Year End 31 st December. An overview of French payroll Module 1

Transcription

1 Year End 31 st December An overview of French payroll Module 1

2 AGENDA Fact Culture Employment Law Setting up a Business Employer Obligations Time management Absence valuation Tax Social Security Payslip review Final settlement Wage attachment Reports Sickness and Maternity

3 FACTS 3

4 Facts Population: more than 66.7 million people live in the country (2016) Capital: Paris, with 2,2 million inhabitants Name: Republique Francaise (French Republic) Motto: 'Liberte, Egalite, Fraternite' (Liberty, Equality, Fraternity) Government: Democracy Language: French Religion: mainly Christians (Roman Catholics 64%) Currency: 1 Euro=100cents, until 2002 French Franc History: In BC the Celtic Gauls arrive in France. In 58-50BC Roman Emperor Julius Caesar defeats the Gauls and France becomes part of the Roman Empire until 476AD. French was ruled by kings for many centuries until the storming of the Bastille during the French Revolution in Then Napoleon becomes Emperor of the French Republic until he is sent to exile. Flag: blue, white and red. The French refer to the flag as 'Tricolore' (french for 'three colours')

5 CULTURE 5

6 Business Culture Please bear in mind that many international organisations will have their own culture Professor Geert Hofstede conducted perhaps the most comprehensive study of how values in the workplace are influenced by culture. He analysed a large database of employee values scores collected by IBM, between 1967 and 1973, covering more than 70 countries, National Culture is about the value differences between groups of nations and/or regions. Using research data from a multinational company (IBM) with subsidiaries in more than 60 countries, he identified four largely independent dimensions: Power Distance (large versus small), Uncertainty Avoidance (strong versus weak), Individualism versus Collectivism and Masculinity versus Femininity. The relative positions of 40 countries on these four dimensions were expressed in a score on a point scale. Replications by Hofstede and other researchers have extended the number of countries covered to UK contact for Geert Hofstead info@itim.org

7 Business Culture Power Distance This dimension deals with the fact that all individuals in societies are not equal it expresses the attitude of the culture towards these inequalities amongst us. Power Distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally. With a score of 68, France scores fairly high on Power Distance. Children are raised to be emotionally dependent, to a degree, on their parents. This dependency will be transferred to teachers and later on to superiors. It is, therefore, a society in which a fair degree of inequality is accepted. Power is not only centralised in companies and government, but also geographically. Just look at the road grid in France; most highways lead to Paris. Many comparative studies have shown that French companies have normally one or two hierarchical levels more than comparable companies in Germany and the UK. Superiors have privileges and are often inaccessible. CEO s of big companies are called Mr. PDG, which is a more prestigious abbreviation than CEO, meaning President Director General. These PDGs have frequently attended the most prestigious universities called grandes écoles, big schools. UK contact for Geert Hofstead info@itim.org

8 Business Culture Individualism The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people s self-image is defined in terms of I or We. In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to in groups that take care of them in exchange for loyalty. France, with a score of 71, is shown to be an individualist society. Parents make their children emotionally independent with regard to groups in which they belong. This means that one is only supposed to take care of oneself and one s family. The French combination of a high score on Power Distance and a high score on Individualism is rather unique. We only find the same combination in Belgium and, to some degree, in Spain and northern Italy. UK contact for Geert Hofstead info@itim.org

9 Business Culture UK contact for Geert Hofstead This combination is not only unique, but it also creates a contradiction, so to speak. Only so to speak, because scores in the model don t influence anything. They just give a structured reflection of reality. This combination manifests itself in France in the following ways: It is claimed that one reason why the French are less obese than people in other EU-countries is that parents still have more sway over children than in other EU-countries. Whether this is true or not is not known by us. All the same, what is true is that the family has still more emotional glue than in other Individualist cultures. This is a reflection of the high score on Power Distance with its stronger respect for the elderly. Subordinates normally pay formal respect and show deference to their boss, but behind his/her back they may do the opposite of what they promised to do, as they may think that they know better, yet are not able to express so. Another reflection of high Power Distance contrary to formal obedience is the total rejection of those in power as there is no way to change by evolution but only by strikes, revolts and revolution. Employers and trade unions don t really talk together as they look at each other as almost belonging to a separate species. The need to make a strong distinction between work and private life is even stronger in France than in the US, despite the fact that the US scores higher on Individualism. This is a reflection of the fact that employees more quickly feel put under pressure than in the US because of their emotional dependence on what the boss says and does. In cultures which score high on Power Distance and Collectivism, the normal combination, such dependence is welcomed. At least, if the power holders act as benevolent fathers. The French prefer to be dependent on the central government, an impersonal power centre which cannot so easily invade their private life. What is human, but more pronounced in France, is the need for strong leadership in times of crisis. In spite of that, when the crisis is resolved the president should make space for much weaker leadership. Many French have the need to become a patron, whether as mayor of a small village or as the chairman of the bridge club. Customer service is poor in the eyes of all those Anglo-Saxons who believe that the customer is king. Not so in France. The French are self-motivated to be the best in their trade. They, therefore, expect respect for what they do, after which they are very much willing to serve you well.

