Employers and employees can agree to mutually terminate the employment contract in line with a termination agreement, according to Art. L. 1237-11 to L. 1237-16 of the French Labour Code. This procedure differs from the dismissal procedure instigated by the employer and the unilateral termination by the employee.
The French authorities have provided a typified termination agreement online in the form of a standardised termination form (cerfa_14598), which must be mandatorily submitted on time to the French Labour Inspectorate DIRECCTE after signing. By now, this form can also be submitted by internet (TéléRC)
Requirements of a termination and settlement agreement
A requirement of a termination agreement is first of all the existence of an open-ended employment contract (CDI). After signing the termination agreement (or the standardised termination form) and termination of the employment relationship, the employee has a claim for the payment of the settlement sum, which must not be any lower than the statutory minimum claim for severance pay.
Amount of severance pay in the case of a termination and settlement agreement
Should the relevant collective agreement not provide a higher amount, the minimum amount according to Art. L. 1237-13 Code du Travail is currently 1/4 of the gross monthly salary per year of employment with the company (after 10 years 1/3). These sums are in principle tax-free, unless the settlement amount exceeds certain threshold values.
As a basis of calculation of the monthly salary, the respective higher mean value of the previous year or of the previous three months is selected. Bonuses and Christmas bonuses are also included pro rata.
In addition, there is also the employee’s claim for unemployment benefit (in France for a maximum of 2 years). In the case of a high settlement, there may be a potential so-called “suspension period” of a maximum of 150 days until unemployment benefit can be received.
Termination procedure in France
The actual termination procedure can be instigated by the employer as well as by the employer ((Cour de Cass. Soc. 15 January 2014). It is essential that the employee must sign the termination agreement without external pressure (Cour de Cass. Soc. 16 September 2015). Mere previous differences of opinions must be differentiated from this and do not prevent the signing of a termination agreement (Cour de Cass. Soc. 23 May 2013.
Prior to signing the termination agreement, the parties must meet at least once and agree the conditions, in particular the end of the employment relationship and the settlement sum. A termination agreement without a prior meeting is null and void (Arrêt n°15-21609 rendu par la chambre sociale de la Cour de Cassation le 1er décembre 2016).
At the preliminary meeting (or preliminary meetings), the employee may invite an additional representative. In this case, the employee is also permitted to invite a representative. Waivers of taking legal action, often contained in termination agreements, are generally unlawful (Cour de Cass. Soc. 26 June 2013). The reason for termination does not, however, need to be stated in the termination agreement.
Following the signing of the termination agreement (or the standardised termination form), a withdrawal period of two calendar weeks (délai de rétractation), which is followed by another period of two weeks (this time in terms of weekdays) for the approval by the French Labour Inspectorate DIRECCTE. In this respect, one of the parties must initially send the termination agreement (or the standardised termination form) to the competent supervisory authority of DIRECCTE after the expiry of the withdrawal period of two calendar weeks. Should there have been a failure to comply with the procedure or the settlement sum is below the statutory settlement claim, the French supervisory authority DIRECCTE will not approve the termination procedure. Approval is, however, implied if the supervisory authority does not explicitly refuse the approval within the time period.
Should DIRECCTE initially reject the procedure, however, subsequently revoke this decision, as the employer is providing additional information that has been missing, the original termination agreement is deemed as issued (Arrêt de la chambre sociale de la Cour de Cassation n° 15-24220 du 12 mai 2017).
Opportunities to take legal action after signing the termination and settlement agreement
It is absolutely possible to instigate extraordinary termination procedures after signing the termination agreement, if the conditions have been met (Arrêt n° 13/02186 rendu par la cour d’appel de Paris le 24 juin 2016).
After approval by DIRECCTE, each party may bring an action before the French labour court within one year, if such party believes that the legal conditions have not been met. Should the labour court then revoke the termination agreement, the employer must repay the settlement sum (Arrêt n° 16-15273 de la chambre sociale de la Cour de Cassation du 30 mai 2018).
Under certain conditions, a settlement can be reached between the parties after a termination has been signed (Cour de Cass. Soc. 26 March 2014). An accident at work/occupational disease does also not prevent the signing of a termination agreement (Cour de Cass Soc. 30 September 2014). The same applies to the signing during maternity leave (Cour de Cass soc. 25 March 2015) as well as after the termination procedure has commenced (Cour de Cass. Soc. 3 March 2015).
This article has been prepared for informational purposes only. It is not a substitute for legal advice addressed to particular circumstances. You should not take or refrain from taking any legal action based upon the information contained herein without first seeking professional, individualized counsel based upon your own circumstances. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
Information by ALARIS AVOCATS, English speaking lawyers in France (Paris) specialized in French labor law, especially any kinds of Social Plans, dismissal procedures and labor contract clauses.