Permanent workers based in France will be normally entitled to the benefit of French employment law, regardless of whether they have an English law contract or a contract that is expressly subject to French law. The fact that they are working remotely for a UK employer will not be relevant. Frequent travel to the UK would not prevent the application of French law if they are working regularly as from France.
Many of the protections conferred by French law will be familiar to UK employers, since they derive from EU law – for example the laws on discrimination and working time. However the elements of employment protection that derive solely from French local law are different, and in some important respects more generous to a worker than the corresponding rights under UK law. There is no obligation to transmit the employment contract to the French labour law authorities.
If the employee is a home worker, they can bring the dispute in front of the French labour courts.
Tax and social security
If the worker engaged is residents in France, they will be subject to French income tax (the marginal income tax rate is currently 45% plus possibly a high earner tax of 3 and 4%) and employer and employee social security contributions (currently around 45% and 25% respectively) on their earnings, even though these are derived from a UK employer. The UK employer is therefore advised to appoint a payroll agent in France to facilitate the appropriate deductions from the worker’s salary (ie. French social security contributions and the income tax – “Prélèvement à la source” – to be withhold on a monthly basis).
Assuming the worker is not conducting any business on behalf of the employer in France, and is simply working from home, the engagement of a sole remote worker is not likely to amount to the creation of a permanent establishment to tax purposes, which would trigger an obligation for the UK employer to pay French tax on the income it derives from any operations in France, as well as having potential liabilities in relation to the French equivalent of VAT, but this point will need to be checked on a case by case basis.
If the worker is moving from the UK, there is a possibility that for a least the first tax year, they may need be liable for tax in both jurisdictions. Any adverse impact for the worker would however be alleviated by the UK/France double taxation treaty (though it is necessary to apply in advance for treaty treatment to avoid the need to pay double tax up front). The same may apply to social security contributions, though there are some exceptions for temporary employment arrangements (known as the “detached worker” provisions) under the UK/EU Trade and Cooperation Agreement, which would avoid the need for social security contributions to be paid in both the UK and France.
Company law considerations
The arrangement envisaged above (ie the appointment of a single home-based worker) is not likely to result in a requirement for the UK employer to register with the French authorities as an overseas corporate entity.
However the position would be different if the worker is conducting any business on behalf of the employer in France, if more than one worker is involved, or if any office or other facilities were to be made available for them to use.
[Provided the worker is EU national, there will be no requirement to obtain a visa or work permit.]
However if the worker is a UK national they would need to comply with French immigration rules, unless they were already resident in France as at 31 December 2020. The UK/EU Trade and Cooperation Agreement does not contain any provisions to facilitate new remote working arrangements of the kind envisaged by UK nationals.
Therefore UK nationals will be treated like third country nationals. As such they will be required to obtain a work permit if they are engaged in work on French territory, unless they qualify for a work permit exemption. They will require a residence permit, if their stay in France or the Schengen area exceeds 90 days in any 180 day period.
This is document is a very brief summary of complex legal provisions. Specific advice should always be sought, based on your organisation’s precise situation.
For advice on French law please contact Christine Pellissier, Partner at FIDAL.
For advice on English law please contact David Mills, Employment partner at Mills & Reeve.