10 Business Culture Masculinity A high score (Masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field a value system that starts in school and continues throughout organisational life. A low score (Feminine) on the dimension means that the dominant values in society are caring for others and quality of life. A Feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable. The fundamental issue here is what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine). With a score of 43, France has a somewhat Feminine culture. At face value this may be indicated by its famous welfare system (securité sociale), the 35-hour working week, five weeks of holidays per year and its focus on the quality of life. French culture in terms of the model has, however, another unique characteristic. The upper class scores Feminine while the working class scores Masculine. This characteristic has not been found in any other country. This difference may be reflected by the following: Top managers earn on average less than one would expect given the high score on Power Distance. Married couples of high society could go public with a lover without negative consequences, at least certainly in the past. The scandal in the US about Clinton and Lewinsky has never been understood in France. In addition, crime passionel, i.e. crimes of passion, have always been sentenced very leniently in comparison to other murder trials. UK contact for Geert Hofstead info@itim.org

11 Business Culture Uncertainty Avoidance This dimension, Uncertainty Avoidance, has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings anxiety with it, and different cultures have learnt to deal with this anxiety in different ways. The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these is reflected in the score on Uncertainty Avoidance. At 86, French culture scores high on Uncertainty Avoidance. This is clearly evident in the following: -The French don t like surprises. Structure and planning are required. -Before meetings and negotiations they like to receive all necessary information. -As a consequence, the French are good in developing complex technologies and systems in a stable environment, such as in the case of nuclear power plants, rapid trains and the aviation industry. -There is also a need for emotional safety valves as a high score on Uncertainty Avoidance and the combination of high Power Distance and high Individualism strengthen each other, so to speak. The French, for example, are very talkative and engueuler, giving someone the sharp edge of one s tongue happens often. -There is a strong need for laws, rules and regulations to structure life. This, however, doesn t mean that most Frenchmen will try to follow all these rules, the same as in other Latin countries. Given the high score on Power Distance, which means that power holders have privileges, power holders don t necessarily feel obliged to follow all those rules which are meant to control the people in the street. At the same time, commonners try to relate to power holders so that they can also claim the exception to the rule. UK contact for Geert Hofstead info@itim.org

12 Business Culture Long Term Orientation This dimension describes how every society has to maintain some links with its own past while dealing with the challenges of the present and future, and societies prioritise these two existential goals differently. Normative societies. which score low on this dimension, for example, prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Those with a culture which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future. France scores high (63) in this dimension, making it pragmatic. In societies with a pragmatic orientation, people believe that truth depends very much on situation, context and time. They show an ability to adapt traditions easily to changed conditions, a strong propensity to save and invest, thriftiness, and perseverance in achieving results. UK contact for Geert Hofstead info@itim.org

13 Business Culture Indulgence One challenge that confronts humanity, now and in the past, is the degree to which small children are socialised. Without socialisation we do not become human. This dimension is defined as the extent to which people try to control their desires and impulses, based on the way they were raised. A tendency toward a relatively weak control over their impulses is called Indulgence, whereas a relatively strong control over their urges is called Restraint. Cultures can be described as Indulgent or Restrained. France scores somewhat in the middle (48) where it concerns Indulgence versus Restraint. This, in combination with a high score on Uncertainty Avoidance, implies that the French are less relaxed and enjoy life less often than is commonly assumed. Indeed, France scores not all that high on the happiness indices. UK contact for Geert Hofstead info@itim.org

14 EMPLOYMENT LAW 14

15 Employment Law Employment relations within companies are governed by the French Labor Code (Code du Travail) and industry-specific collective agreements. In recent years, social dialogue has also been enhanced and now underpins developments in employment law, being the preferred method of modernizing legislation The Employment Act of June 14, 2013, negotiated with employee and employer representatives, introduced new provisions: employee mobility; anticipating change; career security; revised rules for collective dismissals on economic grounds with better defined procedures and time limits, and a focus on developing the use of conciliation to resolve disputes Employment relations within a given company are increasingly based on collective agreements at industry level and at the level of individual companies, with employee and employer representatives playing a key role.

16 Employment Law Parties are free to substitute replace certain legislative and regulatory measures by collective agreements as long as these agreements do not contravene the law. Such agreements include: Inter-professional agreements reached at national level to ensure a cohesive overall system. Industry-specific agreements covering a given profession, which must stipulate: minimum wage levels, job classification, collective guarantees for insurance and pooling of training funds. Company or establishment agreements reflecting specific features of a company and its employees.

