New agreement on Portage Salarial
Four of the main trade unions in France have signed a new agreement on Portage Salarial (sometimes translated as ‘umbrella companies’) covering specialist workers (executives). The mechanism is only applicable to genuine executives and temporary work agencies will only be allowed to enter into contracts with executives if they set up a subsidiary Portage Salarial company. More negotiations are likely and legislation is needed to bring the agreement into operation.
On 24 June 2010, three of the five representative trade unions at a national level in France signed an agreement (in French, 103Kb PDF) on ‘Portage Salarial’ (sometimes translated as ‘umbrella companies’). Interestingly, the employer representatives throughout the long period of negotiation leading up to the agreement were not actually Portage Salarial companies but the French Federation of Temporary Work Agencies (PRISME).
The three original signatories were the French Democratic Confederation of Labour (CFDT), the French Confederation of Christian Workers (CFTC) and the French Confederation of Management – General Confederation of Professional and Managerial Staff (CFE-CGC). Almost a month later, the General Confederation of Labour (CGT), which had originally opposed the mechanism of Portage Salarial, decided to sign the agreement on the grounds that it introduces at least some regulation to the sector. The fifth representative trade union in France, the General Confederation of Labour – Force Ouvrière (CGT-FO), continues to oppose the agreement.
About the Portage Salarial system
The French system of Portage Salarial enables specialist workers, for example human resources (HR) managers or consultants (referred to in this update as executives), to undertake work outside their current employment without jeopardising their employment contract. When the executives undertake work for a second company they are not classed as independent workers but as employees employed by a Portage Salarial company. Portage Salarial companies specialise in employing executives, and pay their wages and associated social security costs. Portage Salarial is seen as a useful mechanism for those who want to undertake work outside their main employment but who do not want to terminate their current employment contract.
Independent (or freelance) workers in France are generally responsible for paying their own taxes and social welfare costs. Portage Salarial creates a system whereby the social costs and taxes are paid by a Portage Salarial company on behalf of the executive as a normal company would for an employee. Thus, executive workers such as consultants can take time off from their main job (perhaps as a holiday) and work elsewhere, having their social costs and taxes deducted from their salary as if they were a normal employee.
Portage Salarial was established in France in the 1980s and given legal status by the law of 25 June 2008 (through Article L.1251-64 (in French) of the French Labour Code). In general terms it is a set of contractual relations between a ‘bearing company’, an individual who is ‘carried’ (the executive) and a customer (see diagram).
A commercial contract of performance of service is made between the Portage Salarial and the customer. The Portage Salarial also concludes a contract with the ‘person carried’. Article 8 (in French) of the law allows the social partners to extend this concept across other sectors after consultation with the organisations representing the Portage Salarial companies.
How Portage Salarial system works
Content of new agreement
The trade unions reached agreement with the employer representatives that this mechanism could only be used by genuine ‘Salarial Portage’ companies. The employers had originally wanted this title to be also used by temporary agencies, thus allowing a much broader application of this form of employment. However, the new agreement does not permit this and only genuine Portage Salarial companies will be authorised to enter into contracts with executives. The only exception to this rule is if a temporary agency organisation establishes a separate Portage Salarial company by creating a subsidiary. From now on, this mechanism is reserved only for use by genuine executives – the definition of which will exclude many existing users from availing themselves of this system of employment.
The new agreement offers the executive the option of entering into a fixed-term or permanent contract and this is why CGT-FO opposed the agreement. The union is concerned that the new permanent contract could contradict current employment law, which places an obligation on employees to undertake work provided by their employer. However, if the work of the executive is contingent on them supplying customers to the Portage Salarial company, it is not known what the legal position would be if they failed to do this or whether a Portage Salarial company could dismiss an executive on these grounds.
The minimum wage in the sectoral agreement is €2,900 a month. The Portage Salarial company pays an additional 5% to the executive for finding new customers.
Future of Portage Salarial system
The concluding of this agreement does not mark the end of the discussions and the agreement refers several times to future negotiations (for example, on collective labour relations, vocational training and pensions/retirement).
Because certain provisions in the agreement do not conform with existing legislation, new legislation will be needed to bring the agreement into effect. The agreement is therefore valid but cannot yet be brought into operation.
In addition, to take effect, the agreement needs to be extended by the government to all employees and employers across the sector. CGT-FO, however, having already refused to sign, has made clear its intention to oppose the agreement.
Finally, the government and parliament will need to find time to adopt the text. This ‘transposition’ into law may involve changes being made to the text as it passes through parliament. As a result, the final law may not be identical to the original agreement and this could then create conflict between the social partners.
It is only at the conclusion of these procedures, which could give rise to fresh negotiations between the partners, that the operation of the new Portage Salarial system will be enshrined in French law.
Hélène Tissandier, HERA