Labor loan between companies: what is it?
Labor loan between companies: what is it?
The loan of labor is a device that makes it possible to avoid partial unemployment in a context of a drop in activity but also to remedy the difficulty of recruiting quickly in the event of a sharp increase in activity.
What is that?
The loan of labor between companies allows inactive employees who so wish to be able to work temporarily in a company that is faced with a shortage of personnel.
The employer can therefore make voluntary employees available for a pre-determined period.
Thanks to this device, the employee will benefit from 100% of his salary. The employee would have received 84% of his net salary in partial unemployment. Thanks to this system, he can acquire new experience and put his skills to good use with a company in need.
The salary is always fully paid by the original company. For its part, the company hosting the temporary employee will reimburse 100% of the salary to the original company, the related social charges, and the employee’s professional expenses.
The employee keeps his employment contract with his company. As a result, the employee returns to his initial job or an equivalent position at the end of his secondment. Neither the development of his career nor his remuneration may be affected by the availability period.
In the current context of the health crisis linked to Covid-19, the government wishes to maintain without interruption the activities essential to the life of the nation. Voluntary employees placed on partial unemployment can be temporarily loaned to another company experiencing a staff shortage.
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What are the legal constraints?
It is Article L8241-1 L8241-2 of the Labor Code, which governs the mechanism for the loan of labor between companies. The latter must be non-profit for the lending company and cannot be set up without the following points:
- The employee’s agreement:
The lending company must obtain the explicit agreement of the employee concerned by the labor loan scheme. Please note that an employee cannot be penalized, dismissed or subject to a discriminatory measure for having refused an offer of secondment.
- Amendment to the employment contract:
The addendum to the employment contract makes it possible to define specific conditions of the employee’s new job. Also, the employee’s agreement must be explicitly mentioned in this endorsement. Here is what the supplement contains:
- The list of tasks entrusted to the user company
- Times and place of work
- The specific characteristics of the workstation
- An agreement between the lending company and the employee defines the probationary period and its duration
- The provision agreement:
A provision agreement between the lending company and the user company must formalize the labor loan system. This agreement defines the loan period’s duration and indicates the employee’s identity and qualifications.
Find the models of amendment to the employment contract and the provisional agreement on the website of the Ministry of Labor.
- And on the CSE side?
The lending company’s social and economic committee is consulted before setting up a loan of labor. It is also informed of the various agreements signed. The same goes for the user company.
- Labor loan: what penalties?
Concealed work is criminally sanctioned ( Labour Code – Concealed work – Penal provisions )
Illicit labor lending is punishable by up to 2 years in prison and €30,000. This amount is increased to €150,000 for a legal person.
Other penalties can be imposed, such as:
- Prohibition to exercise certain professional activities
- Exclusion from public contracts for up to a maximum of 5 years
- Publication of the judgment in the newspapers
Administrative sanctions can also be applied, such as:
- The abolition of public aid
- Reimbursement of public aid already received
- The temporary closure of the business
HR functions are at the heart of Covid-19 crisis management. To better understand the HR challenges of the health crisis and how we can deal with it daily, we gave the floor to men and women in the field.
Lending your employee to another company the practice exists.
Yes, lending an employee to another company is possible! But the practice is still marginal. In this period of labor code reform, the Macron government wishes to encourage this use.
More commonly practiced between large groups, the reform aims to encourage the loan of employees between large and small companies or start-ups. But the Champion law, which has governed this practice since 2011, needs to be clarified, particularly on the billing procedure. The editorial staff investigated.
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The employee loan, how does it work?
This form of sponsorship allows a company to make one of its employees and their skills available to another company without breach or suspension of the contract. Attention: the employee must be voluntarily “loaned.”
A simple agreement signed by the two companies is sufficient. This stipulates the duration of the loan and the invoicing terms: salary, social security contributions and any travel expenses.
Today, online platforms facilitate the connection of companies that want to lend to or host employees. Among them: Apitalent, Crafty or Mobiliwork.
Ok, but what’s the point?
More flexibility for businesses
Two reasons can encourage companies to lend their employees:
- The decline in business activity: lending an employee allows the company to save a salary, without closing the position, the time to recover its health. At the same time, this allows the employee to be occupied during off-peak periods.
- More fluid distribution of payroll: this practice allows large groups to circulate their employees in different subsidiaries according to changing needs.
A revival for the employee
The “loaned” employee can also find his interest there. If he comes from a large structure and goes to a start-up, he can bring his experience to a younger team and learn new practices. The change in environment can bring renewal in work and the missions of the employee. It’s also a way to avoid getting bored in a business where activity is down while avoiding a bore-out!
Labor loan at 0 rates?
Today in reading the law, we understand that the loan of labor for profit is prohibited and that the loan, free or at a lower cost, is not explicitly authorized. This legal vagueness at the level of invoicing is subject to discussion in the government at present.
The law, as it is written, indicates that the lending company must charge salary, social charges and professional expenses. This means that if the invoice is lower, there is a risk of falling into a case of an illicit loan of labor.
This point is very often a deterrent for start-ups that do not have sufficient financial resources to assume an executive’s salary, yet faced with companies willing to lend their employees “for free.”
The practice is criticized on the side of the CGT: “We will entrust missions to start-ups, and we will use them as subcontractors,” declares one of the members of the management.
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Labor loan between companies: what is it?
