The stakes of subcontracting

The purchase of provision of services, involves legal risks and is governed by the law. This is why our platform has been designed to anticipate them. With this guide, we hope to help you understand the stakes of subcontracting and guide you towards the best practices to adopt.

Within this article 

• Offence of bargaining
• Illegal lending of labor
• Economic dependence
• Risk of requalification as an employment contract
• Offence of undeclared work

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Offence of bargaining

Definition and constituent elements

The act of bargaining, a profit-making labor transaction that has the objective of bringing disadvantage to the employee it concerns, or to evade the application of legal provisions or stipulations of a collective labor agreement, is prohibited.

Such a situation may arise in the hypothetical event of a collaboration with service providers, in which the employees of external companies are called upon, to work in another Client company, under the same conditions as one of its own employees.

For a bargaining to be recognized, two elements are needed:

• The material element of the offence which supposes the characterization of a purely profit-making operation of supply of labour, which induces in general a transfer of management power, when the employees intervening with the Client work under their authority.
• A disadvantage caused to the employee or the will to evade the regulation. In order to identify this situation, the sub-contracted employees' situation is compared to that of the employees of the Client company, where they should not have supplementary rights/benefits.

The offence of bargaining can be identified with the help of clues defined by jurisprudence.
A single indicator is not enough to qualify it as an infraction, it is the combination of various indicators that must be assessed.

Actions taken by LittleBig Connection

Thanks to the systems and indicators put in place by LittleBig Connection, the risks are minimized and thus the offense of bargaining is not allowed.

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Illegal lending of labor

Definition and constituent elements

Subject to certain limited exceptions, Article L.8241-1 of the French Labor Code prohibits "any profit-making operation whose sole purpose is the lending of labor".

Thus, subcontracting may be characterized as a permissible labor-lending transaction for profit, provided that the transaction is not exclusively for the purpose of labor lending.

In this respect, the conditions of legality of a subcontracting operation are assessed by a judge in order to qualify or not as illicit lending of labour.

For the subcontracting transaction to be lawful, the following criteria must be met:

• The establishment of a commercial contract, the object of which is the execution of a clearly defined task that the client is unwilling or unable to carry out  themselves or with their staff, for reasons of economic opportunity or technical specificity.
• On the other hand, the use of subcontracting to benefit from a workforce with the same qualifications as the employees of the user company has been condemned.
• In addition, the absence of a written subcontracting agreement (or service contract) is also an indication of illegal labor lending.
• The remuneration of the subcontractor must be fixed at the outset as a fixed sum, according to the objective importance of the project to be carried out, without taking into account the number of hours which will be carried out, the risk of the operation having to be assured by the subcontractor.
• The fact that the remuneration is fixed according to the number of hours worked is an indication of an illicit labour lending operation.
• The subcontractor must be the sole employer of the employees used, managed and paid by them, working under their supervision, following their directives in the performance of the employees' tasks, who remains subject to the subcontractor's sole authority.
• The material means necessary for the execution of the work must be provided by the subcontractor (even if it is admitted that in certain cases, the option for the personnel of the subcontractor to use the equipment provided by the Client company remains).

Actions taken by LittleBig Connection

LittleBig Connection offers the possibility to invoice per time spent, as well as to create work units, which allows the service to be invoiced at a fixed rate.

There is no tacit renewal of the contract. With LittleBig Connection, any extension of a project will give place to the creation of a new Request for Proposals on the platform.

In conclusion, the LittleBig Connection platform is configured in such a way that the criteria allowing the  legal subcontracting process requirements, can be met by the Client.

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Economic dependence

Definition and constituent elements

Economic dependence is indeed an indicator that is regularly sought in the search for undeclared work or for the requalification of an agreement to an employment contract. The existence of a subordination link is presumed in the hypothetical case of economic dependence.

Actions taken by LittleBig Connection

The platform warns the client when the same Service provider has been on assignment for more than 24 months, then 36 months. This is an important tool to alert the client to the increasing risk of requalification to an employment contract.

By making other Requests for Proposals available on the platform, we allow the service provider to diversify they clientele if they so wish, and thus, prove the willingness to fight against this dependency by choosing us.

In conclusion, by the intermediation of all the systems and indications set up by LittleBig Connection, the risks are minimized both in term of economic dependence of the supplier towards LittleBig Connection or the supplier towards the client.

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Risk of requalification to an employment contract

Definition and constituent elements

A contract of employment exists when a person (the employee) undertakes to work, in return for remuneration, for the account and under the orders and control of another person (the employer) in a private enterprise.
A contract may be requalified as a contract of employment if the business relationship involves a subordinate relationship between the client and the service provider. The transformation of a business relationship into an employment contract is neither instantaneous nor automatic. It is necessarily the result of a requalification decided by a judge who notes the existence of a subordination link between a (falsely) independent or voluntary service provider and their client.

Actions taken by LittleBig Connection

The platform warns the client when the same service provider has been on assignment for more than 24 months, then 36 months. It is an important tool to alert the client on the increasing risk of requalification to an employment contract. 

The risk of requalification to an employment contract will depend on the conditions of performance of the service and the relationship.

LittleBig Connection offers the client the best conditions to be able to meet their obligations.

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Offence of undeclared work

Definition and constituent elements

According to article L.8221-5 of the French Labor Code, an employer who intentionally fails to declare employment to the social security authorities, fails to issue a pay slip or fails to make declarations relating to wages and other social security contributions commits the offence of undeclared work.

The following elements enabled the judges to find that there was undeclared work:

• When the modalities of execution of the work carried out on behalf of the client are largely imposed by the latter, in particular with regard to the obligation to respect the use of the list of potential clients to be canvassed, as well as a commercial procedure precisely defined in advance;
• When micro-entrepreneurs are required to regularly report on the results of their phone calls;
• When the company itself issues the invoices for which it is liable to the micro-entrepreneurs;
• When the self-employed workers were previously recruited as employees and they have kept exactly the same functions with the same modalities of execution of the work provided on behalf of the company, and that there is moreover a concordance between the date of creation of the company by the sole trader, and that of the beginning of the project accomplished by it;
• When micro-entrepreneurs work exclusively for the company within the framework of a standard contract common to all, and according to an identical mode of remuneration imposed by the company, which clearly places them in a situation of economic dependence and precariousness;
• When the conditions of creation and cancellation of the activity of the micro-entrepreneur show that they meet the sole needs of the company, which proposed the activity in this form and helped to carry out the steps of creation;
• When, in the conditions of exercise and organization of their activity, their modes of remuneration and their contractual relations towards the company, the micro-entrepreneurs are, permanently and in an exclusive way, placed in a situation of legal and economic subordination with regard to the leader of this one, in the only goal pursued by them to reduce the social charges of the company.

Actions taken by LittleBig Connection

The platform allows a verification of the conditions of the subcontracting in accordance with the monitoring obligation of the client company. 100% guaranteed contractual monitoring with framework contract, purchase order, etc., which is not always the case with our client when this control is not equipped and left to the operational staff.

Control of certificates against illegal and concealed work:

• Certificate of incorporation
• Tax certificate with control of the security code on the Urssaf website (France)
• Certificate against illegal and undeclared work
• Statement of employment to ensure that the consultant is indeed an employee of the service provider company and avoid cascaded subcontracting
• Tax certificate to ensure that it is in order on the payment of VAT and company taxes
• Profesional liabilty insurance certificate

The commercial intermediation contract concluded with the service provider is drafted in such a way that the purpose of the contract, the rights and obligations of the service provider are clear and well defined, in order to avoid the risks that may arise from a potential reclassification as an employment contract, including concealed work.