Termination of Employment contracts in France
I.) The Social Plan in France (PSE)
A French employer who, for economic reasons, considers a dismissal procedure of several employees must, depending on the number of workers who are dismissed, draw up a social plan (PSE) and have it also approved (Articles L. 1233-61 ss. Code du Travail ).
The purpose of the social plan is to reduce dismissals as far as possible, to make them socially acceptable or – as far as possible – even to limit the number of employees to be dismissed. The social plan requires the external approval of the French Labor Direction DIRECCTE or at least the internal approval of the works council.
The social plan provides various measures to make economic dismissals socially acceptable. It is mandatory in companies with at least 50 employees if the planned dismissal concerns at least 10 employees over a period of 30 days.
The social plan contains a catalog of measures, such as a retraining plan for employees whose dismissal is unavoidable. The catalog of measures as well as the procedure to be followed are determined in the social plan itself.
Employers of companies with at least 1,000 employees who are planning a complete company shutdown are also obliged to first seek potential buyers.
The social plan may also provide for other measures, such as incentives for voluntary retirement and retraining.
Redundancy under a social plan will be canceled if the DIRECCTE has not validated or approved it or if the works council has not been consulted on time. In the case of nullity of a social plan, the employee must be reinstated or receive compensation equal to at least the salary of the last 6 gross monthly salaries.
Sollte die Rahmenvereinbarung hingegen abgelehnt werden, kann diese zur nochmaligen Freigabe nachgebessert bei der DIRECCTE eingereicht werden.
II.) The Collective Redundancy Agreements in France (RCC)
Parallel to the social plan there is also the possibility of a collective redundancy agreement.
Since the beginning of last year, regardless of the size of the company, a so-called “framework contract for several simultaneous termination agreements” could be proposed to the employees (Articles L. 1237-17 see Code du Travail).
This is a framework agreement which specifies the conditions for a possible voluntary departure in exchange for extra remuneration of several employees. This framework agreement must also be explicitly (or implicitly) approved by the DIRECCTE within two weeks after the day of its submission. If no written approval is given within this period, the framework agreement is considered as accepted. However, if the framework agreement is rejected, a new and improved version can be submitted to DIRECCTE for further approval.
Employees are then informed on the workplace according Art. L. 1237-19- 4 du Code du Travail about the framework agreement and the conditions of participation.
III.) Requirements and differences to other dismissal measures
The Framework Agreement is not a social plan that is subject to much higher statutory requirements and, moreover, requires an economic reason (see above).
The aim of the “accord collectif portant rupture conventionnelle collective” is to reduce the number of employees in the company as part of voluntary departure plan without a redundancy plan.
Die Rahmenvereinbarung, welche den rechtlichen Rahmen für zukünftige Aufhebungsvereinbarungen absteckt und im Rahmen dessen sodann die einzelnen Aufhebungsvereinbarungen erfolgen, muss gem. Art. L. 1237-19-1 Code du Travail folgende Mindestvoraussetzungen enthalten:
Unlike the regular individual termination agreement, a framework agreement for future collective termination agreements can only be decided by the employer. The framework agreement, which sets out the legal framework for future termination agreements and under which the individual termination agreements are to be concluded, must be adopted in accordance with Art. Art. L. 1237-19-1 Code du Travail.
Furthermore, the formal requirements according to Art. L 2232-12 du Code de travail must be respected. Finally, it is important to note that no employee can be forced to terminate the contract. However, should the employee be interested in it, the employment relationship will be mutually canceled if approved by the employer.
The departing employees are entitled to unemployment benefits in addition to the financial compensation under the termination agreement.
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.