Terminating an Employee in France for Non-Economic Reasons

Given the continuing challenging business climate in France and the well-known difficulties of French labor law, companies doing business in France should, before taking any actions, consider essential issues to avoid or mitigate damaging repercussions terminating an employee’s contract.

This top ten list focuses on tips for in-house counsel when considering or preparing an employee’s termination for non-economic reasons under French law.

1. Examining the reason for the termination?

Under French employment law, there are two applicable methods for employers to terminate an employment contract for non-economic reasons: the dismissal procedure based upon personal grounds, and the agreed termination procedure.

Dismissal based on personal grounds will only be lawful if it is based upon real and serious reasons.

Any company contemplating the termination of an employee will therefore need to build the strongest case possible in advance against the employee to justify the dismissal.

Real and serious reasons that could constitute personal grounds for dismissal include for example:

failure by the employee to adequately perform his/her duties;
unsatisfactory performance. (e.g. due to the employee’s professional inadequacy);
disciplinary grounds; or
unfitness for work.

French courts are increasingly restricting the possibility for an employer to sanction an employee based on his/her personal behavior, and instead are requiring evidence of professional insufficiencies or breaches of obligations which jeopardize the work or the operation of the company.

Should proper dismissal grounds be identified, the dismissal procedure will include the following steps: (i) a summons of the employee to a pre-dismissal meeting, (ii) a pre-dismissal meeting to verbally inform the employee that the company is contemplating his/her potential dismissal, to disclose the reasons to the employee for his/her contemplated potential dismissal and to allow him/her to present his/her defense, and (iii) a letter formally declaring the dismissal by registered mail with acknowledgement of receipt. The process takes approximately 15 days, which may be followed by a notice period before the employment contract ends.

If no proper ground for termination are identified or should the company prefer an amicable termination, the agreed termination procedure may be chosen, which does not require any grounds for termination or notice period.

This procedure (which does not have to identify grounds for dismissal), takes approximately 45 days and must respect a specific time schedule which will consist of: (i) holding a meeting for negotiations. It is legally mandatory that the parties meet at least once, but two meetings are recommended; (ii) signing an agreed termination form; (iii) waiting for a first “cooling-off period”; (iv) sending an original copy of the form signed by both parties to the competent Labor Administration for its ratification; (v) waiting for a “ratification period”. The employment contract can be terminated the day after the receipt of the ratification or at the end of the ratification period if there is are no issues raised with the agreement.

2. Identify the classification of the employee’s employment contract

The procedures previously outlined, apply to the most common type of employment contract: the indefinite term contract. The termination conditions/procedures may vary depending upon the type of contract. For example, a short term employment contract, if not terminated during the probationary period, may only be terminated before its term if there is an agreement between the Parties, force majeure, gross misconduct, if the employee is declared unfit for work by the occupational doctor, or is about to be hired through an indefinite-term employment contract.

3. Verify whether the company has elected staff representatives

In cases where there is no employee representative (e.g. personnel delegates, works council member), the employee may be assisted during the meeting by (i) any employee of the company or (ii) an individual registered on a State list (the “conseiller du salarié”). Should there be employee representatives within the company, then the employee may be assisted by any member of the company.

The possibility for the employee to be assisted during the pre-dismissal meeting must be referred to in the convocation to the pre-dismissal meeting.

4. Verify whether the employee benefits from a specific protection

A particular procedure/time schedule may apply if the employee benefits from a specific protection (e.g. for a pregnant woman, a sick employee, a staff representative, a Conseiller du salarié etc.). As an example, the dismissal procedure and the agreed termination procedure are applicable to a staff representative but there may be an obligation to preliminarily consult with the company’s works council, if one exists, and to obtain an authorization from the labor inspection.

5. Review the provisions of the applicable CBA and the company’s internal rules, if any

Collective bargaining agreements (CBA’s) or internal rules may provide for separate proceedings, which may be different from the legal procedure and more protective of the employee’s rights. These procedures are additional to the legal requirements, and more generally, involve establishing arbitration commissions, disciplinary councils or disciplinary commissions.

