French with Benefits

Introduction

If you've recently acquired a French office due to M&A, or are planning to open one in order to grow your business here, you might be surprised by the non-salary benefits that HR will suggest you implement for employees. There are some overlaps with what an American employee would expect, but also some differences.

Profit Share

In America, if you work for a publicly-traded company then it's likely that you receive part of your compensation package in stock (or RSU's, Restricted Stock Units, which are similar). This makes sense in an environment where it's common for individuals to own stocks, for example in a retail brokerage account or retirement account such as a 401(k). If you receive company stock as part of your comp package, you are rewarded by the company's financial performance via capital gains (if the stock goes up) and also from dividends and buybacks.

In France there is historically less of a culture of individually owning stocks, although nowadays this is changing somewhat with the availability of discount retail brokerages. As a result, it's less common for employees here to receive stock or options directly in a brokerage account as part of their compensation package. Instead, employees generally receive a profit share, typically a bonus paid in June/July whose value is determined by the financial performance of the company. The bonus is administered by a financial services provider such as HSBC or Natixis, who manage investment account portals for each employee. There are specific rules and tax implications for how this money can be invested and used, which I will cover in a later post. 

That being said, for private tech startups here the compensation is similar to what we have in America, where early startup employees receive equity as part of their comp.

Lastly, employees typically receive a cash bonus in December.

Retirement Savings

Many American companies, public or private, offer 401(k) retirement savings plans. Some even provide matching contributions, where if an employee elects to invest part of their salary in the 401(k) plan, the company will match that investment on top of the salary payment. Also, once the money is contributed in the 401(k), you can generally invest it however you like: you can buy individual stocks, or invest in ETF's or mutual funds. The company might even partner with a specific fund provider to offer products such as target date funds ("put the money here if you plan to retire in 2055 and we'll do the rest"), or other funds with lower fees.

France actually has a similar scheme, although there are multiple types of plans (PER, PERO, PERO-B, PERCO). However, rather than matching contributions, the company will simply make a contribution on behalf of the employee. Employees are also allowed to make individual contributions, which reduce taxable income. 

For more information about corporate retirement accounts, here is an english-language explainer from the French government.

Health Insurace

Yes I know...France has socialized medicine! Healthcare is free!

It's true that the majority of healthcare is provided by the government, especially serious issues such as hospital stays. But smaller things such as routine procedures, check-ups, and some prescription medicines are not covered by (or not fully covered by) the national health insurance (« sécurité sociale », or « sécu » for short). For that reason, many employers offer private health insurance (« mutuelle ») that provides additional coverage. 

An employee's mutuelle is linked to their sécu via the national healthcare portal (« Améli.fr »), so when they use their government-issued healthcare ID card (called a carte vitale) at e.g. the pharmacy, they don't pay anything out of pocket.

Transportation & Meals

Frequently, French employers will offer to reimburse the cost of public transportation and meals. 

For transportation the amount of reimbursement varies, but it's usually between 50% and 100%. The employee simply needs to share a proof of purchase of e.g. a monthly transit card to HR, and the reimbursement percentage is added to that month's paycheck.

For meals, either the office has it's own in-house cantine where the cost of meals is partially subsidized by the company, or employees receive a meal card. For each day the employee clocks in, some amount of money is loaded onto the card (rebalanced monthly). Most restaurants in commercial areas accept these cards during lunchtime on weekdays, and employees can spend up to a certain amount per day using the card. This is especially useful for employees who travel for work, because they don't need to bother with expense reports for lunch - they just buy lunch with the meal card wherever they happen to be.

The subsidy for the cantine and the employer contribution to the meal cards is generally negotiated between the employer and the workers' council (another topic for a different column). The maximum daily spend for meal cards is set by the government.

Cheques Cadeaux + Cheques Vacances

Lastly, employers frequently offer types of non-cash rewards to employees as part of the end-of-year bonus. These are advantageous for tax reasons.

• Cheques cadeaux (gift checks) are redeemable at a number of retailers, as well as dedicated eCommerce platforms that aggregate products from various brands

• Cheques vacances (vacation checks) can be used to redeem train tickets, hotel stays, and other vacation costs within France

Conclusion

French companies offer a number of non-salary benefits to employees. Some are similar to what you'd expect in America (retirement contributions, health insurance), others less so (meal subsidies, cheques cadeaux / vacances).

For more insights about doing business in France, don't hesitate to get in contact.

Au revoir !