Expanding into France often raises a key operational question for international companies:

How can you hire employees locally without setting up a subsidiary?

In recent years, Employer of Record (EOR) services have become a popular solution for international expansion. By hiring employees on behalf of a client company, an EOR allows businesses to enter new markets quickly without creating a local legal entity.

While this model works smoothly in many jurisdictions, France has a specific legal framework governing the supply of workforce between companies.

For companies using EOR services, as well as for EOR providers themselves, understanding these rules is essential to avoid unexpected employment law orcompliance risks.

The good news is that Employer of Record models can operate in France, but they must be carefully structured to align with French labour law.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party organisation that legally employs workers on behalf of another company.

In practice, the EOR:

• signs the employment contract with the employee,
• manages payroll and social security contributions,
• deals with benefits and employment documentation,
• ensures compliance with local employment regulations.

The client company, however, usually retains operational supervision over the employee’s day-to-day activities.

For international companies entering a new market, this model offers several advantages:

• hiring employees quickly in a new country,
• avoiding the cost of establishing a subsidiary,
• outsourcing HR administration and payroll,
• testing a new market before committing to a long-term presence.

Because of these advantages, EOR services have grown significantly as companies expand globally.

Hiring employees in France without creating a company

Foreign companies can hire employees in France without necessarily establishing a local subsidiary.

However, French labour law strictly regulates situations where one company provides workers to another company.

Outside certain authorised frameworks, such as temporary work agencies, these arrangements may be challenged by courts or labour authorities.

As a result, many EOR structures operating in France rely on a specific legal mechanism known as “portage salarial” (umbrella employment).

Understanding this framework is key to assessing the compliance of EOR arrangements in France.

The French legal framework closest to an EOR: “Portage salarial”

“Portage salarial” is a legally recognised system that creates a tripartite relationship between three parties:

• the umbrella company (entreprise de portage salarial),
• the worker (salarié porté),
• the client company.

The umbrella company hires the worker and signs an employment contract with them. At the same time, the umbrella company signs a commercial agreement with the client company, which receives the services performed by the worker.

This model is strictly regulated under the French Labour Code and several legal conditions must be satisfied.

The umbrella company

The company employing the worker must:

• declare its activity to the labour authorities
• obtain a financial  guarantee covering salaries and social contributions
• carry out portage salarial as its exclusive activity

The employee

The worker must generally have sufficient expertise and autonomy to:

• find their own clients,
• negotiate the terms of their assignment,
• determine the price of their services.

The client company

The client company can use a worker through portage salarial only inlimited circumstances, such as:

• occasional assignments,
• projects requiring expertise not available internally.

The duration of the assignment is also limited and cannot exceed 36 months.

These conditions illustrate that the French framework governing workforce supply is both structured and protective of employees.

What legal risks may arise when using an EOR in France?

When an EOR structure does not fit within the legal framework described above, certain legal risks may arise.

This does not mean the model is necessarily unlawful, but it does highlight the importance of carefully reviewing the structure of the arrangement.

Two main risks are usually considered under French employment law.

Risk of employment reclassification

Under French case law, an employment relationship exists when three elements are present:

• work performed,
• remuneration,
• a relationship of subordination.

A subordination relationship exists when a company has the power to:

• give instructions,
• supervise the work performed,
• impose disciplinary measures.

If a worker engaged through an EOR is effectively managed and supervised by the client company, a court could determine that the client company is the actual employer.

If such reclassification occurs, the client company may be required to pay:

• notice period indemnities,
• severance pay,
• damages for unfair dismissal,
• compensation for paid leave.

In some cases, additional damages could be awarded for undeclared work under French labour law.

Illegal workforce lending

French law also prohibits certain profit-driven workforce supply arrangements.

Two offences may be considered when the legal framework is not respected:

Illegal lending of workforce (prêt de main-d’œuvre illicite)

and

Labour brokering (délit de marchandage).

These offences may arise if the arrangement consists primarily of supplying labour to another company for profit and results in prejudice to the employee.

Sanctions may include:

• fines of up to €30,000 for individuals,
• fines of up to €150,000 for companies,
• potential criminal liability for company executives.

While such situations depend on the specific facts of each case, they demonstrate why proper structuring of EOR arrangements is essential in France.

Key compliance questions before using an Employer of Record in France

Companies planning to hire employees in France through an EOR should consider several important questions.

For example:

• Does the EOR operate through a compliant legal structure in France?
• Does the arrangement respect French rules governing workforce supply?
• How is the employment relationship structured in practice?
• Are French employment law requirements fully respected?
• How are liabilities allocated in the EOR contract?

Answering these questions early can significantly reduce legal and financial exposure.

Protecting business interests when hiring through an EOR

Beyond compliance, companies should also ensure that their business interests are protected when engaging employees through an EOR.

Employment contracts may need to address issues such as:

• confidentiality obligations,
• intellectual property ownership,
• protection of trade secrets,
• non-solicitation of clients or employees.

Ensuring that these clauses are valid and enforceable under French law is essential when structuring international employment arrangements.

Employer of Record in France: managing risk through proper structuring

Despite the legal complexity, Employer of Record services remain a useful tool for international companies entering the French market.

When carefully structured, they can offer:

• rapid market entry,
• flexible hiring strategies,
• simplified HR administration.

However, because French labour law contains specific rules governingworkforce supply, EOR arrangements should always be assessed on acase-by-case basis.

Often, small adjustments to the contractual framework or operational model can significantly reduce legal risks.

How to secure an EOR strategy in France

Both international companies and EOR providers can benefit from reviewing their structure with French employment law specialists.

This typically involves:

• analysing the EOR business model in France,
• reviewing the contractual documentation,
• assessing potential employment reclassification risks,
• ensuring compliance with labour lending regulations,
• implementing appropriate contractual safeguards.

With the right legal approach, EOR structures can remain both flexible and compliant with French employment law.

Conclusion

Employer of Record services have become an essential tool for international hiring.

But in France, their implementation requires careful attention to local labour law rules governing workforce supply.

Whether you are:

• an international company hiring employees in France, or
• an EOR provider operating in the French market,

a proactive legal review can help ensure that your structure is secure, compliant and sustainable.

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