End of an Assignment with an Employer of Record (EOR) in France: What Are Your Rights?
You’ve been working full-time for a single foreign company for several years. Your meetings, your goals, your manager—everything comes from that company. Yet your contract is in the name of another company, an “Employer of Record.” One day, you’re told that your assignment is ending, that there will be an “inter-assignment” period, or that your contract is being terminated by mutual agreement at the legal minimum. It’s often at this point that you discover you’re working through an umbrella company. Knowing who you work for isn’t just an administrative detail—it’s part of the role you play.
Understanding Your Status: What Did You Actually Sign?
“Employer of Record” is a marketing term, not a category under the Labor Code. It refers to a service that allows a company without a legal entity in France to have someone work here, and this service may, in particular, be based on an umbrella employment contract. The Labor Code describes a three-party arrangement: a commercial contract between the umbrella company and the client company, and an employment contract between the umbrella company and you, the “umbrella employee” (Article L. 1254-1). Only a company whose exclusive business is this activity may enter into these contracts (Article L. 1254-24).
Review your contract. Its title, the collective bargaining agreement it references (the one for the umbrella company arrangement), or the presence of a “financial reserve” are good indicators of whether you are under a standard permanent contract or an umbrella company arrangement—though these factors alone are not sufficient.
A legal framework designed for one-time assignments
Legal Requirements for Using an Umbrella Company
The wage portage system was not designed for permanent employment. The law reserves it for employees who have the expertise and autonomy to find their own clients and negotiate their services (Article L. 1254-2). The client company may use this arrangement only for an occasional task outside its normal and permanent business activities, or for specific expertise that it does not possess (Article L. 1254-3). Furthermore, a single assignment may not exceed thirty-six months (Article L. 1254-4).
Risks of Irregularities and Proof of the Employment Relationship
A full-time position, as part of a team, with a single client for years, arranged by that client and not by you: none of these elements is prohibited in and of itself, but taken together, they are all indicators that do not align well with these conditions. It is therefore possible to argue that the use of an umbrella company is improper. A client company that uses an employee provided by an umbrella company outside the cases provided for by law, or beyond the maximum duration, is also subject to a fine (Article L. 1255-16).
Who is your real employer?
A subtle distinction makes all the difference. This inconsistency does not automatically make the foreign company your employer. Judges look at the facts (who gives you instructions, who supervises your work, who can discipline you) rather than just the label on the contract. So be sure to keep concrete records of your day-to-day work.
End of Assignment and Between Assignments: What Employers Can and Cannot Do
Rules Governing the Termination of an Employment Contract
The termination of the commercial contract betweenthe Employer of Record and the client company does not terminate your employment contract (Article L. 1254-8). If you are under a permanent contract through an employer-of-record arrangement, terminating it requires a standard method of termination, such as dismissal, termination by mutual agreement, or resignation. A fixed-term contract through an employer-of-record arrangement, on the other hand, is governed by its own rules.
On the other hand, the umbrella company is not required to provide you with work (Article L. 1254-2), and periods without work are not compensated (Article L. 1254-21). This is the key difference from a traditional permanent contract, and it is what makesthe time between assignments so uncomfortable.
Termination Between Assignments: The Employer Must Have a Valid Reason
That does not mean, however, that anything goes from then on. An employee under a labor-sharing arrangement had been terminated for “professional incompetence ”: his employer accused him of failing to solicit new clients despite two formal notices. The Court of Appeals ruled that this accusation actually constituted negligent misconduct—and thus fell under disciplinary grounds—and concluded that the termination lacked real and serious cause. The Court of Cassation dismissed the employer’s appeal on this point (Cass. soc., April 12, 2023, No. 21-19.670, unpublished). One should not conclude from this that a lack of business development is inconsequential: the lesson lies primarily in the rigor required of the employer, who must cite the correct grounds and follow the corresponding procedure. Regarding severance pay, the case fell under the former regime, which guaranteed a minimum of six months’ salary. The Court refused to reduce this minimum to zero on the grounds that the employee had received no pay during his final months without an assignment: the last wages actually paid had to be taken into account. This minimum has since been replaced by the scale set forth in Article L. 1235-3.
Financial Reserves and Steps to Take Before Signing a Termination Agreement
How are your financial reserves looking?
For employees on permanent contracts through an umbrella company, the collective bargaining agreement provides for a financial reserve, which is accumulated in your activity account. It is used, in particular, to offset a reduction in—or even the absence of—compensation between assignments, in accordance with the terms set forth in the agreement. This is not a favor from your employer: it is tied to your own work activity. If you are told that a gap between assignments will be “financed by your reserve,” request in writing a statement of your activity account and details on how the reserve will be used.
What to Check Before Signing a Mutual Termination Agreement
A mutual termination agreement requires your consent: it cannot be imposed on you (Article L. 1237-11). Therefore, an offer at the legal minimum is not inevitable. Depending on your situation,severance pay, the scale applicable in cases of wrongful termination (Article L. 1235-3), and any irregularities in the umbrella company arrangement may factor into the discussion. Also keep in mind that the portion of severance pay that exceeds the legal minimum may delay the start of your unemployment benefits, within certain limits: this is a factor to factor into your calculation, not a reason to walk away from the offer.
Request written confirmation of the end of your assignment and the proposed termination agreement. Do not sign anything under pressure, and be wary of a termination agreement with dates already filled in. Keep your contract, your activity reports, and any correspondence that shows who was actually giving you instructions.
If your foreign employer doesn't even use an Employer of Record, the situation is different: an upcoming article will focus on working remotely from France for a U.S. employer.
Key Takeaways
- In France, an “Employer of Record” may be based on an umbrella employment contract. The end of an assignment does not terminate your employment contract: termination must follow standard procedures.
- Contract work, which is typically reserved for one-time assignments, is not well-suited to a permanent position. Your financial reserves are tied to your work: ask how much you have saved.
- Before signing anything, take the time to consider what points are still open to discussion.
This article is intended for educational purposes. Each situation is unique and requires personalized legal advice.
