Dismissals and Termination of Employment in France

The employer must establish a real and serious reason to dismiss an employee.

It may be:

• a personal reason, notably a fault (disciplinary ground), poor performance, disablement of the employee when the employer is unable to relocate / redeploy him to another position or make reasonable adjustments to his post; or
• an economic reason, such as economic difficulties, technological changes or the absolute necessity of restructuring to safeguard competitiveness. The economic reason is analysed at the level of the group’s companies established in France operating in the same business sector. The redeployment obligation for economic dismissal is limited to jobs available “in French territory in the company or in other companies of the group, the organisation, activities, and operating location of which allows mobility of some or all of the personnel“; the refusal to amend the employment contract following a collective performance agreement

The stages in the individual dismissal procedure are as follows:

• The employee is formally invited to a preliminary meeting. The invitation must meet certain formal requirements. 
• At least five business days after the formal invitation, a preliminary meeting is held during which the employer explains the reasons for the contemplated dismissal and listens to the employee’s explanation. As the case may be, and when there is dismissal for economic reason, the employer must propose a specific outplacement called “CSP” (see below).
• The employee may be assisted by a third party (an employee of the company or an adviser of the employee mentioned on an official list prepared by the Prefect, depending on the existence of employee representative bodies in the company). The employer must inform the employee of this possibility in the invitation to the preliminary meeting. The absence of the employee is not an issue and does not prevent the process from moving forward as long as the employee has been duly invited. 
• The dismissal letter must be sent to the employee at least two (or specific delays for a dismissal due to economic reasons) business days after the meeting (and within a month for a disciplinary dismissal).

The dismissal letter must be a registered letter whose receipt must be acknowledged by the employee, signed by either a legal representative of the firm or a person duly empowered by a legal representative, and who must belong to the company.

Applicable collective bargaining agreements can provide for a more favourable timeframe and / or procedure.

The letter must explicitly mention the grounds for dismissal. There are other mandatory provisions such as the possibility of choosing to benefit temporarily the supplementary health care scheme in force in the company, etc.

The grounds set out in the dismissal letter may be specified by the employer or at the employee’s request after the letter has been sent under certain time conditions. If the employee does not make such a request, the letter’s lack of adequate explanation will not in itself support a finding that the dismissal lacks real and serious cause, but will merely entitle the employee to compensation of no more than one month’s salary.

A special procedure (i.e. possible involvement of the works council – see below,
meeting and notification of the dismissal) applies in the case of a dismissal for economic reasons or when the dismissal concerns a ‘protected employee’ (e.g. members of the social and economic council, and trade union delegates notably).

A specific procedure prior to the dismissal exists for employees who have been recognised as physically incapable of performing their work by a labour doctor (e.g. redeployment obligation, possible involvement of the social and economic council, etc.).

For a dismissal based on a disciplinary reason, the employer should move rapidly as the procedure must begin within a few weeks of the employer becoming aware of the reason for dismissal and no more than two months after the discovery of the facts.

The notice period is set by the applicable collective bargaining agreement and the Labour Code, and generally lasts between one and three months. The contract may be terminated without notice in the event of gross misconduct or intentional misconduct.

The works council must be informed and consulted (with an advisory but formal vote of its members) when a mass redundancy is planned, or for the planned dismissal of a protected employee or physically disabled employee.

When a company employs more than 50 employees, trade unions may be involved in a mass redundancy procedure to negotiate an ‘employment saving plan’ or social plan.

This is required when dismissing employee representatives. The validation or homologation of the employment saving plan is also required for mass redundancy procedures.

Different procedures apply according to the company’s workforce and the number of employees concerned. (The procedures are ‘lighter’ in small companies that dismiss fewer than ten employees).

The main principles are the same:

• The employer has a duty to inform and consult the staff representative bodies;
• All documentation related to the collective redundancy must be sent to state authorities.

In case of mass redundancies (ten and more job deletion in a company employing at least 50 employees):

• The employer has a duty to inform and consult the works council, involving at least two meetings (the works council may be assisted by an accountant in some cases). Note that the duration of the consultation is regulated.
• An ‘employment saving plan’ (a social plan providing real alternatives and social measures accompanying the redundancy, such as redeployment, redeployment leave, training, etc.) should be drafted. There are two options for implementing this plan: either through a collective agreement negotiated with trade unions or unilaterally by the employer (only in the absence of trade unions in the company or if no agreement is found and then only after consultation with the works council).
• This employment saving plan should then be sent to state authorities that for validation (if agreed with trade unions) or homologation (if unilaterally drafted by the employer). If the state authorities do not agree with the plan, the employer may present another draft after consulting with the works council.

In groups of less than 1,000 employees in EU or companies under judicial reorganisation or liquidation (irrespective of their size), the employer must propose the CSP statutory outplacement programme to employees considered for economic dismissal. If the employee accepts the CSP, he/she will have better rights in terms of unemployment benefits but will not be entitled to a notice period. (An equivalent amount will be paid by the company to the unemployment administration).  

The term ‘summary dismissals’ has no real meaning in France. Dismissal without a notice period is only possible where there has been a serious breach, but even in that case, a dismissal procedure applies, including calling to the preliminary meeting, preliminary meeting and registered letter. In case of dismissal without notice, the employee receives no dismissal indemnity or notice period indemnity. Such dismissed employees are still entitled to unemployment benefits. The dismissal procedure must begin within a few weeks of the employer becoming aware of the reason for dismissal and no more than two months after the discovery of the facts.