The French Supreme Court ruled that when a conventional dismissal procedure which creates a substantive guarantee for an employee, is not applied, the dismissal that occurs in violation of this procedure is without real and serious cause (entailing damages).

6. Ensure applicable delays are respected

Termination procedure:

The summons to the pre-dismissal meeting has to be hand delivered or sent by registered mail with an acknowledgement of receipt to the employee. The employee must receive it at least five working days (Monday to Saturday) before the date of the pre-dismissal meeting.

The dismissal letter must not be mailed less than two working days after the date of the pre-dismissal meeting.

If the dismissal is based upon misconduct, the dismissal procedure must be started within 2 months after the company became aware of the facts which provided the grounds for termination. The dismissal letter must be sent within one month after the pre-dismissal meeting.

Agreed termination procedure:

The duration of the waiting period is of 15 calendar days, while the ratification period is 15 working days.

7. Ensure all grounds justifying the dismissal are discussed during the pre-dismissal meeting and mentioned in the termination letter

During the pre-dismissal meeting the employee must be given the opportunity to provide his/her explanation on every ground considered for his/her dismissal.

The fact that a ground referred to in the dismissal letter was not reported by the employer’s representative during the pre-dismissal meeting is deemed an irregularity, which may entail the payment of damages.

It should be noted that under French law, the decision to terminate an employee’s contract cannot be made before the end of a two-working day period following the pre-dismissal meeting. Therefore, during the meeting there should be no reference to a decision, and the conditional tense should be used.

Each and every ground deemed to justify a termination after due consideration of the arguments exposed by the employee during the meeting must be mentioned in the dismissal letter. Indeed, should the dismissed employee lodge a claim before court to obtain that his/her termination be held without real and serious cause and related damages, only the grounds listed and detailed in the dismissal letter, related arguments and relevant documents will be taken into consideration by the court to make its decision.

8. Verify whether the employment contract includes a non compete clause

Under French employment law, the validity of a non-compete clause is notably subject to the provision of a financial compensation. The non-compete obligation may only be waived by the employer, and the latter be exempted from paying the related indemnity in cases where the waiver is: expressly authorized by the non-compete clause (and not prohibited by the CBA), made within a certain time (set by the collective bargaining agreement or the employment contract), and executed in writing.

It is therefore advisable that the waiver be expressly provided for either in the dismissal letter or in the agreed termination documents, should the company want to waive it.

9. Check the Labor Code, the CBA, the employment contract and all its addenda to verify the amount of indemnities to be paid to the employee in the framework of the balance of any account

Several payments must be made to an employee upon termination of his/her employment contract (interalia notice period indemnity, paid vacation indemnity, dismissal indemnity or agreed termination specific indemnity, etc.).

The notice period and the termination indemnity (or the equivalent agreed termination specific indemnity, in case of an agreed termination) will be defined either by the Labor Code, by the applicable collective bargaining agreement or by the employment contract (the more favorable of which will be applied to the employee). The employment contract may also provide for additional amounts to be paid to the employee upon termination (golden parachutes, etc.).

It is therefore necessary to check these documents to assess the employee’s balance of any account, which shall be remitted to him/her at the end of his/her employment contract, together with his/her work certificate and Pôle Emploi attestation (to obtain unemployment allocations).

10. Secure a settlement agreement

Both the agreed termination and the dismissal can be challenged by the employee before a court.

Indeed, it should be noted that an agreed termination does not waive the claims made by the employee.

Following a dismissal, the parties may execute a settlement agreement providing for such a waiver, subject to said waiver being compensated and the related compensation not being derisory.

Anne-Lise Puget, Of Counsel, Bersay Associés, Paris, France, a Transatlantic Law International affiliated firm.

For further information or for any assistance with understanding and interpreting French labor law, please contact Anne-Lise at francelabor@transatlanticlaw.com

Disclaimer :

Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 95 affiliated independent law firms worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter . Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.