Over the past years, the use of Employers of Record (“EOR”) has significantly increased outside of Europe and is now also developing across European countries.
This growing interest is due to the EOR system offering increased flexibility to companies, in particular for those intending to expand their business in countries where they do not have a legal presence.
EOR’s are third-party organizations that formally act as the employer of a workforce on behalf of another company (“the client”). The EOR is responsible for hiring individuals and handling legal and administrative employment tasks and formalities, including payroll, taxes, benefits, and compliance with local labor laws. The client oversees the daily activities of the employees.
In France, and many other European countries, EORs are to be managed cautiously.
The principle in France is that EORs are not permitted, except if they are implemented in the context of the portage salarial and comply with their conditions.
The rationale behind this is the general prohibition by French law of the lending of employees against remuneration which, except for temporary agencies is not allowed and is punishable by sentences of up to 2 years imprisonment and fines of up to EUR30,000 for the legal representatives of the company, and fines of up to EUR150,000 for the legal entities, although rarely imposed in practice.
The portage salarial regulations do provide for some flexibility around the lending of employees and subject to...
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