Law firm specialising in employment law
and social security law.
Law firm specialising in employment law
and social security law.
Whatever the name you give them, using freelancers, sole traders, or self-employed individuals offers many advantages. Collaborating with independent contractors allows you to work with people who are often autonomous, experienced, and specialized, in a flexible relationship that doesn't exist with salaried employees.
This type of arrangement, very popular in practice, is not without legal risks, which can materialize from the very beginning of the contractual relationship. And the longer the relationship lasts, the greater the risks become.
In particular, one of the major risks of using a service provider relates to the possible reclassification of the contractual relationship as an employment contract.
When trying to anticipate the legal risks associated with using independent contractors, one cannot avoid the number one risk of this collaboration: the reclassification of the service contract as an employment contract.
As a reminder, an employment contract consists of three main elements: the provision of work, remuneration, and the relationship of subordination (Cass. soc. 22 July 1954, Bull. civ. V, no. 576 – see also The Employment Contract: How to Choose the Right One? - Axel Avocats ). Without these three elements, there is no employment contract. When these three elements are present, the relationship can be classified as an employment relationship.
Indeed, the Labor Code provides for a "presumption of non-employment" for the self-employed. Article L.8221-6 of the Labor Code states that the following are presumed not to be bound to the client by an employment contract, in the execution of the activity giving rise to registration, in particular persons registered with the trade and companies register, with the national register of companies as a company in the trades and crafts sector, with the register of commercial agents, or even the managers of legal entities registered with the trade and companies register and their employees.
This presumption does not exclude all risks if the mission is organized, in practice, as a salaried employment relationship.
Indeed, the same article goes on to specify that the existence of an employment contract can be established when services are provided under conditions that place the self-employed individual in a permanent legal relationship of subordination to the client. Upon reading these provisions, it becomes clear that the relationship of subordination is the key criterion to verify in any working relationship to determine whether it qualifies as an employment contract. Why? Because of the three criteria outlined above that characterize an employment relationship, the criteria of providing work and receiving remuneration are, by definition, met regardless of the contractual relationship.
So, in practice, how can we identify the existence of a subordinate relationship between a client and a freelancer? To answer this question, we need to carry out a case-by-case analysis, taking into account both legal texts and relevant case law.
In particular, several markers will be notable in characterizing a working relationship.
All employment relationships, especially those between self-employed individuals, are generally governed by a contract. Article L.8221-6-1 of the French Labor Code further stipulates that a self-employed worker is presumed to be someone whose working conditions are defined exclusively by themselves or by the contract between them and their client.
This means that while the contractor must of course accept them, it is not, in principle, he who imposes his conditions, but rather the independent worker who must set his price, the nature and limits of his service, as well as the conditions under which the mission must take place.
In practice, it is not always so clear, and it is not uncommon for clients (especially when they are large groups) to provide, also for convenience, standard service contracts; however, to be irreproachable, the conditions must be those of the independent worker, first and foremost.
Naturally, the content of the service contract will be scrutinized in the event of an audit or dispute, so it is up to the parties (and especially the client) to ensure that the contract concluded is not comparable, in any way, to an employment contract.
It will also be necessary to be vigilant regarding the content of the assignment and the expertise of the service provider. It is indeed common to consider that expertise already available within the company, which is not specific and could be found internally, or for which the use of a freelancer (as opposed to an employee) would not be essential, can be a marker of an "unacknowledged" employment relationship.
As we have seen, by nature, a freelancer is an autonomous, independent being, recruited to carry out a mission within their particular expertise, which they must put to use for the benefit of their client under the conditions that they themselves decide.
The Labour Code does not provide criteria and does not define the situations which would allow reclassification as an employment contract, but the logic is as follows: the more the client organizes, directs and controls the service as he would for an employee, the greater the risk of reclassification under the permanent legal subordination relationship referred to in Article L.8221-6 of the Labour Code.
The relationship also becomes fragile when the client imposes schedules ( Cass. soc., 14 Jan. 1982, no . 80-42.256 ; Cass. soc., 30 Nov. 2010, no . 10-30.086) and demands a specific presence, as if availability were the core of the service. The situation is further complicated when the freelancer receives highly detailed daily instructions on how to proceed, and when the evaluation focuses more on discipline and compliance with internal guidelines than on deliverables.
The risk increases even further when the freelancer is integrated as a member of the internal team. This integration is evident in details that seem insignificant but matter in the event of a dispute, such as an internal email address, a position in the organizational chart, ongoing hierarchical approval, or participation in internal rituals "like an employee".
According to case law, reclassification is therefore more likely when several factors are present, for example:
Before delving into the consequences of a potential reclassification, it's important to remember that this type of request most often arises at the end of the contractual relationship. Whether made in advance or on the scheduled date, the end of the relationship is a pivotal moment between the parties: knowing that the relationship is not intended to be long-term, the contracting party will indeed be less hesitant to initiate any kind of action of this nature.
The client will therefore have every interest in carefully managing the termination of the employment relationship to limit the risks of being brought before the labor court once the employment relationship has ended.
When a permanent legal relationship of subordination is established, the self-employed person may indeed have a strong interest in obtaining the characterization of the relationship as an employment contract because the consequences of such a reclassification as an employment relationship are significant.
In practical terms, this can lead to:
The end of the last contract may therefore give rise to compensation for termination (notice period, paid leave, etc.) as well as damages to compensate for the unjustified nature of the termination.
It is indeed necessary to refer to Article L.8221-5 of the French Labor Code , which stipulates that a situation of undeclared work through the concealment of salaried employment is established when the employer intentionally fails to make the prior declaration of hiring, to issue a payslip, or to make declarations relating to wages and social security contributions. Article L.8221-6 of the Labor Code, for its part, provides that the concealment of salaried employment is established if the client has intentionally failed to fulfill the employer obligations mentioned in Article L.8221-5.
These articles entitle the claimant, now classified as an employee, to a lump-sum payment equal to six months' salary. Article L. 8221-6 further specifies that a client convicted of undeclared work is liable for employer social security contributions, calculated on the amounts paid for the period during which the concealment was established.
The most effective prevention is to organize the mission around deliverables, objectives, and milestones, rather than a "continuous" delivery.
It is therefore preferable for the client to approve stages of the process, rather than supervising the work minute by minute. It is also helpful for the contract to clearly state that the working conditions are defined by the freelancer or by the contract itself, in accordance with Article L.8221-6-1 of the French Labor Code.
Finally, it is recommended to avoid markers of HR integration and to limit mechanisms that give the client power comparable to disciplinary power.
However, using freelancers is more about instinct than formal procedures. Therefore, it's essential to seek guidance at every stage of the relationship to minimize risks in case of a dispute.