By Globalization PartnersFebruary 2014
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Many of our US technology CFOs avoid hiring in France as long as possible to avoid the horror stories that have been passed around the water cooler about eternal severance packages and inability to fire. While those horror stories can be true, at Globalization Partners, we believe in informing clients so that you can make a business decision that weighs the benefits against the likely costs before you hire. In other words, what is the likely scenario if you have to terminate an employee in France? What’s the cost to “pay to play?”
1. Minimize Risk Rule #1: Keep your paperwork perfectly clean. Make sure that you follow ALL best practices when hiring in France, including, invest in an air-tight employment contract, which should be in French and tailored to the employee circumstances at hand. Keep track of vacation time and ensure that annual leave days accrued are on each month’s payslip. Keep employee payslips, and all documentation, in strict accordance with HR rules & regulations. This is not a place to skimp on legal fees.
2. Monitor the probation period, and use it. The probation period in France is your best friend. If you are not sure your employee is going to be a fit, it is ideal to terminate before the end of the probation period. If an employee is terminated while the probation period is in effect, your risk of a very high severance package is substantially reduced.
3. If you do have to terminate an employee in France, what should we expect? Most lawyers suggest negotiating a severance package with the employee in order to settle out of court. Our local advisor in France suggests that legal fees may be estimated at about 2,000 Euro and that most companies end up paying about 6-9 months total compensation as severance. In some cases, a client only pays 1 month. Other cost factors in France include approximately 46% social security (employers tax) on top of the total salary + commission .
4. Use our Global Office Incubator. Clients using our global employee leasing platform in any country automatically have an experienced HR & Finance team whose interests are aligned with yours in any HR situation.
For clients that are not using our Global Office Incubator, but need help with an employee situation in Europe, please don’t hesitate to call us. We will put you in front of the same team we use and trust for our own employees. France is a great market for many clients and we hope that by educating US clients with facts, you’ll be able to assess the value of a France hire against expected costs.