(CA Riom 12 June 2012, no. 11-00.992)

In a ruling dated 12 June 2012, the Riom Court of Appeal, adopting the same position as the Dijon Court of Appeal on May 5th, 2011, held that an amicable termination is only valid if agreed to in compliance with the legal rules applicable to the “agreed termination” (which are not to be confused with the rules on settlement agreements). Otherwise, it would produce the effects of a dismissal without real and serious cause.

Legally speaking, the solution is surprising as, in the same way as any agreement, an employment contract is governed by the common intention of the parties, which can be revoked by “mutual consent” (consentement mutuel) (Article 1134 of the French Civil Code). However, a special law can waive a general law. Article L. 1237-11 of the French Labour Code provides that “the employer and the employee may jointly agree on the conditions of termination of the employment contract binding them” through an agreed termination, which is subject to the French Administration’s ratification.

In practice, the application of the position of these Courts of Appeal could be problematic regarding the existing practice. Indeed, first of all, in the scope of a voluntary departure plan, termination of the employment contract by “mutual consent” is authorized without the implementation of the agreed termination (which is prohibited in case of implementation of a legally required plan comprising measures to minimise and accompany a collective redundancy programme). Moreover, in case of intra-group mobility, terminating an employment contract by “mutual consent” and entering into a new one at the time is a common practice.

In such cases at least, it seems contrary to the spirit of the Law to impose to the parties to sign an “agreed termination”. However, as the rulings by the Courts of Appeal of Dijon and Riom have not been challenged before the French Supreme Court, it would be advisable to remain cautious in this respect.