You know that sinking feeling: you have a new employee in France who is not working out, and the manager has left it until the last minute to let you know. What happens if the required termination notice period will now extend beyond the end of the employee’s trial period? Does that automatically convert the employment into one of indefinite duration—contrat à durée indéterminée (CDI)—thus triggering the formal termination process and hefty indemnities? Well, the French supreme court has finally clarified the situation in a recent decision in favor of the employee—an outcome that the employer could have avoided if it had made the right decisions, even at the last minute. Cass. Soc. 5 novembre 2014, n° 13-18.114.

In France, probationary periods are an important tool to control risk in hiring. Unless the employee’s employment agreement or a collective bargaining agreement (CBA) provides for increased protections, the employment contract can be terminated during the probationary period without cause and at no additional cost to the employer beyond providing the mandated notice.

Maximum probationary periods are two months for “blue-collar workers” and clerks, three months for technicians and supervisors, and four months for cadres (mid- to high-level executives and professionals). They may be renewed once, but such renewal must be explicit and not implied. The termination notice periods during probationary periods are 24 hours for employees who have worked at least 8 days, 48 hours when they have worked between 8 days and one month, two weeks when they have worked more than one month, and one month when they have worked more than three months. The CBA or individual employee’s agreement may provide for shorter probationary periods or longer notices.

Article L.1221-25 of the French labor code states, “The probationary period, renewal included, may not be extended by the duration of the notice period.” So, what happens if you are coming to the end of the probationary period and have run out of room for the notice of termination?

A company in the Lorraine region of France recently found out. On January 17, 2011, the company hired a sales manager with a three-month renewable probationary period, the first leg of which would expire April 16. On April 8, 2011, it notified the employee by letter that his contract would come to an end two weeks later, on April 22, 2011, which was six days outside of the trial period (which had not been renewed). The employee worked out his notice until April 22, and departed the company. He subsequently filed an unfair dismissal claim, on the basis that his contract had become definitive after April 16, and that his employment was not terminated for a “real and serious” (réelle et sérieuse) cause.

The labor court (conseil de prud’hommes) determined that the termination of the contract was properly notified within the probationary period, was not unfair or abusive, and therefore the employee failed to establish a claim for damages for breach of his employment contract. The court of appeal affirmed. However, the French supreme court overturned the court of appeal, holding that by the terms of Article L.1221-25 of the French labor code, the notice period may not have the effect of extending the trial period, and that in this case the length of the executed notice period had the effect of extending the employment relationship and rendering the contract definitive. The case was remanded to the court of appeal to analyze the termination in the context of an ordinary dismissal (and not as a trial period termination) and to determine damages.

Where does that leave you? The key is that in France, notice does not have to be worked, but can be paid in lieu. So long as the notice period is not “executed” beyond the end of the probationary period, then the employment relationship is not continued and the contract has not become indefinite. But watch out! Even an extension of an employee’s relationship with the company by one day beyond the probationary period will trigger a CDI. With regard to any time that would otherwise fall outside of the probationary period, the employer should (1) be careful to pay the employee—including for all benefits and vacation indemnities that would otherwise have been due for that period of time—in lieu of notice, and (2) ensure that the contract is definitively terminated by the last day of the probationary period. To avoid costly mistakes, employers should schedule each new employee’s performance review well before the end of the probationary period and ensure that managers make timely decisions about whether or not the newcomer is a good addition to your workforce.

Rebecca L. Marks is of counsel in the Boston office of Ogletree Deakins.

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