What global businesses need to know about Payroll in France
Did you know that in France, it’s against the law for employees to eat their lunch at their desks? It’s just one of many employment rules and regulations designed to protect the work/life balance that is so valued and cherished by the French people.
However, that’s not to say that France isn’t an industrious country and a global economic powerhouse. After all, it’s the world’s seventh-largest economy by GDP, and among European Union members, it ranks second only to Germany in both economy and population. Nearly 80% of its economy is now service-based, with tourism playing an important part: with 100 million visitors each year, France is the most popular tourist destination in the world, just ahead of Spain.
The workforce in France is skilled, productive and brimming with a modern business mindset. However, along with strict employment laws, France has high tax rates, high social security contributions and high labor costs that all companies should be aware of.
As you’ll read in this guide on the basics of running payroll in France, complex regulations and unique cultural characteristics mean it’s vital to gain a good understanding of what’s required.
Getting Started
The good news is that you don’t need to be a French resident or even an EU citizen to set up a business in France: anyone is able to do so.
The three most common French business structures are SARL (a limited liability company), SA (a French joint stock company), and SAS (a simplified stock company). Companies generally must complete incorporation to register the business as a subsidiary company, branch office, or liaison office.
The locally incorporated subsidiary company is the most common entity form used by foreign investors looking to operate in France long-term, because there are many business restrictions imposed on branch and liaison offices. Plus, the French tax system permits many tax exemptions for subsidiaries.
There are several steps to take when setting up a subsidiary. First, the organization must provide articles of incorporation, register with the French Patent and Trademark Office, deposit the minimum share capital in a bank account (a French business bank account is recommended) and then publish an incorporation notice in the official journal. Officially, the minimum share capital is €1 but banks may ask for a practical amount of between €4,000 (approx. £3,300; $4,200) and €7,500 (approx. £6,200; $7,850).
Next, the documentation of those steps should be filed with the Centre de Formalites des Enterprise (CFE), with everything getting final sign-off with the clerk of the Commercial Court where your company books are stamped. Which CFE you need to register with depends on which of four categories your business falls into: commercial/industrial, trades/artisan, agricultural, or independent/freelance professional.
Employment Considerations
At the basic level, the rules and regulations governing employment are set out in the French Labor Code (the Code du Travail). Collective bargaining is commonplace in France, meaning that regulations around trial periods, salary, severance and other areas are often negotiable. It is also worth knowing that employment contracts must meet local standards and must be drafted in French.
France has a famously short working week of 35 hours, which has been enshrined in law since 2000. However, in practice, many employees work longer hours than this and are compensated with paid time off under the RTT working time reduction scheme. Every extra hour worked generates an hour of time off, on top of the usual paid leave allocation, although some companies agree a fixed amount of RTT days for employees each year.
Overtime pay kicks in for any work in a week over and above 39 hours. Generally speaking, this is paid 125% of normal salary for the first eight qualifying hours, and 150% for any hours beyond that. However, collective bargaining can influence these rates substantially. It’s important to note that employees also have the ‘right to disconnect’ from their work-related technology outside working hours.
Probation periods are two months for blue-collar workers, three months for supervisors and four months for management. Notice periods are generally three months, but can be varied in employment contracts or through collective bargaining.
Compensation, Bonuses and Severance
Unless collective agreements apply, the minimum gross wage in France is one of the highest in Europe. As of the start of 2025, it’s €11.88 per hour (approx. £9.90; $12.50). It has increased regularly in recent years, so expect it to rise again in the near future. Reduced rates apply to apprentices and to new employees under the age of 18. Salaries are typically paid on a monthly basis.
Bonuses are paid to French employees in a number of different ways: either on a discretionary basis for good performance; by meeting contractually-defined targets; or through collective bargaining agreements. A 13th-month bonus is traditionally paid at the end of each year.
