EOR in France: what UK companies should check before hiring

For a UK company entering France, hiring a first local employee raises an immediate question: can you recruit without first creating a French subsidiary?

An Employer of Record (EOR) is one route. The EOR formally employs the worker and handles employment administration, while the client company usually directs day-to-day work. In France, the legal framework behind this arrangement needs careful attention.

“Many foreign companies expanding into France are considering using an EOR,” explains Alexandra Dabrowiecki, employment lawyer at Cerdic Legal. Her warning is clear: workforce supply is strictly regulated in France.

• An EOR can employ a worker in France on behalf of a foreign company.
• The EOR usually handles the employment contract, payroll and administration, while the client company manages operational work.
• French law strictly regulates workforce supply, so the legal framework behind the arrangement should be checked before hiring.
• Using an EOR does not automatically remove permanent establishment risk for the UK company. The employee’s activities and authority in France also need to be considered.

An EOR arrangement in France normally involves three parties: the employee, the EOR and the client company.

The EOR signs the employment contract and typically manages payroll, social contributions and employment documents. The client company usually manages objectives and everyday activities.

French employment law also looks at how the relationship works in practice. Who gives instructions? Who supervises performance? Which company takes decisions affecting the employee?

These questions matter because France closely regulates the supply of workers between companies. As Alexandra Dabrowiecki warns, “you could be considered as the employer” and, in some situations, the arrangement could amount to “unlawful lending of workforce.” This is why UK companies should check the legal structure behind an EOR arrangement before hiring in France.

What are the legal risks of using an EOR in France?

The main legal issue is whether the underlying arrangement complies with French employment rules and reflects the actual working relationship.

Using an EOR does not automatically remove the risk of creating a permanent establishment in France for the UK company. Employment compliance and corporate tax exposure are separate questions.

Under the UK-France tax treaty, a permanent establishment can arise through a fixed place of business in France or, in certain circumstances, when a person acting on behalf of the UK company habitually exercises authority to conclude contracts for it.

The employee’s actual role therefore matters. A France-based country manager or salesperson with significant commercial authority may raise different tax questions from an employee carrying out more limited activities.

If a permanent establishment exists, profits attributable to it may become taxable in France. The EOR structure, employee responsibilities and tax position should therefore be reviewed separately with qualified specialists.

Source: UK Government

An EOR can be worth exploring when a UK business wants to make a first hire in France, test the market, recruit before its French entity is operational or build a small initial presence.

If France becomes a permanent market with a growing team, creating a French entity may become more appropriate. The commercial plan, employees’ activities and wider legal and tax position all matter.

The decision should therefore be based on the stage and nature of the company’s expansion, rather than on speed of hiring alone.

🔎Want to settle in France you are daunted by the 35-hour working week? Read our article to change your mind. 

An EOR can shorten the route between deciding to recruit in France and putting someone on the ground. The key is making sure that the employment model suits the role, the working relationship and the company’s plans in France.

Planning your first hire or local presence in France? Discuss your project with our Cross-Channel experts and get connected with the right specialists.