Unlawful labour supply or a service: what sets genuine subcontracting apart

You've found the right tech freelancer, but signing stalls: non-EU tax residence, a foreign invoice, uncertain compliance, a risk of unlawful labour supply or unlawful labour lending.

For an IT services firm, this isn't theoretical. A poorly framed mission can turn acceptable subcontracting into a risky operation. The problem often appears when the freelancer works remotely, on a day rate, over a long duration, with operational oversight very close to that of an employee or an in-house consultant.

The point isn't to avoid international freelancers. The point is to structure the relationship as a genuine provision of services, with an identifiable supplier, clear responsibilities, deliverables, a consistent contractual chain and documented compliance.

Key takeaway Unlawful labour supply mainly targets situations where a company supplies labour for profit, outside an authorised framework, and without any genuine autonomous service. For an IT services firm, the risk rises when the mission looks like a resource assignment rather than an outcome-based service.

Unlawful labour supply: what are we talking about?

Unlawful labour supply is governed by the French Labour Code, notably Article L8241-1. The principle is simple: a for-profit operation whose exclusive object is the supply of labour is prohibited, except for exceptions provided by law.

In a B2B relationship, the risk appears when the service has no real existence beyond the assigned person. In other words, if the contract only sells human time — with no autonomy, no deliverable, no identifiable technical responsibility — the operation can be reclassified.

The risk doesn't depend on a single criterion. It builds through a body of indicators.

Some risk signals:

• a mission described only in person-days;
• the absence of deliverables or a technical scope;
• direct daily oversight by the end client or the firm;
• integration of the freelancer into teams like an employee;
• access to internal tools with no framing;
• validation of work only through presence or time spent;
• no supplier responsibility for the result;
• a contract that doesn't describe an autonomous service.

The topic is especially sensitive for IT services firms, because their model often relies on mobilising technical skills. That reality isn't a problem in itself. It simply has to be contracted correctly.

Unlawful labour supply and unlawful labour lending: what's the difference?

Unlawful labour supply and unlawful labour lending are often cited together, but they don't cover exactly the same risk.

Unlawful labour supply targets an operation whose object is essentially to supply labour for profit, outside an authorised framework.

Unlawful labour lending, covered notably by Article L8231-1 of the French Labour Code, concerns a for-profit labour-supply operation that causes harm to the worker or circumvents the application of legal or collective-agreement provisions.

In both cases, the central problem is the same: the relationship must not be a mere supply of people under the client's operational authority.

For an IT services firm, prevention therefore relies on a clear distinction between:

• structured technical subcontracting;
• and a supply of human capacity with no genuine autonomy.

Subcontracting or provision of services: the right framing

Compliant subcontracting rests on an identifiable service.

The service can be fixed-price, time-based or hybrid. Time-based work isn't prohibited. A day rate isn't illegal in itself. But the day rate must not be the only element defining the mission.

A solid provision of services should be able to answer several questions:

• what is the functional or technical scope?
• what are the expected deliverables?
• who validates the deliverables?
• what are the acceptance criteria?
• what are the supplier's responsibilities?
• what are the acceptance terms?
• what are the security, confidentiality and access rules?
• how are scope changes handled?
• who oversees the provider on the supplier's side?

The more clearly the contract and the purchase order answer these questions, the further the relationship moves from a mere supply of labour.

Bad signal "Need a senior developer available 5 days a week, embedded in the team, managed by the internal product owner, with no defined deliverable."

Better framing "Backend development service on the billing module, with an identified backlog, deliverables per sprint, acceptance criteria, technical documentation and a formal acceptance process."

Why the risk rises with non-EU freelancers

Engaging a tech freelancer based outside the EU can be perfectly legitimate. Many senior profiles genuinely live in Dubai, Bali, Singapore, Morocco, Thailand or elsewhere.

The risk comes less from the distance than from the lack of structure.

On the firm's side, several points often block:

• inability to reference a foreign supplier directly;
• an invoice that doesn't meet procurement standards;
• the absence of expected compliance documents;
• difficulty handling VAT or the reverse charge;
• uncertainty about genuine tax residence;
• permanent-establishment risk if the relationship is poorly organised;
• the absence of a back-to-back contract with the end client;
• difficulty documenting the subcontracting in the event of an audit.

The freelancer may be technically excellent, but administratively "unsignable". The firm then faces a difficult choice: give up the profile, take a contractual risk, or structure a compliant scheme.

It's precisely in this zone that StelarWork steps in.

How StelarWork fits into the relationship

StelarWork is a French company (SASU) that acts as a French supplier between the firm and the tech freelancer based outside the EU.

