The legal background

Under French employment law, the provision of a probationary period in an employment contract entitles the employer to terminate the contract without being required to follow a dismissal procedure or to justify the termination on real and serious grounds. However, the termination of an employment contract during a probationary period must be preceded by a notice period the length of which depends on the employee’s period of service within the company. In this respect, the labor code states that the notice period may not have the effect of extending the term of the probationary period.

In this context, debates have recently arisen concerning the consequences of non-compliance with the notice period in the event of termination during a probationary period and whether or not the failure to observe such notice period can result in the termination being requalified as an unfair dismissal. After some initial uncertainty, recent case law and a subsequent statute have clarified the situation, specifying that non-compliance with the notice period will only entail the payment of a financial indemnity representing the wages the employee would have received had he/she continued to work during such period.

However, if non-compliance with the notice period does not result in unfair dismissal, what happens when the notice of the termination is given before the end of the probationary period but part of the notice period is actually worked by the employee after the term of the probationary period?

The case

In a recent decision of the Supreme Court dated 5th November 2014, a sales director was hired as of 17th January 2011, with a 3-month probationary period (therefore ending on 16th April 2011). By letter dated 8th April 2011, the employer terminated the employment contract with effect on 22nd April 2011 in order to comply with the applicable two weeks’ notice. Subsequently, the employee claimed payment of damages for unfair dismissal before the employment tribunal, on the grounds that, as he had worked beyond the probationary period, his employment agreement had become definitive.

The Court of Appeal dismissed the employee’s claim, holding that the failure to observe the applicable notice period does not render the contract definitive as long as the termination was notified during the probationary period. However, on further appeal, the Supreme Court reversed, holding that, in the event of termination during a probationary period, the employment contract reaches its term at the end of the notice period if it is worked through and at the latest at the expiry of the probationary period. The Supreme Court based its decision on the fact that the labor code expressly specifies that the notice period may not have the effect of extending the term of the probationary period. The Supreme Court judges concluded that the continuation of the contract beyond the term of the probationary period gives rise to a new indefinite term employment contract which could only be terminated through dismissal. As a consequence, the Supreme Court reversed the decision of the Court of appeal and transferred the case to a different Court of appeal in order to rule on the employee’s claim for unfair dismissal.

Conclusion

In conclusion, it follows from this ruling that if the notice period is worked beyond the term of the probationary period, the termination of the employment contract will be requalified as a dismissal, which dismissal will be deemed unfair in the absence of a proper dismissal letter setting out the reasons therefor. In practice, if the notice period at the time of the termination exceeds the remaining probationary period provided in the contract, it is recommended that care be taken to ensure that the employment contract actually terminates at the latest at the expiry of the probationary period. In such case, the employer would be required to pay to the employee a financial indemnity corresponding to the salaries and benefits for the remainder of the notice period exceeding the term of the probationary period, but would not incur the sanction of an unfair dismissal.