ADP Payroll Around The World

Payroll in France

In any global ranking of countries by payroll complexity, France will often occupy the top spot. This is because France offers its residents a high degree of social security, with people entitled to healthcare, a pension scheme, family benefits, and more.

In this episode of Payroll Around the World, ADP experts Carlos Fontelas de Carvalho and Emmanuel Prevost break down the inner workings of French payroll, explain why France is a lucrative destination for businesses despite the complexity, and share their insights from years of experience on the ground. We also speak to Rachel, a Paris-based expat from the U.K. who shares her experience of trying to decipher her first French paycheck.

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Timestamps

Intro [00:00]
Why is payroll in France so complex? [03:05]
Keeping up with legal regulations [07:06]
Rachel’s story [10:00]
Helping foreign workers navigate bureaucracy [12:52]
Remaining compliant during the hiring process [15:48]
Noncompliance penalties [17:19]
Reporting requirements [20:33]
What do you love about working in payroll in France? [22:53]

Credits

Executive Producers for ADP: Nicola Smith and Kate Allen
Executive Producer for Storythings: Matt Locke
Recorded, edited, mixed and mastered by: Chris Mitchell
Scripted and hosted by: Luisa Rollenhagen
Guest interview recorded by: Morgan Ayre
Project Manager: Aimee Perrinjaquet

Hosted on Acast. See acast.com/privacy for more information.