Concretely:

• StelarWork contracts in its own name with the firm;
• StelarWork invoices the firm;
• StelarWork contracts in its own name with the freelancer;
• StelarWork pays the freelancer;
• StelarWork carries the compliance framework associated with the relationship;
• the mission is structured as a provision of services, with a purchase order, a scope and deliverables.

StelarWork does not present itself as the freelancer's employer. There is no employment contract, no salary, no relationship of employee subordination.

Nor does StelarWork act as the freelancer's agent in France. It doesn't conclude any contract in the freelancer's name. It contracts in its own name, to avoid creating a dependent-agent situation that could raise a permanent-establishment risk.

The goal is to turn a relationship that's hard to sign for the firm into a French supplier relationship that's readable and documented.

StelarWork's positioning StelarWork doesn't sell a person. StelarWork structures a compliant B2B service, with a French supplier, an aligned contractual chain and a documented operational framework.

What distinguishes a compliant service from a mere supply of labour

To reduce the risk of unlawful labour supply, you must avoid a relationship that rests solely on the freelancer's presence.

A compliant service must show that the supplier retains a genuine role.

This runs in particular through:

• a service contract;
• a clear purchase order;
• defined deliverables;
• an outcome or objectives logic;
• mission governance;
• formal validation;
• documented professional exchanges;
• invoicing consistent with the service;
• confidentiality and security obligations;
• clauses aligned with the firm / end-client contract.

The contract must be back-to-back where necessary. The obligations taken on towards the end client must be consistent with those imposed on the provider. This is especially important for confidentiality, intellectual property, cybersecurity, deadlines, reversibility and liability.

Compliance doesn't rest on a document alone. It rests on the consistency between the contract, the purchase order and the actual execution of the mission.

Common mistakes on the firm's side

Some practices needlessly increase the risk.

1. Describing the mission only with a day rate

The day rate is a calculation method. It isn't a service scope.

A mission described only as "senior profile, 220 days, day rate X" will be weaker than a mission attached to a scope, objectives and deliverables.

2. Letting the end client manage the freelancer directly

Technical oversight can involve exchanges with the end client's teams. This is often necessary in IT projects.

But the arrangement must avoid a relationship of direct operational subordination. The freelancer must not be treated as an in-house employee of the end client or the firm.

3. Forgetting the deliverables

An IT service can produce code, documentation, fixes, architecture reviews, tests, delivered tickets, recommendations or reports.

These elements must be visible in the framing.

4. Not aligning the contracts

If the firm promises its end client obligations that it doesn't pass down correctly through its subcontracting chain, it creates a risk zone.

The back-to-back contract limits this break.

5. Confusing tax compliance with tax optimisation

A freelancer who is a genuine non-EU tax resident may already benefit from a specific local tax regime. That isn't a StelarWork product.

StelarWork does not sell tax avoidance. StelarWork removes an administrative and contractual friction for the firm, in a configuration where the freelancer genuinely lives and works outside the EU.

Tax point: reality always prevails

When a freelancer claims to be a non-EU tax resident, the central question is the reality of their situation.

A sound configuration rests on consistent facts:

• genuine residence outside France;
• majority physical presence in the stated country, under the applicable criteria;
• an activity genuinely carried out remotely;
• no organised presence in France;
• no office, team or permanent resources in France;
• no person concluding contracts in France in the freelancer's name;
• invoicing and documentation consistent with the real situation.

Conversely, an abusive configuration must be ruled out.

Examples of abusive signals:

• a foreign entity with no real substance;
• a freelancer living in France but invoicing from an offshore structure;
• a regular organised presence at the client's site in France;
• a purely administrative foreign address;
• an arrangement designed to mask a French activity;
• an intermediary presented as the freelancer's local representative.

In this type of situation, the risk can be tax, social-security, contractual and criminal. A shell entity is not a solution. It's a zone of potential fraud, not to be set up.

Sound configuration vs abusive configuration Sound: a freelancer genuinely resides outside the EU, works remotely, has a consistent local activity, and works through a documented B2B service. Abusive: a person actually works from France, uses a foreign company with no substance and seeks to disguise a local activity.

Unlawful labour supply: the points of attention for a firm

A firm must analyse the risk on three levels.

Level 1: the contract

Does the contract describe a service or merely a resource?

To check:

• object of the mission;
• deliverables;
• execution terms;
• responsibilities;
• intellectual property;
• confidentiality;
• security;
• subcontracting;
• audit;
• end of mission;
• reversibility.

Level 2: operational execution

Does the reality of the mission match the contract?

To check:

• who organises the work;
• who validates the priorities;
• who checks the deliverables;
• how exchanges are documented;
• how absences or unavailability are handled;
• how scope changes are decided.