The amount of damages depends on the actual loss suffered by the employee. For dismissals notified after 24 September 2017, damages for unfair dismissal have a preset minimum and a maximum amount depending on the employee’s length of service. There are also specific lower minimum amounts for companies that usually employ less than 11 employees, but the maximum remains identical. This is known as the Macron sliding scale. It ranges from one to 20 months of salary as an absolute cap.

In some circumstances, the dismissal will be void, allowing the employee to request reinstatement. (These circumstances may include collective redundancies without a social plan, dismissal after an occupational injury or in discriminatory dismissals, or dismissal of a protected employee without an authorisation from a state authority). In such cases, the compensation cannot be less than six months’ salary.

Dismissal indemnity is payable unless the dismissal is due to gross misconduct or intentional misconduct. The amount payable is mainly set by the collective bargaining agreement but must not be less than one-quarter of the monthly salary per year of service for the first ten years of service, plus one-third of the monthly salary for each year of service after ten years. A paid leave indemnity is also due for unused accrued holiday entitlement and a notice-period indemnity for the notice period if the employer chooses to release the employee from performing it.

A non-competition clause is only valid if provided in the work contract, and if:

• the employer demonstrates that this clause is necessary to safeguarding its interests and is proportionate (e.g. the lower the employee’s position, the less the clause is justified);
• its scope is limited to a reasonable geographical area, a reasonable period of time, and precise activities; and
• the employee receives a monthly indemnity during the term of the clause. (The indemnity amount is set by the work contract or collective bargaining agreement, but is generally between 30% and 50% of the employee’s monthly salary). 

This clause can be waived by the employer in the dismissal letter or according to the provisions of the applicable collective bargaining agreement and / or employment contract.

The examination of the terms of the applicable collective bargaining agreement is key on this matter.

In addition, the so-called exclusivity clause obliging the employee to devote the exclusivity of his activity to the employer is only valid if it is indispensable to the protection of the legitimate interests of the company, justified by the nature of the task to be performed and proportionate to the aim sought.

Specific and restrictive rules and procedures apply in the case of pregnant women, women on and returning from maternity leave, young fathers, and employees recovering after a work-related accident or suffering from a work-related illness. Women on maternity leave cannot be dismissed during this period.

Since 2008, a new means of termination has been introduced, namely “by mutual agreement”. This new possibility is called ‘rupture conventionnelle’ (mutual termination of the employment contract). Both the employer and employee agree on the termination and there is no cause or reason to dispute it.

The employee is entitled to unemployment insurance benefits and dismissal indemnity provided by law or the applicable collective bargaining agreement (or more if agreed upon).

A strict procedure including preliminary meetings and consideration periods should be followed (both parties have the benefit of 15 calendar days to retract, from the date on which the form is signed); a specific form must be filled in and signed by both parties.

The specific form must be sent to the state authorities for agreement. The state authorities have a 15-open day period to review the form. Within these 15 days, the state authorities can agree to the termination, disagree or stay silent (silence amounts to agreement). However, the state authorities must expressly agree for protected employees. Otherwise, the termination is void.

Since September 2017, it is possible for the employer to negotiate a collective agreement through a ‘rupture conventionnelle collective’ (i.e. mass mutual termination of the employment contract) with trade unions. Such an agreement can only implement voluntary departures and thus excludes any dismissals designed to eliminate jobs. This method of terminating contracts is entirely excluded from the rules governing economic dismissals. The labour administration is informed as soon as negotiations to conclude such an agreement’s contents before validating it.

Most of the time, Managing Directors (“mandataire social”) are not qualified as “employee”, as defined by labour law, the French labour code and applicable collective bargaining agreement (except see point 2.12) and are only governed by the commercial code, company’s by-laws, board of directors’ resolution and, if the case may be, particular agreement concluded with the Managing Directors.

The company may generally revoke the appointment of the managing director without cause, unless stated otherwise in the by-laws of the company or the resolution of appointment. However, a fair reason is legally required in certain forms of companies (e. g. the civil form or commercial forms such as certain limited companies (‘SA’) or limited liability companies (‘SARL’)).

A resolution is taken by the board of directors, depending on the form of the company and the internal organisation of the management. The managing director must be notified in writing of the revocation, and the change of managing director must be published in a public Corporate Register.

There is no notice period, except where one is provided by the by-laws of the company or in the resolution of appointment of the managing director.

No.

Not applicable.

No.

Not applicable.

Not applicable.

Damages may mainly be claimed:

• for lack of fair reason in companies where such a reason is legally required to revoke a representative;
• if the revocation is notified under hurtful circumstances (e.g. is very sudden and unexpected, or is publicly announced before the director is informed), or if the managing director has not been granted a reasonable opportunity to make his point before the decision to revoke him is made (absence of due process).

There is no mandatory severance pay for the capacity of managing director, unless otherwise stated in the by-laws of the company or in the resolution of appointment of the managing director.

The terms of any non-competition clause must be agreed upon between the parties. If the scope of the clause is too wide (according to its geographic area, its length, or the activities it concerns), its validity may be challenged.

The director may also be an employee. In this case, a proper dismissal process must be implemented in addition to the revocation process and corresponding dismissal indemnities paid.