17 Employment Law Employment contracts Employers can hire employees according to their needs using the different kinds of employment contracts admissible under French law. Permanent contract (contrat à durée indéterminée CDI) An employment contract must stipulate the employee s pay and job description, along with the working hours and place of work. In principle, parties are free to write their own contracts and have a great deal of liberty with regard to content, which may include clauses specifying targets for pay, providing for geographical mobility or requiring employees to assume different professional roles, as well as non-compete clauses, clauses covering ownership of inventions and intellectual property rights, etc. Décret n du 22 décembre 2014

18 Employment Law Employers can hire employees according to their needs using the different kinds of employment contracts admissible under French law. Permanent contract (contrat à durée indéterminée CDI) An employment contract must stipulate the employee s pay and job description, along with the working hours and place of work. In principle, parties are free to write their own contracts and have a great deal of liberty with regard to content, which may include clauses specifying targets for pay, providing for geographical mobility or requiring employees to assume different professional roles, as well as non-compete clauses, clauses covering ownership of inventions and intellectual property rights, etc. Décret n du 22 décembre 2014 The contract may also provide for a probationary period, which may be as long as four months for a managerial post (renewable once if an industry-specific agreement allows this).

19 EMPLOYEES MAIN WORK CONDITIONS Employees main work conditions Trial period A trial period may be stipulated in the employment contract. For an unlimited contract, the legal trial period is two months for workers ( ouvriers ), three months for technicians and supervisors ( agents de maîtrise ) and four months for executives ( cadres ). It may be renewed once, for the same duration, with the written consent of each party. Thus, it cannot be the employer s unilateral decision. Payment of salary The employer is free to decide on the level and structure of the employee s remuneration, subject to the following principles: 1 paying the employee monthly; 2 paying a salary, at least, equal to (the statutory minimum wage provided by the law for all kinds of employees (named in short SMIC ) and, possibly, if more favourable, to a conventional minimum wage (i.e. provided by the applicable CBA) as per the classification set up by such CBA and on the employee s status (e.g. cadre ) and level. Minimum wage In practice, determining the employee s salary can give rise to a prior negotiation between the parties, in consideration, notably, of the level of salaries paid for the same level of position and seniority, within the sector of activity/geographic area where the employer performs its activity. Paying possible additional premiums (e.g. based on years of service) that may result from the applicable CBA;

20 EMPLOYEES MAIN WORK CONDITIONS Deductions Withholding the mandatory social security contributions, the rates of which amount, approximately, to 45% for the employer and 22% for the employee. In other words, when an employee s gross salary is 100, he/she gets 78, in net (before personal income tax not withheld by the employer in France) and the corresponding cost for the employer is around 145; Payslip Providing the employees with pay slips showing, amongst other mandatory details, the various elements of their remuneration as well as the social security contributions withheld from such remuneration. Payslip Distribution Labor law Loi El Khomri August 2016 Working time By default, the full working time is 35 hours per week. This number of hours serves as a reference basis, beyond which overtime is calculated. The hourly rate of each hour of overtime performed during the week is increased by 25% for the first 8 hours and by 50% beyond. Total or part of the payment of the overtime can be replaced by rest in lieu under specific conditions.

21 SPECIFIC CONTRACTS Apprentices Trainees Qualification contracts Orientation contracts Adaptation contracts Special part-time contracts Fixed-term contracts Specific categories of payees Brackets for specific contracts Specific contracts give exemptions on contributions. Usually they are set up between an employer and a government agency or between an employer and payee, subject to controls from the DDTE (the regional government organization that is responsible for employment laws). The payroll system should deliver rules for some exemptions regarding some fixed-term contracts, specific exempted contracts, and specific categories of payees. Specific contracts have an impact on many areas of the payroll process

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23 FIXED-TERM CONTRACT (CONTRAT A DUREE DETERMINEE/CDD) Fixed-term contract (contrat à durée déterminée CDD) Extra employees can be hired for a limited time to meet temporary needs. Reasons for fixed-term contracts Temporary increase in the company s business; seasonal work; standard fixedterm contracts (in line with certain practices within a given profession); a special assignment for a skilled employee or an engineer, subject to specific terms; replacement of an absent employee; replacement of an employee who has temporarily moved to part-time work; gap before a new employee takes up their post. Fixed-term contracts cannot however be used on a long-term basis to fill jobs that are related to the company s regular business.