Duration:: 25m
Broadcast on:: 13 Sep 2024
Audio Format:: mp3

Hello everyone, I'm your host, Louisa Rolandhagen, and we're back with another episode of ADP Payroll Around the World. This audio series serves as your guide to how payroll really works in a specific country. We really dig into the details of what makes payroll tick and speak to both ADP experts on the ground and locals who will give us their perspective on work and pay in their homeland. After all, payroll can't really be global if it isn't local as well. Please join me today on a trip to France. With an average 77.8 million visitors a year, the European country is one of the most popular tourist destinations in the world. The French government traditionally offers its citizens a high degree of Social Security, which is one of the reasons why French payroll is considered to be notoriously complex. In fact, in any global ranking of countries by payroll complexity, you'll often find France in the top spot. It is clear that France has a very complex social environment and also social legislation and payroll calculation. Probably this has come from legislation because, for example, the number of social tax has increased by nearly 50% over the past eight years. Being on the other side of things as an employee doesn't seem to be much easier either. Even though you can speak a very high level of French, I think it's still very challenging being in France and working in France and getting your head around the bureaucracy and understanding health insurance and what you need to do for taxes and all of that. But despite the complexity, France is still a very popular location and a leading destination in Europe for foreign investment in sectors such as AI. I'm seeing more and more that multinationals are choosing France as playgrounds to have and develop their business. So today, we're going to take a deeper look at what makes French payroll work and find out how ADP is helping multinationals navigate those waters. We've just heard a little teaser from our two experts for this episode, as well as Rachel, who's a British expat living and working in Paris. She'll be telling us a bit more about what it's like for her to deal with French bureaucracy as a foreign employee. But first, let's meet our ADP experts. So hello, I am Emmanuel Prevo. I'm in charge of the LEGO watch and template teams for France. Emmanuel has been with ADP since 1998 and is based in Nantève, close to Paris. He's joined by Carlos. So I am Carlos Chonteles Carvalu. I'm the president of ADP France and other four countries on Central Europe. And I'm here at ADP since 2013 and also based here in Nantève. Thank you both for joining us today. I'd like to kick us off by getting straight to it. Why is payroll in France so complicated? Yes, ADP is a quite, I would say, complex. We have really the pole position of there's a complexity index and the France is on the top. But at the same time, it means transparency on my pastelip. I see my interaction with the administrative entities. I see my interaction as a citizen. So it's very transparent, where goes the money, what I'm being paid for and all the details. So at the same time, it's a mix of complexity and transparency. The complexity is also found in the number of collective agreements. We have to face 800 collective agreements in France and the number of contracts for the company. France has, for example, more than 500 mutual insurance companies, insurance, pension funds. So that means, as Carlos said, the payroll is complex because you have more than 50 lines on the building, but also according to the mandatory monthly report, called their SIN, because it is 350 data every month to send for each employees. So we have to make sure every month that the rules are fluid and that all the data is correct. So it's a very important and accurate work. Okay. So it's complex because of all the contributions to the country's extensive social security system and collective bargaining agreements, as well as extensive reporting obligations. Anything else? The complexity is here because we have many industries where the pay is totally different. For example, the payroll calculation in a bank area is totally different from the one of a building company or entertainment company. That's the status of the employees also concern. For example, we have several types of apprenticeships, corporate officers, employees and fixed-term or permanent contracts with their own rules. And if you had the exemption of contribution, that's dependent on the status of the company, then, of course, you have a cocktail of a complexity. I love that term cocktail of complexity. Why is there a difference in sectors? That's because we are in a different collective agreement. So the minimum salary are totally different. The way of increases wages also. The collective agreements are setting some of the contribution rates. So you have a stack of rules that you have to know how to implement. Let me give you an example to make it more clear. For instance, we have here a rule. And once again, it's taken to the transparency, then the way socially the country is so complex. The hours, the way we measure hours on the banking system, on the construction, on entertainment, or in retail, or in the restaurant business, we have it, what we call "pinnability." So how heartful is to spend those same hours. So the way a waiter in the restaurant passes is eight hours because it's on foot, because it could be to aggressive temperatures, to be in construction, taking hard objects. It measures in a different way, and it measures also in a different way to the age of retirement. So it's this kind of, I would say, a particularity that makes, yes, I had a full day of work, but the full day of work with a hard way of working and the quantity and the calculation of the hours that makes on the pay sleep, this all has been calculated. Right, that makes sense. So it's not just about how many hours you worked. It's also about how physically demanding that work was. I think it's actually pretty cool that this is acknowledged. So given that the regulations around labor and pay are pretty intricate in France, what advice would you give to multinationals who are interested in setting up shop there? They need central reporting, they need to have all the information at time, and in France means that ADP provides a service that in terms of monitor all legal developments, and we have a big team of lawyers, I would say, the biggest team and the best team of lawyers in all France, because it's more than 20 lawyers that are working only for getting in touch with our customers. But at the same time, they have a connection in terms of, with the public authorities, to anticipate these kind of changes every day. This is so important for multinationals, because so many updates, so many things at the same time that the peace of mind requires a full complex, but at the same time steady a legal watch at all time. Isn't that so, Emmanuel? Yeah, that's clear. Because we are working in a fully compliant seat, we need to, of course, to have a strong service within ADP to monitor the legal developments and before the legal watch. So in my team, we had 20 lawyers who are analyzing the text and especially works upstream with the public authority to anticipate them to the maximums. So it's never handed the work to be sure that we have