For the first time, the French Supreme Court has recognized that mutually agreed terminations may validly be entered into when a dismissal is imminent, and even when the dismissal has been notified to the employee, in three decisions dated March 3rd 2015. The Supreme Court authorized an employer to withdraw its decision to dismiss by entering into a mutually agreed termination agreement. The Supreme Court also authorized an employer to initiate or resume a dismissal procedure where the employee had exercised his right to retract his agreement to a mutually agreed termination.

Until the March 3, 2015 decisions, a mutually agreed termination seemed incompatible with a previous dismissal or resignation, unless both parties agreed to the withdrawal of the dismissal or resignation. As a result, the French labor authorities tended not to approve a mutually agreed termination executed during the course of a dismissal procedure.

In three decisions dated March 3rd 2015 (cases n°13-20.549, n°13-15.551 and 13-23.348), the French Supreme Court determined that initiating a termination procedure did not constitute a waiver of the possibility to implement another means of termination and did not prevent starting another procedure. In the first case, the employer had already notified the employee of his dismissal. Following this, both parties then entered into a mutually agreed termination. In the second case, the employer had abandoned the dismissal procedure before the dismissal was notified, and instead entered into a mutually agreed termination with the employee. In the third case, a mutually agreed termination agreement had been entered into but the employee thereafter exercised his right to retract, following which he was dismissed by his employer.

Are mutual terminations entered into during the dismissal procedure or even after the dismissal is notified valid? Likewise, is a dismissal pronounced after the employee has withdrawn his approval to the mutually agreed termination valid? The French Supreme Court (Social Chamber of the Cour de cassation) said yes.

In its first decision, the Court ruled that “when the employment agreement has been terminated by either party by virtue of the latter’s unilateral right of termination, the subsequent signature of a mutually agreed termination agreement is deemed a mutually agreed withdrawal of the preceding termination”. Thus, it may be considered from now on that the initiation of a dismissal procedure, the notification of a dismissal or even the employee’s resignation are no longer to be deemed obstacles to a mutually agreed termination.

The parties’ withdrawal of a dismissal or resignation, via a mutually agreed termination agreement, entails legal consequences. For example, the period during which the employer may release the employee from a non-compete obligation would run as from the date of the termination provided in the mutually agreed termination agreement.

The two other decisions demonstrate that the employee’s retractation of his agreement to a mutually agreed termination gives the employer an opportunity to either initiate or resume the previously abandoned dismissal procedure. For the Court “the entering into […] of a mutually agreed termination agreement, following the initiation of a disciplinary dismissal procedure, does not amount to a waiver by the employer of the right to exercise its disciplinary power”.

Provided of course that the two-month statute of limitations which runs as from the discovery of the facts on which a dismissal is based has not lapsed. The requisite pre-dismissal “preliminary” meeting must therefore be programmed in due time, since, as stated by the Court, “entering into a mutually agreed termination agreement does not interrupt the statute of limitations”. If the employer resumes the dismissal procedure following the employee’s retractation of agreement to the mutually agreed termination, the Court specified that the employee would need to be convened to a new preliminary meeting.

These decisions make it more difficult for employees to challenge a mutually agreed termination after the 15 calendar day retractation period, thus enhancing this means of termination of employment. This should pave the way for the resolution of more employment termination disputes by mutually agreed terminations, rather than via post-termination settlement agreements