24 FIXED-TERM CONTRACT (CONTRAT A DUREE DETERMINEE/CDD) Format & Clauses Contract must be in writing and drawn up in French. The contract must specify in particular the duration of the assignment and the reason why the contract is being made Probationary period Probationary periods give employers a chance to evaluate an employee s skills. Employers can terminate an employment contract during the probationary period without having to provide grounds or severance pay. The probationary period and the terms of its renewal must be clearly stated, either in the appointment letter or the employment contract, in order to be enforceable. The probationary period under fixed-term contracts of up to six months is one day per week of the contract, and may not exceed two weeks. The probationary period for longer contracts may not exceed one month

25 FIXED-TERM CONTRACT (CONTRAT A DUREE DETERMINEE/CDD) Maximum contract duration Depending on the reason for the fixed-term contract, 18 months at most, or until the absent colleague returns. It is possible to draft fixed-term fixed-purpose contracts for managers and engineers of between 18 and 36 months to complete an assignment specified in the contract. Provision must however be made for this in an industryspecific collective agreement where one exists, or if not in a company-wide agreement. A senior fixed-purpose contract may also be agreed with a jobseeker aged 57 and over. Severance pay Employees are entitled to severance pay when a fixed-term contract ends and is not followed up with a permanent contract. This severance package amounts to 10% of total gross pay received during the term of the contract. However, an extended industry-specific collective agreement (or establishment- or company-wide agreement) may limit this amount to 6%. In such cases, the employee must be compensated for the difference, which is mostly provided in the form of preferential enrollment in vocational training courses (training initiative, skills assessment).

26 CONTRACT TYPE IN YOUR SYSTEMS CORE HR/PAYROLL

27 SPECIFIC CONTRACTS COMPANY DIRECTORS

28 SETTING UP A BUSINESS 28

29 SET UP A BUSINESS If you have decided to set up business in France and to hire staff to work for your business. The first step is to register your company. This procedure is compulsory and a one-step process, dealt with in one place by means of a single application. The forms required to register new businesses and employees can be obtained from URSSAF. URSSAF is the business formalities centre (Centre de formalités des Entreprises, CFE) for businesses hiring employees. When a business establishment registers its first employee, it becomes registered with the employee social security schemes (CRAM, URSSAF) and notification of the employee registration is sent to the DDTE (departmental directorate for Labour and Employment) and INSEE (French national statistics office)

30 SET UP A BUSINESS Each CFE covers a particular geographic area. The CFE takes charge of your business registration application and forwards the contents to the different organisations that need to be made aware of your new business (statutory social security funds, tax authorities, INSEE statistics office, etc.). Once complete and in order, your CFE file is the application used to register your business with the relevant institutions. The CFE issues you with a receipt for your application. INSEE assigns an identification number, the SIRET (14 digit number), which is unique to your business and comprises the SIREN number (which identifies the legal entity) and NIC number (which identifies the business geographically). The company is also allocated an APE code indicating the primary activity of the business. The employer must complete a DPAE prior to hiring each new employee. This simple declaration enables employers to complete all hiring formalities at once. The declaration can be filed online at or

31 SET UP A BUSINESS Frequently Asked Questions: Do you need to register an entity to run a local payroll? You will need to have a legal entity, entity with a distinct existence and standing in law, registered in France with French contract employee to be able to run a local payroll. However you do not need to have a site/location in France to run a local payroll. What is the hiring process, how do you register an employee The employer must complete a Déclaration préalable à l'embauche (DPAE) prior to hiring each new employee. This declaration enables employers to complete all hiring formalities at once. The declaration can be filed online at or The first DPAE is a trigger to open your URSSAF employer account.

32 SET UP A BUSINESS Company Registration The forms required to register new businesses and employees can be obtained from URSSAF URSSAF is the business formalities center (Centre de formalités des Entreprises, CFE) for businesses hiring employees. When a business establishment registers its first employee, it becomes registered with the employee social security schemes (CRAM, URSSAF) and notification of the employee registration is sent to the DDTE (departmental directorate for Labour and Employment) and INSEE (French national statistics office). Each CFE covers a particular geographic area. The CFE takes charge of your business registration application and forwards the contents to the different organisations that need to be made aware of your new business (statutory social security funds, tax authorities, INSEE statistics office, etc.). Once complete and in order, your CFE file is the application used to register your business with the relevant institutions. The CFE issues you with a receipt for your application.

33 COMPANY REGISTRATION SIRET APE Obtaining your identification number INSEE assigns an identification number, the SIRET (14 digit number), which is unique to your business and comprises the SIREN number (which identifies the legal entity) and NIC number (which identifies the business geographically). The company is also allocated an APE code indicating the primary activity of the business.

34 COMPANY REGISTRATION SIREN

35 COMPANY REGISTRATION KBIS the registry of the commercial court

36 COMPANY REGISTRATION

37 COMPANY REGISTRATION APE code gives you the sector, then the CBA SIREN is your FR company ID 9 digits SIRET is your company and site ID 14 digits KBIS can be downloaded via Infogreffe officiels/demande-kbis.html

38 End of Session