- Definition of Undeclared Work and Illegal Employment
It should be noted that French labor criminal law broadly defines the offense of undeclared work. The French legislator has expanded the scope of the prohibition on illegal employment by introducing into Article L.8221-3 paragraph 3 of the Labor Code the concept of posting fraud, which is defined as follows:
“The deliberate misuse by a foreign employer of regulations applicable to the secondment of personnel, when it conducts only internal or administrative activities in the state where it is established, or when its activities are carried out in France on a regular, stable, and continuous basis.”
Through this provision, French authorities aim to reduce the number of foreign companies conducting permanent and customary activities on French territory without being properly registered there.
- Requirements to Avoid Allegations of Posting Fraud
In addition to the criterion of regular, stable, and continuous activity conducted by an employer outside France, there is also the requirement that the usual place of employment of the worker must be outside France.
Article L.1261-3 of the Labor Code complements the existing definition of cross-border secondment. Employees can be considered “seconded” if they are employed by an employer that conducts actual economic activity outside France, provided that they “habitually perform work for that employer.”
- French Regulatory Authorities Control Tools
To more effectively combat offenses related to violations of secondment regulations, the French legislator has equipped labor inspectors with additional control tools and strengthened their right to communicate with third parties.
As explicitly stated in Article L.8113-5-1 of the Labor Code, inspectors may request copies of accounting documents to verify that a foreign employer has met its reporting obligations. They also have access to data and digital records.
Labor inspectors may exercise their general right to communicate with third parties, such as suppliers, clients, or business partners of the foreign employer, who must provide all relevant information. Professional secrecy cannot be invoked as a reason for refusal (Article L.8113-5-2 of the Labor Code).
Additionally, labor inspectors have the power to conduct criminal hearings with employers accused of violating labor laws. Following such a hearing, which takes place at the labor inspectorate responsible for the location of the secondment and at which the employer may (and should) be assisted by a lawyer, a criminal interview report is drafted and sent to the competent prosecutor’s office.
- Penalties for Posting Fraud
The “Avenir Professionnel” law, promulgated on September 5, 2018, has increased the penalties imposed on employers who fail to comply with secondment rules or labor laws applicable to seconded workers. The maximum administrative fines have been doubled, rising from €2,000 to €4,000 per seconded worker concerned by the violation, and from €4,000 to €8,000 in the case of a repeat offense, up to an overall limit of €500,000.
The law provides the possibility of challenging a labor inspector’s decision by filing an appeal with the Administrative Court against the decision imposing these fines. However, such an appeal does not suspend the obligation to comply with the decision.
Furthermore, labor inspectors have the option of referring the case to the public prosecutor at the court competent for the location of the secondment of foreign workers, allowing for the initiation of criminal proceedings against the foreign employer suspected of posting fraud.