France is often considered as an outstanding choice when looking to expand one’s business in Europe. Indeed, la République is a major economical actor, being constantly ranked at the top of the largest economies in the world by GDP. Furthermore, its pivotal location on the European continent makes it a perfect springboard for companies looking to expand in other countries of the European Union. Nonetheless, doing business in another country means that one must become acquainted with the applicable local labour regulations, or seek the services of a competent professional. This might just be the way to go when it comes to handling payroll in France.
What does “Payroll Outsourcing” Mean?
Payroll outsourcing signifies that a business calls upon payroll providers, who are specialists in the field, to handle its obligations relating to payroll. In other words, the employees’ payment process and associated employer obligations are delegated to a third party. Amongst other services, payroll professionals can work out pays, deduct taxes, make necessary deductions (e.g., retirement contributions), file taxes with the tax office, make the payment to employees and keep payroll records.
What Is the Advantages of Payroll Outsourcing?
Firstly, by choosing to rely upon a third party to handle payroll obligations, a business makes sure that it is compliant with its payroll obligations, and thus minimizes the risk of liability and penalty. Indeed, when dealing with payroll specialists, it is less likely that an omission takes place, or that information gets wrongly filed or lost. Also, since the payroll process can be tedious and requires acute meticulousness, outsourcing can have a positive time management effect, and probably also spare you a few headaches. In addition, even if outsourcing payroll means paying for a third-party service, it can end up reducing costs, as it means that the company may be able to save on hiring in-house payroll resources and on investing in special payroll software, thus also cutting its maintenance and infrastructure costs.
What is so special about the payroll obligations in France?
A company carrying business in France has many duties when it comes to the payroll. Navigating between its different obligations can sometimes become a real puzzle, and the French payroll legal framework is rightly so considered as one of the most complex in Europe.
For instance, every pay slip must contain a long list of specific mandatory information: the employer must be identified by the following information: company name, address of registered office, APE/NAF code number (used to identify the business category or sector), SIREN number, etc. The same holds true for the employee, who is identified by their surname and name, their position, the start date at the company, the type of contract, etc.
The employer is also responsible for paying numerous social contributions, which means that, in practice, they must deduct amounts from each of their employees’ pay, and then declare and pay the contributions to the concerned agencies. It is to be noted that some of the levies are to be paid by the employer solely. These include the family allowance contributions, the “Contribution Solidarité Autonomie” (CSA), the Workers’ compensation contributions, the Payment to the National Housing Fund, the “Cotisation au régime de garantie des salaires”, the Social package and the Funds for transportation (applicable to employers with more than nine employees in an urban transport perimeter). On the other hand, some levies are to be paid both by the employer and the employee, notably social security contributions covering sickness, maternity, invalidity, death and old-age insurance, unemployment insurance contributions, etc.
In addition, employers must report each month to the Union des recouvrement des cotisations de Sécurité sociale et d’allocations familiales (Urssaf) the payroll, the number of paid hours and paid contributions. This monthly declaration is called the “déclaration sociale nominative” (DSN) and, when it comes to the payroll, it must be made at the latest on the fifth day of the following month for employers having fewer than fifty employees, or on the fifteenth day of the following month in the other cases.
The myriad of legal obligations explains why payroll outsourcing is often privileged by SMEs doing business in France. We advise you to either be assisted by an experienced professional in this field in order to make sure that your business activities are in accordance with the French legal labour obligations, or to consider outsourcing payroll.
Are you looking to take your business to the European Union ? Stephan Grynwajc is admitted as a lawyer in the U.S., in France, in England and in Canada, and specializes in advising U.S. and Canada-based startups and SMEs in their European operations. Contact us today !