Keywords. Reclassification, employment contract, relationship of subordination, service contract, freelancer.
Introduction
Your company regularly engages service providers, who send you invoices.
Several months after the end of your collaboration with one of them, you receive a summons to appear before the Labour Court (Conseil de prud’hommes). The provider is suddenly requesting the reclassification of the service contract into an employment contract, accompanied by various financial claims.
In this article, Allison BENICHOU CORCHIA, Partner at d&a partners, analyses the main criteria that make it possible to identify situations liable to result in the reclassification of a service-provision relationship into an employment contract.
Reclassification as an employment contract is a major issue in employment law. Its purpose is to restore the legal reality of professional relationships when the actual conditions under which the work is performed do not match the legal nature of the contract signed by the Parties.
The phenomenon of “disguised employment” (salariat déguisé) refers to situations in which a person carries out their activity under the status of an independent worker (micro-entrepreneur, freelancer, consultant), while the actual conditions under which the assignment is performed correspond to those of an employee.
In this respect, case law has consistently held, for more than twenty-five years, that “the existence of an employment relationship depends neither on the will expressed by the parties nor on the label they have given to their agreement, but on the factual conditions under which the workers carry out their activity” (Cass. Soc., 19 December 2000, no. 98-40.572, Labbane). The Court is never bound by the label the Parties have given to their contractual relationship.
The question then arises as to which criteria enable companies to identify, in advance, the risk that a relationship with an independent worker may be reclassified as an employment contract. In this respect, auditing the contractual relationship is essential.
1. The constitutive criteria of an employment contract
Case law traditionally recognises three criteria for establishing the existence of an employment contract: a work performance provided personally by the employee, remuneration, and a legal relationship of subordination, the latter being the cornerstone of the characterisation.
In its well-known Société Générale judgment, the Court of Cassation defined the relationship of subordination as “the performance of work under the authority of an employer who has the power to give orders and directives, to monitor their execution and to sanction the subordinate’s breaches” (Cass. Soc., 13 November 1996, no. 94-13.187).
Demonstrating the relationship of subordination therefore requires that three powers be combined in the hands of the employer: a power of direction, a power of monitoring, and a power of sanction.
2. The boundary between an employment contract and a service contract
The service contract is defined in Article 1710 of the Civil Code under the name louage d’ouvrage (hire of work): “The hire of work is a contract by which one of the parties undertakes to do something for the other for a price agreed between them.” Article L.8221-6 of the Labour Code establishes, under certain conditions, a presumption of independence in favour of duly registered workers, in particular tradespeople, craftspeople, members of the liberal professions and micro-entrepreneurs. This presumption is, however, rebuttable and may be reversed by demonstrating a relationship of subordination. Article L.8221-6-1 of the same Code further specifies that “a person is presumed to be an independent worker where their working conditions are defined exclusively by themselves or by the contract defining them with their principal.”
The service contract is characterised by the provider’s autonomy: they organise their activity freely, bear the risks associated with its execution, deliver a defined result or service, and receive a price for the service — without being subject to any power of direction or monitoring.
The absence of a relationship of subordination is what distinguishes this contract from an employment contract.
In practice, the boundary between independence and subordination can be blurred; this is why the Court focuses on the actual conditions of performance.
3. The body of evidence: the main criteria to audit
The Court never relies on a single element: it applies the technique of the “body of evidence” (faisceau d’indices). It examines all the concrete conditions of the relationship and assesses, in its sovereign discretion, whether that overall picture tips the characterisation towards employment.
The indicators most frequently relied upon are: the existence of imposed working hours or a schedule set unilaterally by the principal, integration into an organised service, fixed monthly remuneration, and monitoring of the performance of the service.
Furthermore, a worker who devotes the entirety or near-entirety of their activity to a single principal is often in a situation of dependence.
The challenge, therefore, is to audit the reality of the relationship and not merely the content of the contract.
The request for reclassification falls within the exclusive jurisdiction of the Labour Court, and the burden of proving the existence of an employment contract lies with the party asserting it.
4. The consequences of reclassification
Reclassification produces retroactive effects, as if the employee had always been bound by an employment contract. It entails particularly serious consequences for the company: financial consequences (back pay, termination indemnities, various damages, and social security reassessments) and possibly criminal consequences (conviction for concealed/undeclared work, depending on the circumstances).
Conclusion
The reclassification of a service provision into an employment contract is a major risk for companies that engage independent workers. Merely signing a service contract, receiving invoices, or the provider’s registration is not sufficient to secure the relationship.
The company must ensure that the concrete conditions under which the assignment is performed remain compatible with the provider’s independence.
With this in mind, conducting regular audits of contractual relationships makes it possible to identify indicators of subordination in time and to implement the necessary corrective measures.
