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Subcontracting is the arrangement whereby a contractor (the principal) delegates, under its own responsibility, to another party (the subcontractor) the performance of all or part of the contract, or of part of a public procurement contract concluded with the project owner (cf. Article 1 of Law No. 75-1134 of 31 December 1975 on subcontracting).

Any principal who signs a contract worth at least €5,000 excluding VAT must ensure that their subcontractor or service provider fully complies with their social security and tax obligations. Otherwise, if the subcontractor engages in undeclared work or fails to make the required declarations, the Urssaf may cancel the contribution reductions you benefited from and hold you jointly liable for the amounts owed.

This joint liability covers not only social security contributions, but also taxes, penalties and public subsidies received by your company in respect of the wages paid. In addition, you may be required to guarantee the payment of salaries and paid leave in the event of your subcontractor’s default.

Before entering into any contract exceeding €5,000 excluding VAT, you must obtain two documents from your future subcontractor:

• a URSSAF certificate of compliance issued within the last six months, confirming the accuracy of declarations and the payment of contributions, it being specified that you are responsible for checking the validity and authenticity of the certificate.;
• where the profession is regulated or subject to a specific registration, proof of the company’s registration.

For subcontractors established abroad or employing foreign workers, additional verifications are required.

If you neglect your due diligence obligations:

• all reductions or exemptions of social security contributions that you have benefited from in connection with the payment of wages to your employees will be cancelled;
• you will be jointly liable with your subcontractor for the contributions, taxes, penalties and public subsidies to be reimbursed;
• you will be required to pay the wages, allowances and employer charges owed by your subcontractor in respect of employees who were not declared prior to hiring or who did not receive a payslip;
• your non-contractual civil liability may be engaged if employees suffer harm resulting from a breach of safety standards.

See Articles L. 133-4-5 of the French Social Security Code and L. 8222-2 of the French Labour Code relating to undeclared work.

To protect yourself effectively, it is recommended to:

• include in every contract a social and tax due diligence clause specifying the obligation to provide certificates and the sanctions applicable in the event of non-compliance;
• set up a reminder schedule to collect and verify URSSAF certificates and registration documents;
• ensure careful monitoring and time-stamped archiving of all documents;
• prepare a standard injunction letter to be sent to the subcontractor in the event of unpaid wages or a breach of labour legislation.

By adopting these measures, you significantly reduce the risks of joint financial and criminal liability associated with your subcontractors’ shortcomings. Implementing rigorous due diligence processes protects your interests and strengthens the legal security of your business relationships.

The Direction RH team is here to support you by keeping you informed of legislative developments and by helping you secure the legal compliance of your procedures. Please feel free to contact us for tailored assistance.