a fully comprehension of the new text. That helps to understand the spirit of these texts and the rules to be that we have to implement it. So yes, we are creating a secure environment for our customers. And we have also a service that allow our clients to request legal assistance and all elements concerning the life of the employee in the company. So we are answering to a question about leave, illness, dismissal, hiring. So it's very secure for our customers and that gives them a very user-friendly experience. It's not a difficulty for my team because we are following more than 500 collective agreements, so wherever the client is working on, we will have the capability to follow the collective agreement and to be compliant on that subject. Because ADP is a company that prioritizes local expertise on the ground, this series also gives a platform to the experiences of people who live and work in the country we're featuring. We wanted to hear from Rachel, a journalist who's originally from the UK but who's been living in Paris and working at a French company for almost two years now. Although she had studied French in university, she's suddenly found herself having to use the language to navigate professional and bureaucratic requirements. I was excited, I knew that I spoke relatively high level of French, but as I'm sure anyone will tell you, it's one thing to be good at it at uni and it's another thing to move to the country and to work in the language. It's always a bit of a challenge, it's very humbling. Definitely. Remember Carlos telling us about how complex a pace lip is? Rachel can definitely relate to that. I think the main thing was understanding my pace lip because with my pace lip, we had social security deductions, which is money that's taken out of your salary that goes towards the French government, but taxes then paid separately on top of that. That makes sense. You have social security, which is used to fund health care, but then you also get taxed on top of that. I think once I ask the question, it was relatively straightforward getting an answer, but yeah, I think you do just need someone to explain these things to you when you first arrive because it doesn't make a lot of sense a lot of the time because you look at your pace lip, you think, "Oh, okay, well, that's social security, that must be taxed, but it's not taxed to something different." Then filling out a tax return form, I didn't know that I had to do that myself. I just think I just assumed, "Oh, well, I'm being taxed already, but you actually have to fill out a form on top of all of the pay slips that you get." Again, once someone explained that to me and told me what I had to do is I had to go to the tax office and ask for a form and someone at the tax office then helped me and told me what documents I needed to bring to fill out my first tax return form. Thankfully, Rachel was able to find people who could help her parse through the complexity. I think once you have someone explained to you, "Okay, well, actually, you're on a contract, you need to fill out this form and then the rest of it is irrelevant. You don't need to worry about these other five boxes because these are for people who are on a different income to you or who are self-employed or whatever. Once you understand how the system works as well, it then makes sense. Once you understand, "Oh, okay. So the reason why I've got to fill out a form for this is because this then goes to this person and then they work it out." Once you understand how the system works, it's a lot easier, I think. Even though it took a while for Rachel to adjust to the French system, she found that both her French and expat colleagues played a major role in making her feel integrated. So I think, yeah, when you first start a new job, it's always going to be quite challenging and add to that it's all new because it's a new job and a new country with new people, with a new language. There are always going to be challenges to that. Almost one out of 10 workers in France come from abroad. I wanted to know whether Carlos and Emmanuel could tell me a little bit more about how ADP is helping their clients and especially their payroll teams on board foreign workers. This is always happening and happens more and more with its new companies that are establishing here in France. How I'm going to be attractive on recruiting, how I'm going to explain correctly how it's going to be because I know for sure what is the gross, that I have no idea at the end what's going to be the net and what are the rights and what are the things that it needs to comply. So what we help here and we have like a species of a handbook that is a virtual handbook to the new joiners. We have tutorials and we have also training and training in France done by ADP as we are one of the biggest training certificate companies that we have in terms of HR and payroll certification gives this kind of tutorials to make it like it's going to be payroll for them is like saying when you arrive what are the 10 key things that you need to know? What are the 10 key rights that you have and what are the things that you should do and you must not do compared inclusive to other countries because as we know the rules that happens with my my fellow colleague that is in Spain or in Italy and Germany or in UK we can do like a species of gap analysis of all the things that can be quite different and this is something that very regularly customers ask us to do in the first three months of work it's more than training giving this kind of what is the top 10 thing that I need to know in a five minute speech that he needs to know about the payroll yes and definitely something that you really need to do because it's quite different in France. The difficulty here but we support our clients both in our service but also in our payroll management tools for example our offers are very templated that mean that could be an insurance in compliancy because we have several thousand modeling rules that cover the majority of the legal and collective agreement option so if the company wish to deviate from it we will analyze the case and come back to it to tell that it's cannot be implemented I remember for example the company that wanted to force the withholding tax rate on one of its employee this is totally not possible due to the law because the rates are issued to the employers by the public treasury so the company would have risk a very high penalty if it has done so yes we we are here to support them and to help them to work these compliancy rules. While researching this episode I came across something that I was hoping you two could clear up for me I read that when you hire someone in France you're required to be compliant from moment zero what does that mean that means that in any new hiring process for example there is a form to respect I'm not just talking about the announcement of course but there is also the the formalism of the on-premian contract the fact that is necessary before the arrival of the on-premian the company to have declared is how we will to the contribution collector hold yourself otherwise the company has a risk of undeclared and declared work another example you cannot collect the employees withholding tax rate before the signing of the contract in a short number of rules to respect that requires knowledge of the legislation