Process of umbrella companies

Work contracts in France are among the most rigid of Europe, so employers are reluctant to hire new staff and opt for on-demand services. At the same time, highly-qualified workers have embraced this type of cooperation with enthusiasm, because traditional employment represents only limited options for them.

The French government officially recognized the concept of umbrella companies in 2008. Since then, some regulations were adopted to improve the legal framework. A bill dated 2 April 2015 thus states that “the employee has the expertise, qualification and autonomy that allows them to seek their own customers and agree with them on the conditions of their performance and price” and this definition adds clarification to the consultant status.

France has been one of the most avant-garde countries with respect to the innovative work systems that benefit freelancers. Whereas the self-employer scheme is growing in much of the world and there is more and more demand from companies for such hiring, many countries stay behind due to their legislation in this area, unlike those where the umbrella companies operate.

Key moments

• The birth of the umbrella company concept in France dates back as early as 1980 thanks to some unemployed executives who joined to offer consulting services while keeping their status of employee. But it was not until 2000 that the first companies of “wage portage” were actually born.
• Two years before, in 1998, the first representative professional body had appeared (National Union of Portage Salarial, SNEPS) and later, in 2004, the second union was created (National Federation of Salary Portage, FeNPS). Those were decisive dates laying the foundations for the of consultants’ right protection.
• The “wage portage” was regulated through the Labour Code in June 25, 2008. “Portage” is then defined as “a set of contractual relationships between a company, organized for porting a person, and client companies, which include the wage-earning system and the compensation for its delivery to the client by the porting company. It guarantees the rights of the person brought on his contribution of customers.”
• The two existing unions merged in 2012, thus creating the Professional Union of Employment in Portage Salarial (PEPS), which is currently the only union of the sector. In 2015, the 2008 law was revised, and its conditions were improved. Finally, 2017 was the year when the collective contract specific to the wage transfer was created.

What’s new in the 2015 Order

A governmental bill definitely secures the profession with the reinforcement of the legal framework. It secured the conditions applicable to porting companies, employees and customers. The decree was published under number 2015-1886.

• The conditions under which an umbrella company arrangement can be used with a business customer.
• The types of work contracts allowed between the employee and the umbrella company.
• Commercial provision that can be included in the contract between an umbrella company and the client company.
• The obligations of the umbrella company.
• The rules of internal governance applicable within an umbrella company, professional elections, voluntary participation in benefits, mandatory participation in profits and savings plans for employees.