What is freelance payroll and how does it work? What are the advantages for companies that use it and what are the criteria not to be overlooked for a company that chooses to go through a portage organization? Discover Payrolling: A Hybrid Form of Work

What is payrolling?

Freelance payroll is a new form of work that can be described as hybrid. This system, which was actually set up at the end of the 1980s or even the very beginning of the 1990s, is based on a tripartite agreement between the portage organization, the freelancer and the company and offers a brand new status that straddles the line between that of an employee and that of a freelancer.

This hybrid form of work is currently attracting more than 100,000 consultants in France. It was included in the French labor code in 2008, and has been clearly regulated since 2015, with a collective agreement in place since 2017.

What is freelance payroll and how does it work? What are the advantages for companies that use it and what are the criteria not to be overlooked for a company that chooses to go through a portage organization? Some answers to your questions in our last article.

Official definition and characteristics of payroll in France 

According to the website ” entreprise.service.public.fr ” the “portage salarial” in french is defined as a tripartite contractual relationship in which an employee from a payroll company, performs a service on behalf of client companies. This implies, on the one hand, that an employment contract is established between the employee and the freelance administration company. On the other hand, a commercial contract is established between the company and the client company. 

A commercial contract between the client, the employee and the payroll company.

As its name indicates, the particularity of a freelance administration contract, a tripartite contract, is that it binds: the employee, the freelance administration company and the client company. This implies that the 3 parties are bound to each other and have obligations regarding the execution of this contract.

The client company first signs a commercial contract with the company. The latter is then referenced as a service provider to its client. This is a considerable advantage for the client company, which can now go through this freelance administration company to assign freelancers. We will come back later on the advantages of this commercial contract for companies.

An obligation of quality and execution for the employee

The employee is also required to respect the terms of the contracts between the company and the client.

Towards the payroll company, the employee must : 

• Keep up to date on the missions he/she carries out in the framework of his/her missions to allow the company to correctly follow his/her file and his/her investment.
• Manage and keep up to date the documentation necessary to keep his file.
• Keep the client company and the company of portage informed of any change related to its situation.
• Ensure monthly activity reports: activity reports, expense reports, etc. Respect the deadlines set so that the company can prepare the payroll and invoicing.

Regarding the client, the ported employee must :

• Honor his mission by respecting the terms of the commercial contract between the company and the client company.
• Respect his environment, his managers and his new colleagues by acting in a totally professional way and integrated in the company.
• Inform the payroll company if there is any problem with the client.

The qualities and obligations of a freelance administration company

In order to choose the right freelance administration company, it is important first to find out about its reputation and expertise. Indeed, there are several fundamental points that must be taken care of by the freelance administration company and that you should not neglect before making your choice.

The administrative management is totally at the charge of the umbrella company. This is the main advantage that companies who use freelance administration generally cite. Elaboration of work contracts, pay slips, social and fiscal declarations… All these tasks are no longer your responsibility and are part of the service.

As far as the self-employed are concerned, using a freelance administration company allows you to benefit from a simplified administrative management: social contributions (retirement, unemployment), health insurance and providence. Moreover, you can also obtain legal assistance and insurance included in your service contract. Finally, the freelance administration company is the only one responsible for the recovery in case of unpaid invoices from the client company, which guarantees you a security of payment for the mission.

To summarize, the freelance administration company takes care of all the possible points of friction or apprehension, but in addition it has the capacity to propose a human accompaniment to help the self-employed like the companies to find a good balance.

Is payrolling becoming more and more widespread?

According to official figures from the Fédération des Entreprises de Portage Salarial (FEPS), in France the number of companies using this form of employment has been steadily increasing since 2010. In 2021, there were nearly 250 companies using freelance administration, compared to 180 ten years ago. If the number of employees ported was 50,000 in 2015, it has doubled in less than 10 years to now reach 100,000.

Payroll around the world

More and more popular in European countries such as France, Belgium, Switzerland, Spain and Italy, freelance administration is also quite popular in countries such as the United States, Canada and Australia. However, there is no real uniform legal framework, which makes it difficult to collect data on its international application.  

It is important to underline that freelance administration takes as many forms as there are applications in the different countries of the world where it is used. Therefore, if you wish to employ a freelancer, or if you are yourself a freelancer who wishes to join a client company abroad, it is important to be accompanied by an experienced and competent freelance administration company.

At Colever, 50% of our business is conducted abroad. Contact our team of experts to start the adventure of freelance administration.

Freelance administration by sector of activity

Still according to the FEPS figures, in 2020 the most represented sectors of activity in the field of freelance administration were :

• Intellectual services such as consulting, training…
• IT and new technologies.
• Marketing and communication.
• Project and administrative management.

However, more and more activities of the secondary sector are seduced by this hybrid approach of employment. For example, the construction, engineering, medical and audiovisual sectors are increasingly using freelance administration to find new talent.