All questions

Discontinuing employment

i Dismissal

The employer must invite the employee for an interview before dismissal by letter, which the employee must have received at least five days before the date of the interview, unless the applicable collective agreement provides for different time frames. It may also be contractually provided that this letter should include certain information.

The interview provides the employee with the opportunity to state his or her point of view on the accusations of his employer. He or she may be assisted by a third party, who in principle should be an employee of the firm.

The employer then notifies the employee of his or her dismissal by registered mail at least two days after the interview. The letter should state the grounds for the discontinuation of the contract. The letter should be precise as this document will determine any litigation that may ensue. The Macron Ordinances have made it possible for the employer to specify the terms of the letter after it has been sent.

The dismissal must be based on real and serious grounds that may take several forms. For example, the employment contract of an employee may be terminated for professional incompetence, as a result of the reprehensible conduct of the employee, or even where the employee's situation affects the due operation of business (in particular where the occupational doctor has found that the employee is physically unsuitable for the job).

If the employee is dismissed on grounds that are not serious, the employer is liable to sanctions. The employee can be reintegrated into the company. If either party refuses, the judge will grant an indemnity, which will be defined by a compulsory sliding scale of capped damages depending on the employee's seniority. For companies with less than 11 employees, the minimum indemnity is reduced. This scale does not apply if the termination of the employment violates a fundamental right of the employee, results from moral or sexual harassment or is discriminatory.

Unless discharge is granted, the dismissal becomes final on the expiry of a notice period that may vary according to the provisions of the contract and the applicable collective agreement being noted that its usual duration varies between one and three months depending on the length of service and professional category of the employee. By way of exception, an employee who has been dismissed because of serious misconduct will not benefit from any notice period.

The dismissed employee receives dismissal indemnity, except in the event of serious misconduct. This indemnity is equal to at least a quarter of the monthly wage for each year of seniority under 10 years, to which is added a third of the monthly wage over 10 years' seniority. The dismissed employee is also entitled to payment in lieu of leave for any outstanding paid leave (employers were previously exempted from the payment in lieu of leave. Yet, this measure was declared unconstitutional by the French constitutional council).

Once the employment contract has been terminated, the parties may terminate any disagreement between them by way of settlement negotiations that will end the dispute and prevent the employee from referring the matter before any court. The employer will agree to certain concessions, notably of a financial nature.

If an employer dismisses an employee on discriminatory grounds (i.e., if it is in breach of a freedom, such as non-discrimination or the right to strike), a judge may hold the dismissal to be null and void. Pregnant women and employees who have suffered from an occupational accident or disease are also protected. Most importantly, the dismissal of a staff representative, who has been elected or appointed by a trade union, requires the prior consultation of the works council and administrative authorisation from the labour inspector. If the dismissal is held to be null and void, the employee is entitled to be reinstated and to receive payment of the wages lost between his or her dismissal and his or her reinstatement. If reinstatement is not possible or not requested the employee shall be entitled to dismissal indemnities and to compensation equal to at least six months' wages.

ii RedundanciesIndividual redundancy

An employee may be made individually redundant on economic grounds, in particular if the firm has suffered financial losses, in the event of technological changes, the need to safeguard competitiveness or even the discontinuation of the activity. Financial losses are defined, essentially, as a significant drop in orders, turnover, cash flow or gross operating profits, or as an operating loss going for a certain period of time, which varies depending on the size of the company. These economic difficulties are assessed at the level of the sector of activity of the group to which the firm belongs, taking only the companies established in France into account.

