What social security regime for the manager of an SARL?

The social situation of the manager of an SARL depends essentially on his participation in the share capital. Depending on whether he is majority, equal, or minority, he will fall either under the regime of self-employed workers, or under the general regime of Social Security.

This distinction has an important impact on the cost of contributions, the social benefits covered (sickness, retirement, provident scheme), and on the attractiveness of the status.

Majority manager: affiliated to the Social Security of the self-employed (SSI)

A manager is said to be majority if he holds more than 50% of the share capital, directly or indirectly.

To determine this majority, one must add:

• The shares held in full ownership or usufruct by the manager;

• Those held by his spouse or PACS partner;

• Those of his minor unemancipated children;

• Those held by an interposed company controlled by him or by the persons above.

Not taken into account are:

• The shares held in joint ownership;

• Those of a cohabitant;

• Those of a co-manager in fact.

If he is majority, the majority manager necessarily falls under the Social Security for self-employed (ex-RSI):

• Even if he is not remunerated;

• Even if the company does not exercise an effective activity.

Reference texts:

• Social Security Code (CSS) art. L 611-1, 1°

• Case law: Cass. soc. 28-05-1998, n° 96-20.917

Equal or minority managers: affiliated to the general regime

The minority manager is the one who holds less than 50% of the capital (including the shares of close relatives).

The equal manager is the one who holds exactly 50%, without being in a majority board. If he is part of a board of management which holds more than 50% of the capital of the company, he will have to be affiliated to the Social Security regime for self-employed (ex-RSI).

The minority or equal managers are affiliated to the general regime of Social Security, only if they are remunerated.

They are then considered as assimilated employees, which gives them entitlement:

• To health insurance;

• To the basic retirement;

• To the mandatory complementary retirement Agirc-Arrco;

• To family allowances.

However, they do not contribute to unemployment insurance (except a distinct and real employment contract, rarely admitted).

On the other hand, a minority or equal manager not remunerated does not fall under any mandatory social regime.

He may however benefit from the universal health protection (PUMa) if he resides in France and has no other coverage.

Collegial management: beware of collective majority

When an SARL is managed by several managers (collegial management), the majority or minority character is assessed collectively, and the analysis is made on the management board. Thus:

• If the management board together holds more than 50% of the share capital, all the managers, including those not associates, fall under the social regime of the self-employed (SSI).

• Otherwise, they fall under the general regime, provided they are remunerated.

• The situation of each co-manager is assessed in relation to the board as a whole, and not individually.

📚 Cass. 2e civ., May 31, 2018, n° 17-17.518 
“The status of majority manager is assessed at the level of the management board. A non-associate manager is affiliated to the SSI if the board collectively holds the majority.”

Option for the tax regime of partnerships (“sociétés de personnes“): no impact on social security

It is frequent that family SARLs opt for taxation under the regime of partnerships (tax transparency). However:

• This tax option has no incidence on the social regime applicable to the manager;

• The regime depends only on the capital and functional situation of the manager (majority, minority, remunerated or not).

Thus, the personal income tax option of family SARLs has no effect on the nature of the social affiliation of the manager.

Practical consequences of a change of status

A transfer of shares modifying the majority/minority character takes effect only after registration at the RCS. Before that, it is unenforceable against the social bodies.

This means that even if a transfer of shares makes you fall below 50%, you will remain considered as majority manager as long as the registry has not recorded it (Cass. 2e civ. 7-5-2014, n° 13-15.981).

Payment of social contributions by the company

In principle the social contributions of the majority manager are personally owed by the latter. However, the associates may decide that the company takes them in charge, partially or totally.

This coverage is neither mandatory nor automatic, but it is legal and possible, subject to an express agreement between the company and the manager.

It should be noted that, according to case law, the chartered accountant of the company incurs his liability if he does not alert the manager on the consequences of the absence of calls for contributions, in particular in matters of retirement.

A failure in the affiliation of the manager to the SSI, even after filing of a dossier, must be followed and reminded. Failing that, the manager could lose several quarters of retirement validation, with significant financial prejudice.

Application of labor law and unemployment insurance to the manager of an SARL

1. The manager of an SARL is not an employee, except cumulation of the functions of manager with an employment contract when this is possible

In principle, the manager of an SARL — whether majority, equal, or minority — does not have the status of employee within the meaning of the Labor Code. He is a corporate officer, and not a subordinate.

Consequently:

• He is not subject to labor law;

• He does not benefit from:

  • The minimum wage (SMIC);

  • Collective agreements;

  • Salary privilege (Civil Code article 2331, 3°);

  • The unemployment insurance regime of Unédic, except exception.

However, an important exception exists: the manager may cumulate corporate mandate and employment contract if he exercises in the company distinct technical functions, under the authority of the company or of a distinct body (such as a general meeting of associates). This contract must meet the classic conditions of an employment contract: subordination link, real technical functions, distinct remuneration.

2. Unemployment insurance regime of the manager of a SARL

The managers (majority, equal, or minority) cannot benefit from the classic unemployment insurance, except if they justify a valid and recognized employment contract.

They are therefore excluded from the Unédic regime and are not eligible:

• To the unemployment return assistance allowance (ARE),

• Nor to the opening of rights in the general regime of employees.

The manager may however benefit from specific schemes:

• The ATI (allocation of self-employed workers): provided by Labor Code article L. 5424-25, in case of involuntary loss of activity, bankruptcy, judicial liquidation or durable cessation.

• It is also possible to voluntarily subscribe to an unemployment insurance with:

  • The GSC (Social Guarantee of Company Directors),

  • The APPI (Association for the Protection of Independent Employers),

  • Or a private insurer.

The contributions to these private contracts are not tax-deductible from the remuneration, except for majority managers taxed under article 62 of the CGI, who subscribe a “Madelin” contract or an Individual Retirement Savings Plan (PERIN).

3. Securing access to unemployment insurance (termination/control France Travail)

France Travail (ex-Pôle emploi) is very restrictive on the recognition of the employment contract for managers. Even if a contract exists, it is prudent to obtain a formal confirmation.

Two procedures are possible:

• Obtaining a rescript (prior opinion) from France Travail: it is generally up to the company to ask France Travail for an explicit decision on the subjecting or not of the corporate officer to Unédic.

  • The opinion binds France Travail, Urssaf, and the company, as long as the situation does not change.

  • In case of change, France Travail must notify in writing its new position (taking effect on the date of the change or of the notification).
    📚 Labor Code, art. L. 5312-12-2 and R. 5312-5-2

• Request for opinion at the time of loss of activity: the manager may consult France Travail when applying for allowance, in order to obtain an opinion binding his responsibility. It is strongly recommended to provide the employment contract, payslips, organizational charts, minutes of meeting, etc.
  

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