Table of Contents

1. Purpose
2. General
3. Responsibilities
4. Procedure
5. Flowchart
6. References
7. Attachments

1. Purpose

This procedure describes the legal and social aspects with regard to the activities of Company in France.

2. General

2.1 This procedure is applicable to projects which constitute a fixed establishment. A project is classified as having a fixed establishment as soon as it entails full project construction execution in France for more than twelve months

There is no "force of attraction". Each project is considered for its own merits, in order to establish the existence of a fixed establishment.

2.2 It is primarily intended to set rules for the Company operation but it can also be applied if a client requests Company to act on his behalf

2.3 Company, having a fixed establishment in France, must notify the "Chambre de Commerce et d'Industries" of the district concerned

2.4 For the Allied-Signal Fibers Europe project in Longlaville, Company shall be registered as contractor with the "Centre des Formalités des Entreprises" of the "Chambre de Commerce et d'Industries" at Briey.

Reference number of the registration is:

Note: Registration is pending.

3. Responsibilities

3.1 Home Office Construction

(Manager Subcontracts) is responsible for:

·  Checking the subcontractor registration on subcontracts (see 4.1.1).

·  Instructions to subcontractors and supply and erect vendors to supply information with regard to subcontractor's employees (see 4.5.4.2).

3.2 Human Resources

is responsible for:

  •   Handling and filing of forms E 101/E 102 (see 4.5.2. and 4.5.3).
  •   Labour regulations (see 4.6).
  •   Obtaining work permits (see 4.8).
  •   Checking the registration of French Agencies (see 4.2.1).
  •   Assisting in completing forms received from government bodies, as applicable (see 4.4.2).

3.3 Site Organization

(Office Manager) is responsible for:

  •   Control of valid documents of personnel working on the site (see 4.5.3, 4.5.4 and 4.5.5).
  •   Keeping a register of personnel (see 4.7).
  •   Informing Labour Inspection of overtime (of non-management personnel).
  •   In cooperation with the Accounting department and Personnel department of The Hague, complete the various forms received from government bodies (see 4.4.2).

3.4 Accounting Department

is responsible for:

Manager Finance

  • Notifying the district Chamber of Commerce (see 4.4).

Project Accounting

  • Invoicing the fixed establishment for cost incurred relating to the construction activities.

Payroll Department

  • Supplying information required by French regulations.

Corporate Accounting

  • Assisting in completing forms received from government bodies, as applicable (see 4.4.2).

3.5 Local agent, France

Is responsible for all interfaces between Company and the French authorities, except the registration of the fixed establishment.

4 . Procedure

4.1 Subcontractors

4.1.1 The registration number of a French company (and of a permanent establishment) must be indicated on their letterhead and invoices. Company may assume that this registration number

is correct and that it will not be necessary to check on every subcontractor whether they are registered

4.1.2 Company is not responsible for the non-payment of employee income tax due by subcontractors.

4.1.3 If a subcontractor only has Company as client and no others, Company will be deemed to be the (co)-employer of the employees of the subcontractor.

If the subcontractor would become insolvent, Company would have to pay salaries and social contributions of the employees of the subcontractor, if the subcontractor had not been registered with the "Registre du Commerce et des Sociétés" (Chamber of Commerce).

4.1.4 The tax authorities could issue an "avis à tiers détenteur" (noticeto creditors) and the social security authorities, be it with permission of the court, could issue a "saisie-attribution" (distrain for premiums), resulting in blocking any payment from Company to subcontractor who is liable for taxes or social contributions, in case subcontractor does not pay his taxes and/or social premium contributions

If, following receipt of an "avis à tiers détenteur" or "saisie attribution" Company still pays subcontractor, while subcontractor continues not to pay his taxes and social contributions, the tax and social security authorities may pursue Company for the payment of the taxes and social contributions due by subcontractor.

