All the answers to the questions that a Human Resources Manager may ask about wage portage from the business’s viewpoint.

RH

Are the various forms of self-employment compatible with wage portage ?

Yes, and sometimes that compatibility is a legal requirement.

Wage portage and sole trader :

Below a turnover level of 70 000 € (of which 33 200 are below the VAT registration threshold), it is possible for businesses to use the services of a sole trader, but this entails two major risks. If the sole trader works regularly for a company, there is a risk that the relationship will be reclassified as an employment contract.

The courts regularly rule that contracts should be reclassified, which has two consequences :

  • It brings the sole trader within the scope of labour law, and the sole trader becomes an employee of the company;
  • The company runs the risk of having to pay all the associated social security contributions retrospectively, and even being exposed to the risks associated with dismissal.

In an assignment where the fees may exceed the threshold, the self-employed person can no longer use the regime applicable to sole traders. Then wage portage is available as the most credible alternative.

It combines two regimes :

The legislator has not prohibited combining work as a sole trader and working via an umbrella company.

That is why you can ask a sole trader to work via an umbrella company in the context of the assignment for your company. He/she can remain a sole trader for different assignments or for lower amounts. In the context of the assignment, unlike a sole trader, wage portage will enable the consultant to pay pension contributions and obtain social insurance for unemployment and social security.

Wage portage and self-employment :

Likewise, a freelance can carry out one or more assignments via an umbrella company. It only needs the principal to suggest it to avoid a listing application which is unlikely to be successful. Likewise for an expert who has founded a company. There is no disadvantage to combining statuses once laws and regulations recognise these statuses and allow payment of contributions and taxes due on income generated.

Which rules apply to a freelance who has worked for us ?

  • The freelance working via an umbrella company cannot be forced by the client company to choose a particular umbrella company, nor a particular wage portage arrangement. He/she must choose the firm and this way of working without any ambiguity.
  • He must not replace a permanent employee or take over his/her functions in the company.
  • The freelance cannot derive more than half of his/her fees from working for a single client for longer than three years.
  • In the arrangements for the work, the freelance is free to choose his/her workplace, working hours and does not have a permanent office at the client company.

Can wage portage avoid contract reclassification ?

In the vast majority of cases, yes, because the person working via an umbrella company is already subject to an employment contract. Assuming that this contract is in order, it is hard to imagine it the freelance being reclassified as an employee of your company. This is particularly the case because there cannot be illicit supply of workers, as working via an umbrella company allows supply of workers.

But there are clauses in the existing laws and regulations that must be observed :

  • The freelance working via an umbrella company cannot be forced to choose a particular umbrella company [1], nor to choose a particular wage portage arrangement. He/she must choose the firm and this way of working without any ambiguity.
  • There must not be any intention to replace permanent employees with employees of an umbrella company.
  • The freelance cannot derive more than half of his/her fees from working for a single client for longer than three years.
  • The freelance is free to choose his/her workplace, working hours and should not have a permanent office allocated at the client company.

The residual risk of reclassification can be avoided by drawing up a clear service contract, which lists the various specifications, and by only recruiting those who have chosen to work for an umbrella company and who have declared that to be the case, and whose choice is appreciated by the internal customer who makes sure the candidate has the required skills.

This is where a company like ITG sets itself apart from the competition: it sets up organised, systematic oversight to avoid any mishaps that could be harmful for the client.

[1] The client can suggest a company where it has verified that the company provides the necessary guarantees but avoiding presenting only a single way of formalising the choice.

What if a freelance's conduct causes us problems? What can we do ?

In this case, the umbrella company must be informed as soon as possible. The consultant is accountable to the umbrella company which is responsible for disciplinary matters and sanctions. At ITG, all you need to do is send your B2B a mail explaining the problems encountered, and they will contact you to tell you what measures will be taken and settles the matter with the consultant.

How to put an end to an assignment that is no longer required ?

It can happen that a client has to put a stop to an assignment, which has become irrelevant or is no longer in the interests of the company.
How can the client terminate the contract with the umbrella company ?

The assignment using wage portage is defined in a sales contract between the client and the umbrella company. This is known as a ‘bilateral’ contract, whose conditions are determined by the co-contractors in accordance with the law.

It must provide for termination of contract. This clause must be inserted. A notice period is usually set which reflects the duration of the assignment. This precaution is necessary, on the one hand, so as to avoid putting the consultant in a difficult situation, and because case law has tended to settle disputes in this way.

What is reasonable: allow one day’s notice per week of work if the assignment is to last longer than 2 weeks. Three days in total if the assignment is to last less than two weeks.

This notice is notwithstanding any complaint about the way in which the assignment has been conducted.

ITG standard contracts provide a space to be completed with this notice period.

What arguments should be used vis-à-vis the social partners to reassure them about this new type of arrangement ?

