International posting of employees enhanced role of the principal in combating illegal employment

France

The rules governing international posting of employees were further amended by the law of 5 September 2018 for employees’ freedom of choice over their future career, clarified by the decree and ruling of 4 June 2019.

While the latest legislative changes include simplifying certain formalities in the event of posting of employees to France by foreign employers, we note the legislator’s intention to involve the principal even more closely in combating the illegal posting of employees.

International posting occurs when an employer established outside France temporarily posts employees on French territory to perform a service and their employment relationship continues during that posting (Article L.1262-1 of the French Labour Code). In practice, these operations are regularly inspected by the authorities and may constitute illegal employment with consequences for both the employer and the posted employee’s host company, if relevant legal precautions have not been respected. 

The principal is an essential link in the fight against undeclared work, especially where foreign labour is posted to perform the service.

Firstly, the principal must ensure that its co-contracting party has effectively completed all the administrative formalities. In case of international posting of employees, the principal acts as guarantor and must ensure that the foreign employer has made the prior posting declaration and appointed a representative in France.

In practice, the principal should no longer request a copy of the SIPSI posting declaration, but instead request a receipt for submission of that declaration. Another procedural change is that the designation of the employer’s representative in France, which covers the entire period of posting, is now directly included in the SIPSI declaration. In particular, the posting declaration therefore now indicates the representative’s electronic and telephone contact details, as well as the location where records are kept relating to the posting.

Secondly, the principal’s supervisory responsibility now extends to verification of payment of any administrative fines that have been notified to its co-contractor. Since 1 July 2019, it is required to verify that the provider posting employees in France has paid any administrative fines imposed on it and to obtain a sworn declaration including the full name, company name and signature of the service provider’s legal representative.

This last measure confirms the increased penalties for breach of posting legislation introduced to combat illegal employment.

Exemptions have been made for certain short-term services.

The principal is exempt from these checks, however, for the short-term postings listed in the ruling of 4 June 2019. To facilitate posting for short-term services or relating to one-off events, the employer no longer needs to make a declaration or appoint a representative for posted employees including: artists, athletes (when their services last no more than 90 days in 12 consecutive months), apprentices posted abroad for less than 12 consecutive months, participants in conferences and seminars whose posting lasts no more than 12 consecutive months, etc. However, this exemption is not applicable to personnel supporting these events (e.g. installation, security and transport teams).

The injunction procedure and the powers of the labour inspectorate in the event of a breach of the posting rules have also been reinforced.

The labour inspector can now inform the employer or its representative and order it to end the breach by paying the sums due. In the event that the foreign provider fails to comply with this order by refusing to pay the sums due, depending on the severity of the breach the administrative authority is now empowered to temporarily prohibit provision of the services for a period of two months before the start of the activity and until compliance has been achieved.

This temporary prohibition procedure is clearly likely to impact the principal, implying extension of the project according to the importance of the services affected by the suspension procedure. The principal therefore has all the more reason to check the compliance of employees posted by its service providers at the start of the service and then regularly thereafter.

The maximum administrative penalties applicable in the event of failure to comply with the posting formalities have been increased.

In the event of a failure to comply with posting formalities, the employer and the principal are therefore now liable for a fine of €4,000 per employee concerned, whereas previously the maximum fine incurred was €2,000.  In addition, failure to comply with a decision to suspend activity in the case of non-payment of administrative fines is subject to the imposition of a further administrative fine, capped at €10,000 per employee concerned by the breach.

In conclusion, the principal must be particularly vigilant when foreign employees are posted by one of its service providers to work on its project. The penalties for non-compliance with posting formalities and non-payment of administrative fines imposed on the foreign employer in this respect are likely to have a direct impact on the principal.

The simplified formalities applicable to posting foreign employees to France are subject to strict interpretation and confirm that, in principle, the foreign co-contractor and the principal must be vigilant from the start of performance of a service in France by posted foreign employees. Indeed, the rise in the number of inspections and adjustments and the increase in penalties applicable in the event of posting fraud demonstrate the authorities’ intention to combat illegal employment by involving French economic players which make use of foreign employees, particularly via international postings.