Level 3: the compliance chain

Are the necessary documents available?

To check:

• supplier identity;
• signed contract;
• purchase order;
• compliant invoices;
• compliance supporting documents where required;
• subcontracting clauses;
• useful tax and administrative documentation;
• consistency with the firm's due diligence.

Compliance rarely plays out on a single document. It plays out across the continuity of the relationship.

How StelarWork reduces friction for the firm

For the firm, the need is simple: to be able to work with international talent without needlessly exposing the contractual chain.

StelarWork answers this constraint by providing a single French supplier, readable invoicing and a contractual framework suited to tech services delivered by non-EU freelancers.

This allows in particular:

• contracting with a French company;
• receiving a French supplier invoice;
• structuring the mission as a provision of services;
• aligning the purchase order with the deliverables;
• documenting the relationship with the freelancer;
• clarifying each party's responsibilities;
• avoiding a direct relationship that's hard to reference;
• reducing procurement, finance and compliance friction.

StelarWork doesn't promise the total absence of risk. No serious player should.

StelarWork's role is to design a contractual and operational chain aimed at reducing the identified risks: unlawful labour supply, unlawful labour lending, tax inconsistency, lack of documentation, a break between the client contract and the actual subcontracting.

The role of the purchase order

The purchase order is often underestimated. Yet it's central to risk prevention.

A solid purchase order must not be limited to a period and a day rate. It must attach the mission to an identifiable service.

It can specify:

• the project context;
• the technical scope;
• the expected deliverables;
• the milestones;
• the acceptance criteria;
• the points of contact;
• the validation terms;
• the confidentiality rules;
• the security constraints;
• the renewal conditions;
• the exit terms.

The purchase order must remain consistent with the framework agreement. It must also reflect actual execution.

In a firm, it's an important tool to reassure procurement, the legal department, finance and sometimes the end client.

The role of the outcome-based service

An outcome-based service doesn't always mean an absolute fixed price.

In tech projects, work is frequently evolving: agile backlog, fixes, maintenance, continuous integration, advanced support, architecture, security, data, cloud.

The outcome logic can therefore be adapted to the context.

It can take the form of:

• delivered user stories;
• resolved tickets;
• developed components;
• produced technical audits;
• written documentation;
• configured environments;
• automated tests;
• delivered CI/CD pipelines;
• architecture recommendations;
• validated fixes.

The goal is to show that the mission produces something identifiable, beyond the mere availability of a person.

Compliance checklist for a firm

Operational checklist Before signing with a non-EU freelancer, a firm should check the following points.

Contract

• The contract concerns a provision of services.
• The supplier contracts in its own name.
• The obligations are consistent with the end-client contract.
• The confidentiality, security and intellectual property clauses are suitable.
• Subcontracting is authorised or framed where necessary.

Mission

• The scope is defined.
• The deliverables are identified.
• The validation criteria are provided for.
• The day rate is not the only framing element.
• The milestones or monitoring terms are documented.

Operational

• The freelancer isn't integrated as an in-house employee.
• Exchanges with the end client stay compatible with a B2B service.
• Validations are formalised.
• Scope changes are tracked.
• Access to tools is justified by the mission.

Tax and international

• Non-EU residence rests on a material reality.
• The work is done remotely from abroad.
• There is no organised presence in France.
• The supplier doesn't create a local-representative role for the freelancer.
• The invoicing flows are consistent.

Documentation

• The contracts are signed.
• The purchase orders are kept.
• The invoices are consistent.
• The useful compliance documents are available.
• The documentary chain can be presented in the event of an audit.

When should you be particularly vigilant?

Some cases require heightened vigilance.

Long mission

A long mission isn't prohibited. But the longer the duration, the more you must document the service, the deliverables, the renewals and the governance.

Full-time mission

A near-exclusive engagement can be justified by the project. It must nonetheless remain compatible with an autonomous B2B service.

Highly involved end client

In IT projects, the end client often sets priorities and validates features. That isn't necessarily a problem.

The risk appears if the end client directly organises the work as with an employee: hours, leave, sanctions, hierarchical reporting, HR integration.

Freelancer who is a former employee

When a former employee later works as an independent contractor on a similar scope, the analysis must be stricter. The risk of reclassification or social-security circumvention can be more visible.

"Offshore" freelancer with no substance

A foreign invoice isn't enough. Genuine residence, effective activity and the consistency of the scheme must be verified.

What StelarWork does not do

To avoid any ambiguity, StelarWork must not be confused with other models.

StelarWork is not an umbrella-employment company. There is no employment contract, no payslip, no salary and no employer relationship.

StelarWork is not a domiciliation service. The company doesn't provide an administrative address intended to give a foreign activity a French appearance.