otherwise you risk not only difficulty with the employee but also with the with the public authority and it is very very tiny differences but could be a huge penalty for the company so imagine a multinational company that as someone working outside France and say oh let's send the standard contract and let's send it during the week and he can start work already dude could be making huge penalties for the company if on the first day doesn't have any contract signed so and this kind of things you need a good partner you need a reliable partner to understand and to anticipate what is going to happen when you start your business in France because it's good to have business in France you just have to follow the rules what happens if you don't follow the rules we have two type of collectors social and fiscal collectors so they could give some penalty to them to the company we talk about the monthly social declaration called their send the information are sent to 34 public authority through this declaration and of course depending to the to the case the penalty could be given also by other organizers so it's that could be really really huge amount of of penalties for example on the fiscal case if some mistake could be done it could be for example 10% of the amount as a penalty so it's that could be quickly quickly huge and then you could have also some risk coming from the employees because if the compliancy is not giving at the pay slips level of course they have some action that could be done by the employees so the difficulty when you are persisting pay slips to of course to be compliant every month for everyone for every public authority and and of course for the employees and also because the rights the long term rights for example for retirement calculation are sent through the monthly social declaration so you need to be compliant because it could be 10 years after to have some some difficulties for the for the employees if you are making some mistakes so we need to be compliant every month what say as as an example also that trans is a unique country in terms of and I mentioned before in terms of depth transparency between employer and employee and it's not only the pay slips it's the way we work the way we communicate that's why also unions are very present in France is because of they know correctly their rights and they go out to defend their rights so that means that the company that does not follow this alignment does not follow this discipline can have immediately and very reactive aggressive reaction in terms of their employees and at the same time in terms of exposure to the to the market itself so it means that the anticipation being well partnered with a good partner in terms of federal like ADP is quite key in terms of anticipate and follow the rules just a small example at the end the CEO of a company here in France whatever it is a branch of a different country has unlimited responsibility in terms of social to their employees so that means that they can go to jail if it doesn't follow the rules and that is quite I would say tough but at the same time you need to do the rules this is way it is to work in France wow those are really high stakes then very high since we're on the subject of compliance are there any reporting requirements that employers must comply with such as reporting on the wage distribution in their workforce according to gender we have several action and rules to follow and to respect for example if we are talking about gender pay gap reporting first of all all employees regardless of the size of their enterprise must ensure equal pay for women and men for the same work work of equal value the employee of at least for example 50 employees must report to the staff representative during mandatory consultation some indicators on the wage gap they have to to produce it and to put them in the in the social and environmental economic database that is shared with the trade unions and home careers with at least 300 employees of more indicators to produce regarding the wage gap France adopted an energy and climate bill in two thousand nineteen that is meant to reduce greenhouse gas emissions and promote greener industrial practices are there any requirements that businesses need to comply with on this front it's related to the carbon footprint so more and more related to the inclusive the Paris meeting that that every countries and needed to have their own agenda in terms of ecological France anticipated these rules to the French right and the French law so that means the companies need to anticipate in time of for instance electricity consumption in terms of the how the the employees come to the to the office and the transportation that they need to took everything is measured in order to once again gives up to an index that needs to be published and gives the the performance of each company and the correct data the timing of that data that comes on the payroll at the end at the payroll system needs to be very accurate and in timely to in order to do that and of course we can buy and gives that that reporting to all of our customers so businesses in France are required to report and process massive amounts of data every month obviously the payroll department is spearheading and managing all of this we're going to be wrapping things up but I just want to end by asking you to what do you personally love about working in payroll in France? I would say that is the vote the young and young it's delicate but it's exciting then why because we need to compliant every time and you need to be aware of everything that needs to be done the declarations the payroll itself do the right thing at the right time in no matter what is the environment but at the same time is something that we know that each month that we while we provide gives transparency and peace of mind for our companies and it's really our expertise more than 50 years in France 75 years world known market leader but the big responsibility also so that the more than 3 million pay slips that we calculate every month on the private sector give us this proud to do something that works out for the companies and makes our associates and our colleagues so proud of participate on that so I'd say exciting because it's complex and they need us but at the same time this complexity to make us in the next days never the same day as the day before because there are so many legislation changes that every time something is something is happening for our own place it is very exciting because the legislation is constantly changing so definitely if you like stability or routine then it's not in this sector of activity that you have to work because it's it's a never ending story and that's the exciting point Carlos and Emmanuel thank you so much for your time and expertise it was great to chat with you and get a better understanding of why payroll in France is considered to be so complex I hope you got a bit of a deeper insight into how payroll in France works today if this episode has piqued your interest where your company is considering expounding into France and you want to learn more about payroll there please go to the ADP France website fr dot adp dot com and don't forget to subscribe to learn more about payroll around the world with each new episode you've been listening to ADP payroll around the world produced by ADP and story things