Law firm specialising in employment law
and social security law.
Law firm specialising in employment law
and social security law.
Whether you are an individual or a legal entity, if you are a principal and use contracting partners (subcontractors, service providers, freelancers, etc.), a number of obligations apply to you and non-compliance exposes you to significant financial risks.
This duty of vigilance covers the principal’s obligations with regard to illegal employment and employment of foreign workers.
In this context, the French Labour Code provides that any person who enters into a contract for an obligation amounting to at least equal to €5,000 (excl. VAT) with a view to the performance of work, provision of services or performance of commercial activities must ensure that the contracting partner fulfils social security and tax filing obligations. This duty derives from Articles L.8222-1 and R.8222-1 of the French Labour Code.
This obligation to ensure that the subcontractor or service provider carries out its activities in accordance with French labour law is generally referred to as a "duty of vigilance".
It is valid from the conclusion of the contract and every six months until the end of performance of the contract, which means that these documents must be sent at the beginning of the contract and then at least every six months.
Specifically, the duty of vigilance entails the obligation to carry out certain mandatory formalities before commencing a service.
Thus, the principal must ask its contact persons to provide it with:
The certificate of vigilance must be dated less than six months and must then be digitally verified on URSSAF’s website using the identification number shown on the certificate, using the verification module available at the following link: https://www.urssaf.fr/portail/home/utile-et-pratique/verification-attestation.html.
If you are an individual contracting for your personal needs, only one of these documents is required. (Article D.8222-4 of the French Labour Code)
If you are a legal entity, all these documents must be provided in the event of an URSSAF inspection (Article D.8222-5 of the French Labour Code).
Note : this obligation is strictly assessed and the social security authorities (URSSAF) are not flexible. If the documents are not consistent with each other, if there are differences in information (Court of Cassation, 2nd Employment Division, 11 February 2016, no. 12-21554), or if a document is missing, a penalty will be applied and no other document may replace it (Court of Cassation, 2nd Employment Division, 11 February 2016, no. 14-10614))
If my subcontractor is a foreign company?
The duty of vigilance exists even if the subcontractor is an undertaking established or domiciled abroad. However, the documents that must be produced by the company are adapted.
Note: all of these documents must be in French or translated into French (accompanied by a translation). (Article D.8222-8 of the French Labour Code)
Contracting partners (subcontractors or service providers, for example) are sometimes subject to an URSSAF inspection to verify compliance with the rules on illegal employment and payment of social security contributions.
In this context, in the event of non-compliance with the duty of vigilance and if the contracting partner is reported for illegal employment, the principal may be held financially liable for the payment of taxes, social security contributions, salaries and other charges, in addition to the reimbursement of public aid received by the principal, including cancelled exemptions and reductions granted to the contracting partner which committed the offence. (Article L.8222-2 of the French Labour Code)
In practice, a letter of observation is sent by URSSAF which informs the principal regarding the implementation of its liability in the scope of financial solidarity. (Article R.133-8-1 of the French Social Security Code)
The penalties do not stop there since URSSAF can also cancel the exemptions and social security contribution reductions applicable to the principal's own employees over the entire period during which illegal employment occurred. (Article L.133-4-5 of the French Social Security Code)
How do you know if your service provider has been reported for illegal employment?
You may ask to be provided with the document that must be drawn up before implementation of financial solidarity called a “report on illegal employment” issued regarding the service provider. If you dispute the adjustment notified to you by URSSAF, it must be sent to you as part of the procedure. (Court of Cassation, 2nd Employment Division, 8 April 2021, no. 19-23728)
The financial solidarity mechanism with a subcontractor which has been reported for illegal employment may in particular be applied to:
The principal must also ensure that its contracting partner complies with the legal obligation to only employ foreign workers holding a work permit. This obligation derives from Articles L.8254-1, D.8254-1, D.8254-2 and D.8254-4 of the French Labour Code.
This is more or less the same mechanism as provided above.
In this context, the principal must obtain a sworn statement specifying whether the subcontractor uses foreign workers for the performance of the contract and confirmation that the workers are authorised to work in France. (Article L.8254-1 of the French Labour Code)
On conclusion of the contract and every six months, the list of workers is sent specifying the date of employment, nationality, and type and number of the document constituting a work permit for each employee. (Articles D.8254-2 and D.8254-3 of the French Labour Code)
Article L.8254-2 of the French Labour Code states that the principal who does not comply with its obligations with regard to combating illegal employment is jointly and severally liable with it for payment of:
Additional obligations for large companies
Special obligations exist for companies which employ more than 5,000 employees in France or 10,000 employees worldwide. The latter must draw up a vigilance plan including measures to identify risks and prevent breaches of human rights and fundamental freedoms that may result from the activities of the parent company, companies it controls and their suppliers and subcontractors, in France and abroad. (Article L.225-102-4 of the French Labour Code)
A principal is informed by URSSAF regarding a subcontractor’s non-compliance with its obligations to declare contributions or prohibition on employment of foreign workers without authorisation. It must also order the subcontractor to promptly put an end to this situation by registered letter with acknowledgement of receipt.
This procedure is laid down in Articles L.8222-6 and L.8254-2-1 of the French Labour Code, which set out the compulsory steps to be followed by the contracting partner or the principal when it is informed in writing by an inspecting officer of an administrative body regarding its contracting partner’s non-compliance, resulting in illegal employment being established by non-disclosure of salaried employment or work. (Articles L.8221-3 and L.8221-5 of the French Labour Code).
Non-compliance with your duty of vigilance as principal may result in you being held jointly and severally liable to pay your contracting partner's taxes, social security contributions, salaries and other charges, if your contracting partner has used illegal employment.
The same penalties as applicable to non-compliance with the duty of vigilance are provided for in the event of non-compliance with the duty to give instructions.
When the principal is informed that its subcontractor does not comply with the minimum requirements under labour law (rules relating to prohibition of discrimination, exercise of the right to strike, working time, minimum wage, etc.), it is obliged to order the subcontractor in writing to promptly remedy the situation. (Article L.8281-1 of the French Labour Code)
This obligation also exists in the event of non-compliance with the provisions relating to the payment of the legal or contractual minimum wage (Article L.3245-2 of the French Labour Code) or in the event of providing collective housing with conditions that are incompatible with human dignity (Article L.4231-1 of the French Labour Code).
These three procedures relating to giving instructions are precisely defined by the French Labour Code with specific deadlines that must be observed. Otherwise, the social security authorities (URSSAF or other body) may call into question the principal’s financial solidarity. The principal’s criminal liability may also be implicated with potential fines. (Article R.8282-1 of the French Labour Code)
In the event of multiple principals, the amount claimed by URSSAF may be allocated proportionally:
The proportional distribution of the amount owed by each joint and several principal is established on the basis of the work or services performed and on the basis of quotations, purchase orders or work orders, invoices and contracts or commercial documents relating to the services performed using illegal employment.