4.2 French Agencies

4.2.1 It shall be checked whether the Agency is registered in France. (See 4.1.1).

4.2.2 Since there is no contractual relationship between Company and personnel supplied by an Agency, Company does not have any responsibility for the payment personnel supplied by an Agency, Company does not have any responsibility for the payment of tax due by the Agency

Would the Agency not pay the taxes for its employees to the French tax authorities, the authorities may ask Company to pay, part or whole of amounts still due to the Agency, to the tax office instead of to the Agency.

4.2.3 In case of insolvency of the Agency, Company may be asked by the social security authorities to pay to the employees of the Agency working for Company, part of their salary and related employer's and employee's social security contributions, to the social security authorities

It is unlikely that an Agency will become insolvent, because of the strict regulations in France requiring the Agency to complete a number of documents and to file a bank guarantee before they will be registered.

However, if there are any indications that it could happen, Company shall immediately terminate the relationship with the Agency.

4.3 Locally Hired Personnel on the Payroll of Company Fixed Establishment

4.3.1 If Company hires locally it should do so by means of written contracts, describing the job particulars, the amount of the remuneration and providing for a trial period (normally one month, but may be extended by mutual agreement in certain cases).

4.3.2 Employment contracts are normally of unlimited duration, but in the present case the duration of the contract should be indicated as that of the construction of the particular project, thus avoiding extra formalities and payments upon termination of the work

The alternative could be contracts of limited duration, but this limited duration may not exceed 18 months and they entail additional compensation upon their termination.

4.3.3 Hiring declaration ("declaration d'embauche") must be submitted to the Labour Inspector

4.3.4 Each hired employee must have a medical examination before the end of his trial period. This medical examination must be made by the "Medicine du travail" (Medical inspection department of French labour administration).

4.4 Notification to the Chamber of Commerce

4.4.1 The Manager of Finance shall notify the "Chambre de Commerce et d'Industrie" for every project in another district, in close cooperation with Porter and Dunham in Paris

4.4.2 The following formalities are centralized in a "Centre de Formalités des Entreprises" located in the local "Chambre de Commerce et d'Industries". Thus with the filing of a single document, the existence of Company's establishment would be declared to:

  • Registre du Commerce
  • The Tax Office
  • The URSSAF (Social Security Agency)
  • The Assedic (Unemployment Compensation Office)
  • The Labour Inspection
  • The INSEE (National Institute of Statistics)

The above mentioned organizations of government bodies shall send Company's permanent establishment the various forms, which must be filed either monthly, quarterly, or annually.

4.5 Social Securities

4.5.1 Notification

With the filing of a single document, the existence of Company's establishment would be declared to the social security authorities (see 4.4.2)

4.5.2 Regulations Regarding Employees Detached from within the EEC

4.5.2.1  In principle, every individual working in France is liable to the French social security authorities. However, a person detached to France and employed by a company established in an EEC member state, other than France, will remain liable to the social security authorities of this member state.

Therefore every employee working in France but liable to the social security system of another EEC country must be in the possession of an E 101 or E 102 form.

4.5.2.2  Detached employees are always obliged to have this form E 101/E 102 with them, from the first day of their detachment

4.5.2.3  Form E 101 is valid for the duration of one year. The E 101 document is issued by the member state where the company for which the employee is working is established

For an extension, the company must apply for a form E 102. The E 102 document is issued by the French Authorities. Forms E 101 and E 102 are for a single detachment. Form E 101 with serial number can be used for more than one assignment to France with the maximum duration of three months. Extension is possible for another three months.

4.5.3 Forms for Company Personnel and Agency Personnel

Human Resources shall be responsible for obtaining the formsE 101/E 102 for Company and Agency personnel. The Office Manager on the site shall receive and keep a complete set of copies of the forms E 101/E 102 as well as copies of the application letters. Formal notification to the authorities shall be done by Human Resources if the proper E form has not been received on the first day of the detachment. Copy of this notification shall be sent to the Office Manager

4.5.4 Checking of Personnel Employed by Subcontractors

4.5.4.1  The site organization (Office Manager) shall keep copies of following documents (if applicable):

  • Copy of work-permit for non-EEC personnel
  • Copy of document required for personnel who are liable to social securities in a non-EEC country. Refer 4.5.5.2 below

4.5.4.2  The Home Office Construction Department (Manager Subcontracts) shall instruct the subcontractors and vendors, respectively, to supply the site organization with the required information as stated above

4.5.5 Regulations Regarding Social Security of Non-EEC Nationals being Employed in France

4.5.5.1  When a non-EEC national is being employed in France, the French social security system will be applicable. This implies that the employer has to register with the French social security, Human Resources shall register such Company and Agency employees

The site organization (Office Manager) shall check the registration of subcontractor personnel from non-EEC countries.

