Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in France might not all be familiar to you yet. By using our PEO and EOR service, we can provide compliant labor contracts for employees in France including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In France, benefits can be guaranteed by labor law and national legislation, as well as collective agreements with trade unions or workers’ councils.
Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into France.
What France Compensation Laws Exist?
In France there are around 300 collective agreements covering over 90% of the workforce and they supplement minimums stipulated by the Labor Code. Compensation laws generally apply to such as holidays, sick leave, maternity benefits, minimum wages and more.
Collective and trade union agreements ensure that employees are treated equally in their respective sectors of industry and the economy. Agreements cannot undercut minimum compensation levels laid down by national laws where they apply. These include:
- Social Insurance: Social insurance in France is organized by national, regional, and local institutions supervised by the Ministry for Solidarity and Health and the Ministry of Economy and Finance.
Around 80% of the general scheme’s total revenue derives from social security contributions and taxes paid by employers and employees. Mandatory withholdings for social security include the General Social Contribution (CSG) and the Social Debt Repayment Contribution (CRDS), which deduct tax from income earnings, property, investments, and gambling. Foreign tax residents must also pay into the social security system to be eligible for certain benefits, including healthcare, maternity and paternity allowances, sickness benefit and supplementary pension schemes.
- Redundancy, Termination, Severance: Dismissals, terminating contracts and redundancies in France are regulated to protect the employee. In practice, in France there is no such thing as a ‘summary dismissal’ or being ‘sacked on the spot’. The French Labor Code dictates that the employer must have a ‘justifiable cause’ for termination and follow the proscribed procedures. Redundancy for an employee or groups of employees can be justified for economic, technological, or business reasons. Under the French Labor Code these reasons must be verifiable as not relating directly to the employees.
Severance pay is 25% of the month’s salary for each year up to 10 years’ employment and 33% for each month’s salary over 10 years’ service. Notice periods are generally governed by the French Labor Code and collective agreements, the latter particularly applying to fewer than six months’ employment. Notice is one month for between six months and two years’ service and two months for more than two years’ service.
- Working Hours and Breaks: Working hours should not exceed 35 per week or 44 on average over 12 weeks. The ‘office day’ is often based on 8 or 9am until 12/12.30 then 2/2.30 to 6pm. The Labor Code stipulates that weekly working hours over 35, or 1,607 annually, are overtime. Employees receive a minimum 20 minutes’ break after six hours work, with 11 hours’ unbroken rest between shifts and 35 continuous hours of rest every seven days.
- Sick Leave: Employees unable to work through illness or injury qualify for daily payments from the social security system, with the employer legally required to make up the difference as per the Labor Code. Employees receive 90% of salary for the first 30 days, two-thirds for the next 30, with qualifying periods increased by 10 days for each five years or service. Benefit is paid from day one of incapacity for work-related illness or injury, or from the eighth day in other cases and cannot exceed 90 days in total.
- Holiday / Vacation Leave: Paid annual leave totals five weeks after completing one year’s employment, with collective agreements covering entitlement for less than one year’s work. Full entitlement is two-and-a-half days for each month to a maximum of 30 days. Labor Day is the only mandatory public holiday in France; employees who have to work earn ‘double time’. There are a further 10 statutory public holidays.
- Maternity / Paternity Leave: Leave totals 16 weeks with at least 10 taken post-natal and eight weeks the mandatory minimum total. Leave can increase to 26 weeks for a third child, 34 weeks for twins and 46 for triplets. Maternity benefit equals average salary over the three months prior to birth (with a quarterly cap of €10,131, US$11,920) as long as the individual worked a minimum 150 hours over the previous three months.
Paternity leave increased to 28 days from July 1, 2021, with salary paid for three days by the employer and by social security for the rest. Seven days are mandatory. Adoptive fathers can also apply. The co-parent has up to six months to take the leave and must have worked at least 150 hours in the three months preceding leave to claim benefits. For multiple births, 32 days leave are allowed.
- Parental Leave: Leave starts from the end of maternity leave at six months for one child up to three years for two or more children. In this case either parent can receive benefit for 12 months, but the remaining 12 months is paid only if the parent stops work or sufficiently reduces their hours. Benefit depends on income and length of employment.
