France is a country that has a rich tradition of creativity and innovation — French workers are highly educated and skilled, providing international companies with a knowledgeable working force. A result of this innovation and skilled population is a flourishing economy that’s a powerhouse in the European Union.
All of this makes France an attractive option for Japanese companies who want to gain a foothold in major Western markets.
With so many companies hiring international workers, companies in Japan can gain access to a vibrant economy and a dynamic business environment. However, companies who want to hire in France may have difficulty navigating the intricacies of French employment laws and the county’s tax structure.
This guide will tell you everything you need to know as a Japanese company hiring French workers.
Reasons to Hire in France
Access to France’s Skilled Workforce
France has a highly skilled and educated workforce that can help you reach new markets. France has the 5th best education system in the world as of 2023 and the 19th largest workforce, giving your company access to a large pool of capable workers.
French workers are versatile and have strengths in several industries, such as fashion, hospitality, manufacturing, STEM fields, and more.
Gateway to Europe
Japanese companies hiring in France can utilize its close proximity and cultural ties to other major European markets. By establishing a presence in the second largest European Union economy, Japanese businesses can gain access to a diverse consumer pool with varying demands and the ability to gain insights into other European regulations.
Additionally, France has a strategic location and shares borders with major economies such as Germany and Italy. It’s also a member of several trade agreements and has a highly developed transportation system to efficiently transfer goods. This can help bridge potential gaps when expanding your business.
Innovation and Creativity
Japanese companies who want French workers can also benefit from the country’s tradition of creativity and innovation. France ranked 6th in terms of gross research and development expenditure in 2022 and has a culture that facilitates creativity and unique perspectives.
France is home to a number of renowned schools and research institutions that can provide your company with innovative ideas or technologies. The French government also provides funding initiatives and policies to foster growth.
Challenges When Hiring in France
By hiring in France, Japanese companies can gain access to a world-class economy and a diverse talent pool. However, Japanese companies may face some key challenges when recruiting and onboarding French workers.
Cultural Differences
Despite the opportunity for growth into a major European market, Japanese companies may find the significant cultural differences between the two countries difficult to navigate. In addition to the different business climate, France has a strong presence of labor unions that can impact terms of employment.
Language Barrier
Another challenge Japanese companies may face when hiring in France is the language barrier. France doesn’t have a large Japanese-speaking population, which can make communications across borders more complicated when dealing with local employees.
Understanding Local Employment Laws
Now that you have a better understanding of what’s needed to hire in France, you might be wondering where to start. There are several key considerations you’ll need to make to remain compliant, as France has relatively complicated local labor laws and regulations. By finding an EOR in France with extensive expertise about legal requirements, you can save time and money throughout the entire process.
Misclassifying Your Employees
One of the potential challenges a Japanese company recruiting French workers may face is the risk of misclassification. Misclassifying your employees can result in significant punishments, including heavy financial damage, tax penalties, and back pay for wages or benefits.
Employers can have various reasons for misclassifying employees, such as avoiding the taxes and necessary costs associated with hiring a permanent employee. Regardless if the misclassification is accidental or on purpose, penalties may apply.
In France, an employee is a permanent member of your staff and receives a regular monthly salary in exchange for work. The worker typically provides exclusive services to the company, and the employer has more control over the individual’s work. Employees are entitled to various statutory benefits and have more job security when it comes to termination.
An independent contractor is a short-term or temporary worker that’s hired on a project-by-project basis or for a specified amount of time. The contractor is not on your payroll and does not count as a regular employee. This means that the contractor is responsible for handling their own taxes and contributions to social programs and does not receive benefits from an employer.
Right to Disconnect Law
In 2017, France became the first European country to implement a policy about an employee’s right to disconnect. The law states that workers are allowed to disconnect and not be expected to answer emails, calls, or messages from their employer outside their regular working hours without facing penalties. This is particularly important since the pandemic, as remote work has become increasingly popular among companies.
Collective Bargaining Agreements
When hiring in France, it’s also important to know that labor unions are relatively strong. A collective bargaining agreement (CBA) is a set of negotiations between a union and the employer that guarantee certain working conditions for employees. These agreements clearly define certain working conditions, such as the minimum wage requirement, benefits, working hours, and more. They can also vary between industries or sectors.
Costs of Hiring in France
In addition to some of the challenges you may face, there are a range of mandatory costs you’ll be responsible for to compliantly hiring French workers. These include basic requirements like the employee’s wage and other associated costs such as benefits and allowances. Here’s an idea of how much it might cost to hire an employee in France as a Japanese company.
Home Allowance and Remote Work Stipends
Japanese companies hiring in France are required to provide employees with a work from home allowance, which usually ranges from €80 to €100 per month. Home allowances are exempt from income tax up to a maximum of €580 for the entire year. Employees must be compensated for using their personal space as a work office.
Wages
As of 2023, the statutory minimum wage requirement in France is €1747.20 per month, or roughly €11.27 per hour. However, you’ll likely need to pay skilled workers more, as the average salary in France in 2023 is roughly €2464 per month.
As mentioned above, the specific minimum wage requirements for different industries can be different depending on the terms of the CBA. This helps ensure that employees are protected and properly compensated for their labor. The employment contract should state the employee's wages and other financial implications.
Overtime
The standard working hours in France are 9 AM to 5 PM with an unpaid hour break for lunch. Additionally, working days in France cannot last for more than 10 hours, and a standard workweek is 35 hours. If an employee works more than 35 hours in a single week, they are entitled to overtime pay. When there’s an agreement in place, employees can earn 110% of their regular wage. When there’s no agreement, the overtime premiums are:
- For the first 8 hours of overtime, employees can receive 125% of their regular hourly wage.
- For any additional hours, employees earn 150% of their regular hourly wage.
