Do French companies under-report their workforce at 49 employees to get around the law?

Various legal obligations in terms of social dialogue, profit sharing and accounting apply to French companies when they reach the threshold of 50 employees. This policy brief shows that a significant proportion of companies voluntarily under-report their workforce below this threshold and this allows them to avoid their obligations. Compliance with the law in terms of social dialogue or profit-sharing thus appears to be linked to the number of employees that companies declare and not to their actual workforce. These results illustrate how the labor code can be circumvented in a complex regulatory environment and in the absence of sufficient means of oversight. They invite reflection on the use of more direct and effective methods of monitoring compliance with the law. They also invite caution in considering the results of several recent studies that quantify the cost of legal obligations at the 50-employee threshold, assuming that they are fully respected in practice.