When it comes to termination, severance pay will only be awarded under certain conditions. The employee needs to have been on an indefinite-term contract or met a minimum length of service required by the Labor Code, or, if applicable, the collective bargaining agreement. In general, employees receive one-quarter of their monthly salary for each year of service (up to ten years) and then one-third for each additional year.
Tax and Social Security
French income tax rates are complex, with different rates and thresholds applied according to marital status, how many children an employee has, and even collective bargaining. Through the Pay-As-You-Earn (PAYE), all income is taxed at the source and remitted to the authorities by employers.
Generally speaking, the first €11,509 (approx. £9,500; $12,000) earned each year is exempt, before bands of 11%, 30% and 41% kick in at progressively higher rates. The top rate of 45% is applied to annual income over €180,471 (approx. £149,000; $189,000).
Social security contributions are also complicated and rates are very high. Employers are required to contribute for sickness and maternity, old age insurance, workplace accident funds, family benefits, unemployment, wage guarantee insurance, autonomy solidarity, apprenticeships and supplementary pensions. Several of these rates are variable, and the total can range anywhere between 32.82% and 55.16%. Employees’ total contributions are 30.23%.
To remain compliant, employers must report on several areas and make any necessary declarations to French authorities on an annual basis.
To remain compliant, employers must report on several areas and make any necessary declarations to French authorities on an annual basis. In early 2017 the Déclaration Sociale Nominative (DSN) was implemented. This automated and mandatory process requires employers to align with their payroll system, in order to comply with social welfare reporting requirements.
Holidays and Leave
France has 11 days of national public holidays. However, the Alsace and Moselle regions have two additional days off: Good Friday and December 26. These extra holidays stem from the region’s historical background, specifically when these territories – previously part of Germany – were reintegrated into France following World War I. If holidays fall on weekends, they are ‘lost’ and no alternative day is granted as a day off.
Officially, employees are only legally entitled to a paid public holiday on Labor Day (May 1). However, most businesses tend to offer paid time off for all public holidays anyway. If a public holiday falls on a Tuesday or a Thursday, it’s common for employees to book the adjacent Monday or Friday as paid leave to create a four-day weekend.
Paid leave entitlement is 25 days per year, although collective bargaining can lead to increased rates in some industries. Furthermore, the compensatory time off given for working more than 35 hours a week means many employees rack up huge amounts of paid leave. This enables the common practice of employees taking most or even all of August off for their summer holidays.
Sick pay is partially covered by social security at 50% of salary, from the fourth day of medically-certified absence up to the 90th day. There is a maximum limit on sick pay of €53.31 per day (approx. £45; $55). Employers are then required to top up sick payments, initially to a total of 90% of total salary, then reducing to 66.66% for long absences. How long employers have to make these top-up payments varies with length of service.
Maternity leave depends on the number of children and whether the birth is a ‘multiple’ birth (e.g. twins and triplets). Based on this, women may receive between 16 and 26 weeks of leave. Maternity pay is 100% of salary and covered by social security. Paternity leave is compulsory for the first seven days after the birth, followed by up to three optional weeks, and is also covered in full by social security.
Employees can also apply for up to a year of unpaid parental leave if they have at least a year of service at the point a child is born, but approving these applications is at the employer’s discretion.
French Public Holidays
- New Year’s Day
- Easter Monday
- Labor Day (1 May)
- Victory Day (8 May)
- Ascension Day
- Whit Sunday
- Whit Monday
- Bastille Day (14 July)
- Assumption Day (15 August)
- All Saints’ Day (1 November)
- Armistice Day (11 November)
- Christmas Day
In Summary
As this guide demonstrates, France has some unique rules and regulations when it comes to payroll and employee rights. Add in a complex tax and social security regime, and this is a country where local, French-speaking payroll expertise is absolutely essential. This is where the support of a global payroll provider is so valuable, combining global technology with local know-how to aid your expansion project and keep your organization compliant.
This guide is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional. Click here to see more country payroll guides from CloudPay