through the French tax authorities, and if your business activities warrant it, VAT registration is also a necessary step.
Entity set-up FAQs
Typically, between 12-14 weeks.
Yes. The standard VAT rate in France is 20%. Reduced rates of 10% and 5.5% still apply to most food products and other consumption goods. A reduced rate of 2.1% is levied on pharamaceuticals, printed materials, and other specified products and services.
The range of products that are exempt from VAT in France includes:
- Specific exported products
- Certain real estate transactions
- Designated imported products
- Activities with educational purposes
- Medical services
- Operations conducted by non-profit organisations
- Operations carried out by authorities
Yes, and you must deposit a minimum of €400 worth of capital into the French bank account.
The most common business registration types for expanding a business into France are:
- Société à Responsabilité Limitée (SARL): A limited liability company suitable for small to medium-sized businesses.
- Société Anonyme (SA): A public limited company, often used by large businesses and suitable for raising capital from public investors.
- Société par Actions Simplifiée (SAS): A simplified joint-stock company, offering flexible management and operational structures, popular among foreign investors.
- Branch Office: An extension of the parent company without a separate legal identity in France.
- Subsidiary: A separate legal entity owned by the parent company, offering more autonomy and local presence.
There is no specific legal requirement mandating French residency for directors of businesses in France. Directors (administrateurs) of French companies can be of any nationality and are not obligated to be French residents.
However, there are certain considerations and responsibilities for non-resident directors:
- French companies are required to have a legal representative, and this person can be a director. The legal representative does not necessarily need to reside in France, but there should be a designated person who can represent the company legally.
- The company is required to have a registered office in France, and this can serve as an official address for legal communication and representation.
- Directors who spend a significant amount of time in France may be considered tax residents, and this could impact their tax obligations. It's important to understand the criteria for tax residence in France.
- Directors, whether residents or non-residents, are required to comply with French company law and other applicable regulations. This includes fulfilling their duties and responsibilities as outlined in the company's articles of association and French law.
Corporate tax returns in France involve a structured process that businesses must follow to fulfill their tax obligations. Here is a general overview of how corporate tax returns work in France:
Determining fiscal year:
Companies in France typically follow the calendar year (January 1st to December 31st) as their fiscal year. But, they can choose a different fiscal year if it aligns with their business operations.
Corporate tax rate:
France has a standard corporate income tax rate at 28%. However, the rate may vary depending on the size and nature of the company.
Annual financial statements:
Companies are required to prepare annual financial statements, including the balance sheet, income statement, and other relevant financial documents.
Deductible expenses:
Organisations can deduct certain expenses from their taxable income, including operating expenses, depreciation, and other costs related to their activities. It's crucial to maintain accurate records of these expenses.
Tax credits:
Organisations may be eligible for various tax credits, which can help reduce their overall tax liability. Common tax credits include those for research and development, innovation, and environmental initiatives.
Advance payments:
Organisations may be required to make advance payments on their estimated corporate tax liability throughout the fiscal year. These payments are based on the previous year's results and help prevent large tax bills at the end of the fiscal year.
Corporate tax return filing:
Organisations must file an annual corporate tax return, known as "liasse fiscale" or "déclaration de résultat." This declaration provides details about the company's financial activities during the fiscal year.
Tax administration review:
Once the corporate tax return is submitted, the French tax administration may review the information provided. Organisations may be subject to audits or inquiries to ensure compliance with tax regulations.
Tax payment:
After the tax return is processed, the company receives a tax assessment indicating the amount of corporate tax owed. The payment is typically due shortly after receiving the assessment.
Country nuances
- French is the primary language of business. While English is widely spoken, conducting business and legal matters in French is often preferred or required.
- The French business culture emphasises formality, relationship-building, and a clear hierarchy. Understanding and respecting these cultural norms is key to successful interactions.
- The French place a high value on work-life balance, reflected in laws and attitudes towards working hours and vacation time.
- Share capital in France is at a minimum €1. But the level of share capital affects the external view of the business, so companies tend to elect more.
Interested in expanding into France?
Want to find out more about Cintra Global? We’d love to hear about your global expansion plans and tell you about how we can support you with your international payroll, HR, and expansion needs.