The rights of employers during social security audits
French employers are regularly subject to social security audits performed by URSSAF (French institution for collecting social security contributions) to check whether social security contributions have been duly paid. Such audits resulted in €1.2 M reassessments in 2013 and are becoming more accurate and technical on matters such as contributions on free share plans and stock-options.
The French Social Security Code contains some procedural requirements which protect the employer and which the courts interpret strictly. In recent court decisions, the French supreme court has clarified aspects of the Code, issues that should be kept in mind by employers wishing to challenge URSSAF’s decisions.
- Pre-audit communication
The employer should be the sole recipient of the audit notice (Cass. civ. 2e 6 November 2014 n°13-23.433).
The information received by the employer prior to the audit taking place must include the start date of the audit, the list of the requested documents and that the employer has an option to seek assistance during the audit process. The employer must also be provided with an audit overview, summarising the main steps of the audit and its rights as employer. The supreme court has considered that these provisions also apply to audits in the context of illegal working (Cass. civ. 2e 9 October 2014 n°10-13.699).
- URSSAF reassessment
At the conclusion of a reassessment, URSSAF is required to issue a letter of observations which must contain: the purpose of the audit, the audited period, the end date of the audit and the list of the reviewed documents. In recent decisions, the French supreme court has ruled that the following particulars must also be included in the letter:
- the date and signatures of all inspectors conducting the audit (Cass. civ. 2e 6 November 2014 n°13-23.990). In this case, the audit was performed by 3 inspectors but one omitted to provide a signature to the letter, thereby invalidating the reassessment;
- the calculation method applied to reassessment (Cass. civ. 2e 18 September 2014 n°13-21.682). In this case, URSSAF indicated the nature and amount of the reassessment, but not the method of calculation used to determine the amount of “Fillon” exemptions. This too led to the reassessment being rendered invalid;
- information on employers’ rights, in particular the ability of the employer to challenge URSSAF’s decisions within a 30-day-period as from the letter of observations and its right to be assisted in the audit process (Cass. civ. 2e 3 April 2014 n°13-11.516).