Social Security in France
Social insurance in France is administered by The Ministry for Solidarity and Health and the Ministry of Economy and Finance. This covers benefits for all salaried workers in the private sector through a network of national, regional, and local institutions and consultation with employers and employees. Around 80% of revenue comes from contributions and taxes calculated on percentage rates from employer and employees.
The system covers such as maternity and paternity benefits, unemployment pay, sick leave, workplace accidents and family benefits. Contributions to the funds are based on percentages of total earnings, as follows:
- Health, maternity, disability, death - 13% or 7% (employer)
- Autonomy solidarity contribution - 0.3% (employer)
- Old-age insurance (with upper limit) - 6.9% (employee), 8.55% (employer), capped monthly at €3,428 (US$4,044)
- Old-age insurance - 0.4% (employee), 1.9% (employer)
- Workplace accidents - variable
- Family benefits - 5.25% or 3.45% (employer)
- Social security surcharge (CSG) - 9.2% (employee)
- Social security debt (CRDS) - 0.5% (employee)
- Unemployment - 4.05% (employer), capped monthly at €13,712 (US$16,176)
- Unemployment wage guarantee (AGS) - 0.15% (employer), capped monthly at €13,712 (US$16,176)
- Supplementary pension (Bracket 1) - 3.15% (employee), 4.72% (employer), capped monthly at €3,428 (US$4,044)
- Supplementary pension (Bracket 2) - 8.64% (employee), 12.95% (employer) - which applies between €3,428 (US$4,044) and €27,424 (US$32,353)
For more information on this complex system, click here.
Employer Statutory Costs in France
Minimum Wages: The National Minimum Wage in 2021 remained at €1,554.60 (US$1,830) per month or €18,655 (US$21,963) per year based on 12 payments annually. Employers’ statutory costs to social insurance can vary between 32% and 45% of gross salaries depending on ages of employees and various ceilings.
Social Security: Employers’ statutory costs to social insurance can vary between 32% and 45% of gross salaries depending on ages of employees and various ceilings.
What Benefits are guaranteed in France?
- Overtime: Rates are 25% above hourly rate for the first eight hours and 50% above basic for each subsequent hour.
- Health Insurance: All employees having contributed to the social security funds for the required period are entitled to health insurance.
- Public Holidays: There is one mandatory public holiday, Labor Day on May 1, with another 10 statutory public holidays.
- Vacation Leave: Paid vacation is based on two-and-a-half days per month after more than one year’s employment, to a maximum of 30 days or five weeks. Holidays for having worked less than 12 months are covered by the individual contracts or collective agreements.
- Sick Leave: Employees who have been with their employer for one month receive 90% of salary for the first 30 days, two-thirds for the next 30 days with, with the employer making up the difference according to the Labor Code.
- Maternity and Paternity Leave: Sixteen weeks includes at least 10 weeks post-natal. Eight weeks is the mandatory minimum. Paternity leave doubled to 28 days from July 2021.
What Restrictions exist for Compensation and Benefits in France?
- Social Security: Maternity and paternity benefits – claimants must have worked at least 150 hours within the previous three months, or 600 hours over 12 months if working part-time.
- Vacation Leave: Employers must have worked at least 12 months with their employer to qualify for two-and-a-half days per month for 30 days annually.
- Unemployment Benefit: Claimants must have registered as a jobseeker, be involuntarily unemployed and have worked at least four months in the previous 24 months, or 36 months for the over 53-year-olds.
Health Insurance and other Benefits in France
Health insurance is mandatory for all French residents, who since 2016 come under the universal healthcare system Protection Maladie Universelle (PUMA). Permanent residents are covered once they have lived in France for a minimum of three months and have made the necessary contributions, including expats who qualify under this requirement. Most costs can be reclaimed to between 70% and 80%. Other benefits cover sick leave, paid vacations, maternity, and paternity benefits, plus unemployment benefits. All employees paying social security contributions are entitled to health insurance.
Benefit from our advice!
Negotiating employee benefits is a complex process for employers in France. The mix of mandatory regulations, collective agreements and individual contracts creates many compliance issues. Compensation, benefits, social security contributions and health insurance must be attended to swiftly and efficiently to ensure a smooth transition for your staff. Get ahead of these issues by working with Bradford Jacobs’ Employer of Record (EOR) services.
Contact us today to learn more!