Criminal risks related to service provision, subcontracting, and undeclared work: DELCADE’s expertise

DELCADE supports companies and their executives in managing criminal risks related to service provision, subcontracting, and undeclared work. Our experts in employment law and business criminal law provide advice and assistance to prevent disputes and ensure compliance with regulations.

Legal issues and corporate obligations

Illegal work includes several offenses under the French Labor Code (Art. L. 8211-1):

• Undeclared work
• Unlawful subcontracting (marchandage)
• Illegal labor loan
• Employment of foreign workers without authorization
• Irregular accumulation of jobs

Undeclared work: a major offense

Undeclared work can take two main forms:

1. Concealment of activity (Art. L. 8221-3): failure to register with the Trade and Companies Register (RCS), failure to declare to social security organizations, or misuse of posted worker status.
2. Concealment of employment (Art. L. 8221-5): failure to issue payslips, non-declaration to URSSAF, or underreporting of working hours.

These offenses are criminally sanctioned, even in the absence of clear fraudulent intent. Indeed, case law establishes that “the mere finding of a violation, knowingly committed, of a legal or regulatory requirement implies criminal intent” (Cass. Crim. January 20, 2009, No. 08-82.615).

Illegal labor loan and unlawful subcontracting (marchandage)

Article L. 8241-1 of the French Labor Code prohibits any profit-driven operation aimed exclusively at making employees available to another company, except in specific cases (temporary employment agencies, employer groups, etc.). Unlawful subcontracting, which circumvents labor law to benefit from lower costs, is also heavily sanctioned.

Applicable sanctions

Violations related to undeclared work, unlawful subcontracting, or illegal labor loan expose companies and their executives to severe penalties:

• Criminal sanctions:
  • Undeclared work: fines up to €225,000 for legal entities and imprisonment up to 3 years for individuals (Art. L. 8224-1 of the Labor Code).
  • In aggravating circumstances (exploitation of a vulnerable person, organized crime involvement): fines up to €500,000 and imprisonment up to 10 years (law of December 22, 2014).
  • Unlawful subcontracting and illegal labor loan: fines up to €150,000 for legal entities and imprisonment up to 2 years (Art. L. 8234-1 and L. 8243-1 of the Labor Code).
• Additional sanctions:
  • Prohibition from exercising professional activities for up to 5 years
  • Prohibition from subcontracting labor for up to 10 years
  • Exclusion from public contracts for up to 5 years
  • Confiscation of unlawfully gained profits

Our solutions to secure your practices

DELCADE offers a comprehensive approach to protect your company against these risks:

• Audits and legal advice: review of subcontracting and service provision contracts
• Compliance support: ensuring adherence to vigilance obligations (Art. L. 8222-1)
• Dispute resolution: legal assistance in case of audits or litigation
• Training and prevention: raising awareness among executives and HR managers

Case law examples

All these rulings come from the French Court of Cassation, Criminal Chamber:

• Cass. Crim. November 29, 2022, No. 21-85.579: obligation to register for an agricultural company engaged in commercial activities.
• Cass. Crim. March 2, 2021, No. 19-80.991: sanction against a foreign company for failing to register in France.
• Cass. Crim. September 15, 2009, No. 09-80.414: reclassification of a subcontracting contract as an illegal labor loan.
• Cass. Crim. February 22, 2023, No. 22-81.903: conviction for failure to verify the compliance of a subcontractor.

DELCADE is available for any inquiries or assistance regarding criminal risks related to service provision and subcontracting. Contact us for a personalized consultation.