4.5.5.2  The above is not applicable in case of a social agreement between French and non-EEC countries, making it possible for individuals of these countries to remain liable to the social security system of their own country. These individuals must carry the required documents (E 101 equivalent) with them.

4.5.6 Regulations Regarding Social Security of Locally Hired Personnel

4.5.6.1  All individuals working in France must be covered by the French Social Security System, unless there exists an exemption as described above.

4.5.6.2  In practice, all formalities are made by the "Centre de Formalités des Entreprises (CFE)" (see 4.4.2). The CFE gives the necessary forms to be filed for all social security obligations.

4.5.6.3  The date of payment of social security contributions varies according to the head-count of the company.

4.5.6.4  Before each payment, the URSSAF gives a "bordereau récapitulatif des cotisations" (recapitulative statement of contributions) which must be sent back by the employer with its payment within the required time period.

4.5.6.5  Every employer of salaried staff must send to the URSSAF, before January 31 of each year, the "Déclaration annuelle des données sociales" (Annual Social Security Declaration). This printed form includes various information elements of all employees working in France for the tax and social security administration.

4.6 Labour Regulations

4.6.1 Every employer must keep a "livre de paie" (payroll ledger), either in book-form or as computerized records. This document must include all the indications on the payslip of locally hired personnel. It must be kept during six years from the date of the last operation written on it.

4.6.2 Each locally hired employee must have a medical examination at least once a year.

4.6.3 A "Registre des observations et mises en demeure de l'Inspecteur du travail" (Record of Labour Inspection Remarks and Notifications) must be kept by the company. This record must indicate any observations made by the Labour Inspector relating to the fulfillment by the company of its labour law and social security obligations.

4.6.4 The employer must ensure that the following information is posted in the company:

  • Name, address and phone number of the Labour Inspector
  • Address and phone number of the labour medical department
  • Indication of the applicable collective bargaining agreement
  • "Règlement intérieur" (company rules)
  • Company work schedule

4.6.5 After one year, an employer with 11 employees (including assignees) must organize elections of personnel representatives. These personnel representatives are responsible for submitting the individual and collective complaints of the employees to the management as they relate to salaries and the application of the French labour law.

An employer with 20 employees or more, (excluding assignees) must establish company rules ("règlement intérieur") which are applicable to the entire body of company personnel.

This document must indicate only general and permanent rules enforced within the company relating to:

  • Discipline
  • Rights of the employees in case of disciplinary penalties
  • Hygiene and safety

4.6.6 The employer is subject to the regime relating to the protection of the disabled and must employ them in a percentage of at least 6% of the total headcount or pay a specific contribution to the URSSAF, the amount of which varies according to the company headcount.

4.7 Register of Personnel

A "Registre unique du personnel" must be kept permanently within the company. Such a register is to be bought in a bookshop.  It must be initialled by the local Tribunal de Commerce. The name, surname, mention of the nature of the employment contract (fixed, determined period or undetermined period) must be indicated in this register for each employee by chronological order of hiring.

These indications must be recorded at the date of hiring and maintained during 5 years after the departure of the employee from the company.

4.8 Work Permits for Employees from outside the EEC

4.8.1 In principle, all foreign employees are not allowed to work in France unless they have obtained permission from the local "Préfecture de police". For members of one of the EEC countries the permission is easily arranged. No work permits but "special card".

Employees from outside the EEC have to apply for an official work-permit. They have to complete a form and it usually will ake three months before the permit will be issued.

5. Flowchart

Not applicable.

6. References

Address of local agent in France.

7. Attachments

Check with the Social/Employment Authority in France for details.