Employees are also entitled to a 20-minute break for every 6 hours worked.
Vacation and Other Time Off
If you’re a foreign company looking to hire in France, you should know that the country gives a generous amount of time off to each employee. French workers are entitled to up to 5 weeks of statutory paid time off per year. All employees are entitled to paid leave of 2.5 days for every month of work. For part-time employees, the amount of time off is prorated based on their actual working time.
In France, new mothers may take up to 16 weeks of maternity leave, which can begin six weeks before the birth of the child and 10 weeks afterwards. Mothers are also required to take at least eight weeks of total leave, and mothers with over three children can be eligible for 26 total weeks. New fathers are entitled to take up to 25 days of parental leave, or 32 total days with multiple births.
In addition to parental leave, workers are entitled to other types of time off. Employees who have worked at least 150 hours during the first three months of the year are entitled to unlimited sick leave.
France also has 11 public holidays that your company should be aware of:
- January 1 (New Year’s Day)
- Easter Monday
- May 1 (Labor Day)
- May 8 (Victory Day)
- 39 days after Easter Sunday (Ascension Day)
- Whit Monday
- July 14 (Bastille Day)
- August 15 (Assumption Day)
- November 1 (All Saints’ Day)
- November 22 (Armistice)
- December 25 (Christmas Day)
Termination and Severance
The rules regarding terminating an employment agreement in France are strict, and you’ll have to meet certain requirements to avoid noncompliance. The Code du Travail (French Labor Code) provides several protections to employees. France does not have at-will employment and employers require a valid and proven reason for dismissal, including:
- Failure to perform basic duties of the job
- Insufficient results
- Misconduct such as disagreements with coworkers or insubordination
- Economic reasons
- Mutual consent
The notice period in France is another strict aspect of termination. Generally speaking, the amount of notice needed is determined by the length of the employee’s tenure with the company. For employees who have worked between six months and two years, your company will need to give one month’s notice. For French employees who have worked for over two years, the required notice period is two months.
Workers in France who are on permanent contracts for at least eight months are entitled to severance pay upon termination. The amount depends on the length of the employee’s tenure. The requirements for severance pay are as follows:
- ¼ of the employee’s monthly wages per year for the first ten years of seniority
- ⅓ of the employee’s monthly wages per year after ten years of seniority
France also has a probationary period. During this time, employers or employees can end a working agreement with no penalty or severance required. Collective bargaining agreements may impact the specific terms. However, the usual probationary periods in France are:
- Two months for employees and workers
- Three months for supervisors and technicians
- Four months for executives
Payroll
As a Japanese company looking to hire in France, you’ll also be responsible for setting up a proper payroll system. This ensures that your employees get paid the right amount and within the French payroll cycle. It is also your responsibility to ensure that employees make the appropriate contributions to social security programs after each payment.
In France, employees typically get paid once per month. There is no legal requirement to pay bonuses, but many companies in France give their employees a 13th month bonus in December.
The income tax brackets for your French workers are:
- 0%: up to €10,225
- 11%: up to €26,070
- 30%: up to €74,545
- 41%: up to €160,336
- 45%: over €160,336
As an employer, you must make sure employees are taxed appropriately. You will also be responsible for withholding social security contributions. When hiring in France, you’ll need to withhold:
- 7% for Health, maternity, disability, and death insurance
- 3.45% for Family benefits
- 0.89% for Supplementary incapacity, invalidity, death
- 0.77% for Workplace accidents and occupational illnesses
- 8.55% for Social security (capped)
- 1.9% for Social security (uncapped)
- 4.2% for Unemployment insurance
- 0.41% (plus a fixed fee) for Occupational medicine
- 0.1% for FNAL
How Can You Legally Hire in France?
Hiring in France has a few logistical and financial challenges, including notice periods, but the country is home to a bustling economy and a skilled workforce that can help drive growth through innovation.
Before you begin the hiring process, there are a few more considerations you’ll need to make before you can compliantly recruit skilled French workers to your team. Finding a quality employer of record (EOR) can help you avoid any potential fees or penalties.
Setting Up a Local Entity in France
To compliantly hire French workers, your Japanese company will need to set up a local entity in the country. You are responsible for keeping accurate records, setting up proper payroll, handling employee taxes, and all other aspects of the hiring process, along with managing and developing your staff on a day-to-day basis. Failure to comply with local labor laws can result in noncompliance penalties or fees.
This is a good route to go if you have long-term expansion plans in France or if you want to hire a large staff of French workers. This method can be time-consuming, costly, and require you to follow several steps, including registering with local tax authorities in France. You may also have to apply for other documentation, such as a work permit to authorize your business.
Employer of Record Services
Partnering with an employer of record service or professional employer organization in France can make the entire hiring process much easier. An EOR in France acts as your local entity there and handles all complicated HR requirements. This means instead of figuring out the payroll, taxation, benefits, and termination process for your international employees, you can focus on improving your team’s productivity and delivering high-quality results.
A global employer of record acts as the legal employer for your staff in France. It can connect you with top talent from the country you want to hire from and efficiently onboard your new hires, all without the hassle of understanding complicated labor laws. This can help you remain compliant with all applicable laws and avoid noncompliance penalties.
EORs take care of things like:
- Draft employment contracts
- Hire employees on behalf of your organization
- Mitigate compliance risks
- Ensure payroll compliance
- Manage the probation period duration
- Adhere to local country laws
In short, an EOR understands the complicated logistics of hiring international employees so you don’t have to.
Partner with Borderless
Borderless is an EOR service that can help you find top talent and quickly onboard your new employees regardless of where they’re from. Borderless offers an extensive range of services to make the entire hiring process more efficient. Book a demo today to see how we can help you grow your business in over 170 countries around the world.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