StelarWork is not an EOR. It doesn't hire the freelancer as a local employee.

StelarWork is not a business introducer. It fits into the contractual chain as a French supplier, in its own name.

StelarWork is not a legal or tax firm. Sensitive situations must be reviewed by the firm's usual advisers.

This clarification is important. Compliance also depends on choosing the right model.

How to present the arrangement to your procurement or legal department

A firm often has to convince several internal parties before validating a non-EU freelancer.

The right angle isn't: "we found a way to sign anyway".

The right angle is: "we're replacing a direct relationship that's hard to frame with a structured B2B service, with a French supplier, enforceable documents and a readable compliance chain".

The elements to highlight:

• a French counterparty;
• French invoicing;
• a described and documented service;
• a clear separation of roles;
• the absence of any representation of the freelancer in France;
• attention to genuine tax residence;
• a framing of the deliverables;
• contractual consistency with the end client.

This approach speaks to procurement, finance and legal. It shows the topic isn't handled as an informal exception, but as a structured supplier relationship.

Useful references

To go deeper into the general framework, the reference texts include in particular:

• French Labour Code, Article L8241-1 on unlawful labour supply;
• French Labour Code, Article L8231-1 on unlawful labour lending;
• rules applicable to subcontracting and due-diligence obligations;
• tax doctrine applicable to tax residence and permanent establishment;
• international tax treaties where the situation warrants.

These references must be analysed according to the actual facts of each relationship.

Disclaimer This article is general information for decision-makers at IT services firms. It does not constitute personalised legal, tax or social advice. Concrete situations must be checked with your usual advisers, notably in the case of a long mission, presence in France, a complex subcontracting chain or doubt about the freelancer's tax residence.

FAQ

What is unlawful labour supply?

Unlawful labour supply targets a for-profit operation whose main object is to supply labour, outside the authorised legal framework. In a B2B relationship, the risk appears when the contract doesn't concern a genuine autonomous service, but only the availability of a person.

What's the difference between unlawful labour supply and unlawful labour lending?

Unlawful labour supply concerns the supply of labour for profit outside an authorised framework. Unlawful labour lending adds a dimension of harm to the worker or circumvention of legal or collective-agreement rules. The two risks are close and must be handled together in a subcontracting relationship.

Can an IT services firm work with a non-EU freelancer?

Yes, if the relationship is correctly structured. The freelancer must genuinely work from abroad, the service must be documented, the contractual and tax flows must be consistent, and the mission must not be organised as a relationship of subordination.

Does the day rate create a risk of unlawful labour supply?

The day rate isn't a problem in itself. The risk appears when the day rate is the only framing element and the mission has neither a clear scope, nor deliverables, nor service responsibility.

How do you reduce the risk of unlawful labour lending?

You must avoid a relationship that looks like a mere supply of personnel. The mission must be framed as a provision of services, with deliverables, validation, supplier responsibility, contractual documentation and compliance with the applicable social-security and tax rules.

Is StelarWork the freelancer's employer?

No. StelarWork is not the freelancer's employer. There is no employment contract, no salary and no relationship of employee subordination. StelarWork acts as a French company contracting in its own name with the firm and with the freelancer.

Does StelarWork sign in the freelancer's name?

No. StelarWork doesn't sign in the freelancer's name and doesn't present itself as their representative in France. StelarWork contracts in its own name, which helps avoid a dependent-agent situation.

Does StelarWork provide a tax advantage?

No. StelarWork doesn't sell tax avoidance. If a freelancer is already a genuine non-EU tax resident, with an activity genuinely carried out remotely, StelarWork can remove an administrative and contractual friction for the firm. The reality of the tax residence remains decisive.

Is an offshore company enough to make the relationship compliant?

No. A foreign entity with no real substance can create a significant risk. A sound configuration rests on genuine residence, effective activity outside France, consistent documentation and a structured B2B service.

What's the main benefit for a firm?

The main benefit is being able to work with international talent that's hard to sign directly, through a French supplier, readable invoicing and a documented provision of services. The goal is to reduce procurement, finance and compliance friction, without circumventing the applicable rules.

Conclusion

Unlawful labour supply doesn't prevent IT services firms from working with international tech freelancers. It requires structuring the relationship correctly.

The difference plays out in the details: service contract, deliverables, purchase order, governance, genuine residence, absence of an organised presence in France, consistent invoicing and documentation.

StelarWork fits into this compliance logic. The company lets a firm contract with a French supplier, while framing the relationship with a non-EU tech freelancer as a documented B2B service.

For a firm, that's often the difference between a talented but unsignable profile, and a workable, readable, better-controlled supplier relationship.