2. Re-Characterisation of Independent Contractors as Employees

A. Guiding Principles

French courts are not bound by the wording of the contract. They look at the actual conditions under which the work is performed.

If the factual indicators of subordination are present, a court may reclassify the relationship as an employment contract, even if:

• the contract is called “services agreement” or “consultancy agreement”,
• the contractor is registered as self‑employed,
• both parties initially intended a contractor relationship.

The burden of proof usually lies with the contractor, who must demonstrate the existence of a relationship of subordination.

B. The Legal Consequences of a Re-Characterisation

The reclassification produces the following effects:

• the contractual relationship becomes an employment contract;
• the company or person using the services becomes the legal employer;
• the contractor becomes an employee.

Therefore, under this new legal status, the employer must apply the French Labour and
Social Security Codes. As a consequence, the employer must:

• pay a minimum wage (SMIC or conventional minimum);
• paying charges and taxes on wages;
• apply the rules on hours of work including overtime;
• pay any sums related to a breach of the employment contract.\

C. Judicial Remedies Available to Persons Seeking ‘Employee’ Status

There are two ways for the request the reclassification and declaration of an employment contract to come about.

It may result either from a decision by the French administrative authorities such as the Labour Inspector or Social Security Authority, or following a claim brought by the worker before the Labour Courts (Conseil de Prud’hommes) seeking recognition of an employment relationship.

D. Legal or Administrative Penalties or Damages for the Employers in the Event of Re-Classification

The consequences of a reclassification may include:

i. Payment of any overtime, bonuses and other employee benefits applicable within the company;

ii. Payment of social security contributions. Amounts paid to the independent contractor would be reclassified as salary and therefore become subject to both employer and employee social security contributions;

iii. The termination of the service agreement being treated as an unfair dismissal, potentially giving rise to payment of statutory indemnities (including notice pay, severance indemnity and accrued paid leave) as well as damages;

iv. Potential criminal liability for concealed employment (“travail dissimulé”). Failure to declare an employment relationship may constitute a criminal offence punishable by up to three years’ imprisonment and a fine of up to €45,000 for the company’s legal representative, and up to €225,000 for the company as a legal entity. In addition, if the relationship is terminated, the individual — once reclassified as an employee — could claim a specific indemnity corresponding to at least six months’ salary, in addition to any other amounts arising from the reclassification.