The social partners must be aware that portage is now regulated by the Ordinance adopted by the government on 2 April 2015 and the collective wage portage agreement was signed unanimously by the trade unions (CGT, FO, CFDT, CFTC, CGE-CGC) and the employers’ representatives (PEPS – National Association of Umbrella Companies) on 21 March 2017. Moreover, trade unions have a seat on the Joint Wage Portage Observatory, an employer/employee body will oversees compliance with employment rules, in which the unions regularly monitor the evolution of the profession.

Do the employment conditions for our company's employees have to apply to those working via an umbrella company ?

The answer is no. The consultant is an employee of the umbrella company, and enjoys the conditions provided by the company that makes his/her services available. There is no ‘wage relationship’ between the client company and the consultant.

What are the best practices for wage portage ?

Wage portage is a recent type of business and is practised by many bodies or companies, often without being fully aware or the administrative requirements or issues involved.

To standardise and uphold ethics in this sector, several companies providing wage portage in a professional manner have joined forces in an association, the PEPS, which has a code of conduct. Wage Portage is an activity that requires the utmost professionalism. Here are 10 good management practices and 5 good marketing practices.

The 10 good management practices :

  1. Payment of salary starting from the 1st day of work.

Several companies only pay salaries after they themselves have received payment (despite claiming the contrary). Whether they like it or not, it is still a breach of the Labour Code and risks consequences for the consultant. It must be ensured that the contractually-agreed pay is actually paid from the 1sup>st day of work, irrespective of the date when the umbrella company’s invoices are paid. Thereafter, pay is due for days of searching for customers, otherwise the consultant is deemed to be doing clandestine work and would be in a difficult situation in the event of an accident, for example.

  1. Collective agreement and social dialogue

Umbrella companies that are members of PEPS apply the collective agreement on wage portage; the ‘contractual’ salaries that are to be paid depending on the work done are calculated on the basis of this collective agreement. It should also be checked that the umbrella company has a Works Council and a training plan to offer all the necessary and legally-required means of exchange of views and expression.

  1. Management fees

The amount of the umbrella company’s management fees must be shown clearly: there must not be any hidden fees or surprise supplements or unannounced deductions (for example: supplement for pay advances …).

  1. Employment contract with the umbrella company

The consultant must have an employment contract for wage portage from the commencement of employment.

Is this employment contract actually handed to the consultant? Is a sickness insurance scheme proposed to the consultant, at least as an option? Does the managers’ supplementary pension include a death benefit (request amounts and check whether the payments are actually paid) ?

  1. Professional civil liability

The umbrella company must have operator’s and professional civil liability insurance: ask for the certificate, you will find out how much the consultants are insured for.

  1. VAT on expenses

When VAT is recovered on the expenses and disbursements by the consultant, the umbrella company must credit the amount to the consultant’s account: that VAT is payable to him.

  1. Management of your account

The consultants have direct real-time access (extranet, secure access) to their account: they know where they stand at any time. Transparency of operations accessible in real-time is a necessity. The access to the balance of the accounts is only useful if the result shown is verifiable.

  1. Transparency and financial security

The balance sheets and results of the umbrella company are filed and published every year: they indicate clearly the amounts due to the work of consultants (salaries, social security contributions, insurance, etc.).

Are these amounts actually paid: the auditor’s certification is the proof. The umbrella company insures the legal and financial liability for assignments.

  1. Direct service to the consultants

The activity of each consultant is processed and managed by a dedicated manager known to the consultant by name and whom he can contact directly and in person.

  1. Responsiveness

Phone calls and mails from client companies and consultants are either picked up immediately (phone) or within the following 24 hours. Invoices and salaries are issued promptly in the appropriate form. The company must guarantee direct access to a manager responsible for dealing with any question arising from the day-to-day management of their account.

The 5 good marketing practices of umbrella companies :

  1. Sales support

Each consultant has a ‘mentor/supervisor’ to answer his/her requests and follow up ‘marketing’ activities (sales, prospecting, writing of proposals, price negotiation, etc.). This supervisor has experience of the market and consultancy methodologies. The consultant knows him/her personally and has direct access to his e-mail addresses and telephone number.

  1. Networking and team formation

The umbrella company offers effective networking of its consultants (clubs, meetings, creation of teams with additional expertise, exchange platform, etc.); it facilitates initiatives by consultants who wish, either alone or as a team, a consultancy activity or training course under the company banner: it facilitates contacts and support the development right up to the possible creation of a specific entity.

  1. Skills database

This skills database is a Resources site for companies, local authorities and administrations (French, European, international) who are looking for skills.

  1. Training

The umbrella company proposes training programmes suited to finding assignments and enabling consultants’ training to be paid from its training budget: it contributes financially to individual training courses requested by consultants (improving their skills, acquisition of new knowledge).

  1. Visiting cards and stationery

The umbrella company offers its consultants the possibility of prospecting and carrying out missions under its name and with its marketing tools.