Dismissals and Termination of Employment in Monaco

An employer may not dismiss an employee without a legally valid cause.

Dismissal may be based on personal grounds (e.g. disciplinary dismissal, dismissal due to professional inadequacy, dismissal due to incapacity) or economic grounds (e.g. economic difficulties, technological changes). 

Under specific conditions, dismissal can be decided without stating a specific motive. 

The employee must be notified of the dismissal in writing.

In the event of dismissal, the law provides that employees are entitled to a notice of a duration which varies depending on the seniority as follows:

• Length of service of less than six months: no notice period applicable;
• Length of service between six months and less than two years: one month;
• Length of service of at least two years: two months.

For any dismissal, the employer may choose whether the employee works during the notice period.

In either case, employee is entitled to receive the same salary, including any benefits. Thus, in case of exemption from work during the prior notice delay, the employee will be paid in lieu of notice.

As there is no such status for international employees in Monaco, as they are considered Monegasque employees first and foremost, there are no specific regulations for them.

Works councils do not exist in Monaco. Staff representatives (if elected) must be duly informed before any collective redundancies. 

No involvement for dismissals.

Mandatory for employees with legal protection because of their private life or their mandate.

This protection applies to staff representatives, union delegates, pregnant women, employees taking maternity leave, paternity leave, adoption leave or family support leave, members of the Labour Court, harassment referents.

The relevant Labour Authority has to be informed of projected collective redundancies prior to their dismissal, and grant prior approval. 

The implementation of collective redundancies is mainly regulated by law and the National Collective Bargaining Agreement, which provide for a number of procedural steps prior to the implementation of such a decision.

Three main issues must be considered regarding the preparation and implementation of a collective social plan:

• Drafting an information document containing all essential elements regarding the decision to restructure, its motivation, its implementation and the measures taken by the employer to minimise any adverse impacts on employees;
• Circulating the information to staff representatives, discussing it with them and collecting their comments and choices about measures taken to implement the restructuring (i.e., the measures adopted to minimise the number of dismissals); and
• Implementing the restructuring plan, by obtaining the required authorisations as the case may be, notifying employees of their terminations and paying termination indemnities. 

Dismissal without notice is only possible in case of gross misconduct. In such a case, the employee receives no dismissal indemnity or notice period indemnity. The employee is still entitled to unemployment insurance benefits.

Should the employer dismiss an employee on personal or economic grounds without a valid cause, the employer would have to pay a dismissal indemnity.

In addition, the employee could claim damages for injuries suffered due to his / her wrongful dismissal.

Dismissal indemnity is payable unless the dismissal is for gross misconduct. The amount payable is mainly set by the collective bargaining agreement, but must not be less than the French legal dismissal indemnity (25% of the monthly gross salary until ten years of seniority and one third of the monthly salary as of the tenth‘s year). A higher indemnity is payable in case of dismissal without a stated motive. Indemnity is also payable for unused accrued paid holidays and for the notice period if the employer chooses to release the employee from performing it.

Restrictive clauses may be included in employment contracts, provided that they do not result in a violation of the freedom of work protected by the Monegasque Constitution.

The most common restrictive clauses in Monaco are non-competition, non-solicitation, confidentiality and mobility clauses. Penalties for breach may be provided for in the contract.

Not applicable.

A 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. This is particularly the case for limited companies (‘SA‘). However, a just cause is legally required in limited liability companies (‘SARL’) when revoking a managing director who is also a shareholder of the company. In any event, revocation must follow mandatory steps to be declared valid.

A resolution is taken by the shareholders and / or board of directors, depending on the form of the company and the internal organisation of the management. The managing director must be given the opportunity to explain himself or herself and the revocation must not be made vexatiously.

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 involvement.

No involvement.

For limited liability companies (‘SARL’), appointment of a new director is subject to government approval. For all companies, the change of director must be registered in the Monaco Companies Register. 

Not applicable.

Not applicable. 

Damages may be claimed, mainly:

• for the lack of a just cause, in the event that such reason is legally required to revoke a legal representative; or
• 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 / her point before the board’s / shareholders’ decision to revoke him / her (absence of due process). However, the managing director cannot be reinstated. 

Not applicable. 

Restrictive covenants are common for managing director positions, due to their sensitive role in the company.

Non-compete, non-solicitation and confidentiality clauses are the most common, and penalties for breach may be included in the contract.

Not applicable.