An employee can be made redundant only after every effort of training and adaptation has been made and where it is not possible to provide alternative employment within the company or with the companies of the group established in France. If these attempts are unsuccessful, an interview prior to dismissal is held and the employer may then notify the employee of his or her redundancy. The following specificities are features of redundancy:

  1. The employee is entitled to priority for rehiring for a period of one year from his or her dismissal.
  2. In companies with fewer than 1,000 employees, the employer must offer employees with at least one year's seniority the opportunity to take out a professional security contract with unemployment insurance agencies which provide him or her with the benefit of a set of measures to facilitate his or her reinstatement in the employment market and the partial payment of his or her previous remuneration.
  3. In companies or establishments with at least 1,000 employees, the employer must offer the employee redeployment leave of between four and 12 months, funded by the company and that, in addition to maintaining remuneration, provides the employee with training and the assistance of a specialised team in his or her search for work.
Collective redundancies

The procedure is different depending on the number of employees dismissed within the same 30-day period and the size of the company:

  1. In a dismissal of at least 10 employees within the same 30-day period in companies with fewer than 50 employees, the staff delegates must be consulted. The delegates hold two meetings that cannot be more than 14 days apart. They are provided with certain information and documents (e.g., economic reasons, number of dismissals, professional categories affected, number of employees, expected timetable of dismissals and the social measures contemplated). The administrative authorities are also kept informed of the various stages of the procedure.
  2. In a dismissal of at least 10 employees within the same 30-day period in companies with more than 50 employees, the employer must establish an employment safeguard plan to avoid dismissals or limit their number. There are two ways in which this employment safeguard plan may be adopted, as detailed below.

First, the employer and trade unions may enter into a majority agreement setting out the content of the employment safeguard plan and the conditions under which the redundancies may take place.

Negotiations may be opened before the launch of the procedure for the consultation of the works council. Alternatively, the employer may announce its intention to open negotiations at the first meeting of consultation of the works council, or a trade union can request such negotiation at any time during the consultation of the works council.

Moreover, in negotiating the agreement, the trade unions may receive assistance from the accounting expert usually appointed by the works council to provide assistance during the consultation period.

The labour authorities must be informed immediately that negotiations have been opened.

To be valid, the employment safeguard plan must be signed by the trade unions who have received at least 50 per cent of the votes cast at the first round of the last professional elections. Finally, the majority agreement is submitted to the works council for its opinion before signature.

Alternatively, if a collective majority agreement is not reached, a document drafted by the employer in which the content of the employment safeguard plan is set out as well as the conditions for dismissal. The employer discusses the content of this document with the works council and then finalises the document on completion of the consultation procedure.

Specific rules govern the consultation of the works council (or the social and economic committee when it replaces the works council). The employer convenes the works council in an initial meeting and provides the works council with information on the dismissal project that is communicated in parallel to the DIRECCTE. During the first meeting, the works council may appoint an expert.

The works council must hold at least two meetings at least 15 days apart; the majority agreement or an agreement on procedure may provide for a greater number of meetings. From the first meeting onwards, the works council issues its opinions within one to four months depending on the number of dismissals contemplated.

If no opinion has been issued by the deadline, the works council shall be deemed to have been consulted. The works council issues an opinion on the contemplated operation and the procedures for its application. The works council also issues an opinion on the dismissal project, and this aspect covers the employment safeguard plan as well as the procedures for carrying out the dismissals, including criteria for the order of dismissals and the timetable.

Once the works council has issued its opinions, the labour authorities must, as the case may be, approve the majority agreement entered into with the trade unions or approve the unilateral document. The DIRECCTE issues a decision within 15 days for a collective agreement and within 21 days for a unilateral document. In the examination of a collective agreement, the DIRECCTE verifies the conditions under which it is adopted and the content thereof, as well as the procedures for the consultation of the works council. In the case of a unilateral document, the DIRECCTE carries out in-depth verification and, in particular, verifies the content of the employment safeguard plan.

The Macron Ordinances have created an alternative type of voluntary departure plan called the 'collective mutual termination'. A collective agreement, which must be approved by the Labour authorities, can define the terms and conditions of a mutual termination of the employment contract outside the framework of a dismissal and of economic justifications.

The Macron Ordinances have also provided employers with substantial leeway in adapting their employees' contracts of employment either to face the necessities of employment, or to preserve or develop employment. The new legal framework allows employers to adapt the contract on three levels: the remuneration, the geographical and internal mobility, and the working hours. The employee is free to refuse; however, a refusal constitutes a specific motive for termination, based on a real and serious cause.