In a decision dated 26 March 2014, the French Supreme Court, for the first time, ruled that a settlement agreement can be signed in case of a mutual consent agreement under certain conditions.

In a decision without precedents the French Supreme Court ruled that after a mutual consent agreement it would be possible to sign a settlement agreement if the two following conditions are met:

  • The settlement agreement must be signed after the ratification (“homologation”) or authorization (“authorisation” in case of protected employees) of the mutual consent termination by the labour authorities
  • The settlement agreement must only cover the performance of the employment contract (not its termination).

If those two conditions are not met, the settlement agreement is null and void.