Staff leasing can present many benefits for companies, especially during these highly uncertain times.
Under French law, companies can lease staff without profits (notably within groups) and only salaries, related social charges and professional expenses can be re-invoiced.
If a company wants to lease staff at a profit, the object of the contract between the two companies cannot be the staff leasing itself, but must be for the benefit of receiving a specific know-how ser-vice.
Similar schemes to the professional employer organisation (PEO) solution model are the “portage company” and the “temporary work agency”. For both schemes, the idea is to find an external skill or know-how that does not exist internally, in order to perform a specific task requiring a particular tech-nical skill.
How to lease staff through a “portage company”?
“Portage salarial” is a specific form of employment, mixing rules related to independent contractors and an employment relationship. Indeed, the portage salarial implies a tripartite relationship between two companies (a portage company and an end user) and an individual.
More precisely, the contractual scheme applicable to the portage company is as follows:
- An individual wants to work for a client in order to perform a specific assignment.
- The individual contacts the portage company and explains the project to perform a specif-ic assignment for a client.
- The individual executes an employment contract with the portage company (an indefinite-term or a fixed-term contract). The portage company is thus the employer and manages all the administrative formalities related to the employment relationship.
- The portage company executes afterwards a services agreement with the client providing that the client requests the supply of an employee in order to perform an assignment.
- The portage company executes an assignment letter with the employee providing for the terms of the assignment requested by the client.
- During the assignment, the employee reports to the client, but the portage company re-mains the employer and is liable for the payment of salary.
The main benefits of such schemes are:
- For the individual: being able to perform a mission like an independent contractor while still benefiting from the Labour Code protection and benefits.
- For the user company: being able to hire an individual without being required to manage such individual as an employee (that is, less formalities, fewer constraints, notably regard-ing the end of the mission which would not take the form of a dismissal from the user company’s perspective).
To be noted:
- An end user company can only use the “portage salarial” scheme for the execution of an occasional task that is not part of its normal and permanent activity, or for a specific ser-vice requiring an expertise that it does not have.
- In addition, the maximum duration of the contract cannot exceed 36 months.
- Finally, for any contract of at least €5,000 excluding tax (total amount of the service), the user company must, when the contract is concluded and then every six months until the end of its performance, ensure that the portage company fulfils the various social and tax obligations.
How to lease staff through a temporary work agency (TWA)?
The temporary work scheme also implies a tripartite relationship between two companies (a TWA and a user) and an individual. However, in this case the temporary contracts are generally to cover low-skilled positions (for example, mechanic or assistant).
More precisely, the contractual scheme applicable is as follows:
- A client executes an agreement with a TWA, the purpose being to supply a temporary worker in order to perform a specific assignment.
- The TWA executes a temporary employment contract with a temporary worker providing for the scope of the assignment.
- During the assignment, the temporary worker reports to the client from an operational standpoint. However, the TWA remains the employer and is liable for the payment of salary.
The main benefits of such schemes are:
- For the individual: being able to work in various companies and sectors of activity while benefiting from the Labour Code protection and benefits.
- For the user company: to find at short notice qualified and experienced staff during a temporary increase of activity without being required to manage such individuals as em-ployees (that is, less formalities, fewer constraints, notably regarding the end of the mis-sion which would not take the form of a dismissal from the user company’s perspective).
To be noted:
- The supply of a temporary worker must be conditional upon very specific grounds (mainly, the replacement of an employee or a temporary increase in the client's activity).
- In addition, the temporary workers can only be supplied to a client for a maximum duration of 18 months, or for the time of an employee's absence in case of replacement.
- Finally, for any contract of at least €5,000 excluding tax (total amount of the service), the user company must, when the contract is concluded and then every six months until the end of its performance, ensure that the TWA fulfils the various social and tax obligations.
How to create a portage company or a TWA?
The formalities for creating a portage company or a TWA are very similar, and there must be compli-ance with specific regulations. It requires a prior declaration to the Labour Administration and there must be provision for a financial guarantee covering the payment of salary items and social security contributions that should not be under:
- For the portage company: €82,272 for the year 2021.
- For the TWA: €131,178 euros for the year 2021.
Risks for staff leasing companies and user companies
While these systems can offer many benefits, failure to comply with the specific regulations can ex-pose both staff leasing company (portage company or TWA) and user company to criminal and civil liabilities:
- Leasing staff outside the scope of a legal scheme (as the portage salarial scheme or TWA) is a criminal offence punished by a fine of €30,000 and two years of imprisonment (for the legal representative) and/or €150,000 (for the legal entity).
- The illicit use of portage salarial scheme or temporary work scheme is a criminal offence punished by a fine of €3,750 (for the legal representative) and/or €18,750 (for the legal en-tity)
- In addition, the individual could also file a claim before the Labour Court to obtain the requalification of the contract into an indefinite term employment contract with both staff leasing company and user company, which would entail the payment of damages.
- In the case of a portage company, the employees could also ask the Labour Court for the recognition of a co-employment between the portage company and the user company, in particular in case of litigation, if they were to demonstrate that the user company sanc-tioned them directly or indirectly.