France: Employees Can be Terminated for Serious Misconduct During a Mutual Termination Procedure
The French Supreme Court rules that employees can be terminated for serious misconduct during a mutual termination procedure but that they may, nevertheless, be entitled to receive their mutual termination indemnity.
Under French law, it is possible to agree a mutual termination with an employee subject to respecting a specific procedure. The employee will be entitled to a mutual termination indemnity at least equal to the legal severance indemnity they would have received in case of a normal dismissal. After the parties agree on such mutual termination, each party can change their mind during 15 calendar days and then the mutual termination agreement must be sent to the Labor authorities who have 15 days (not including Sundays) in which to register such mutual termination. In the absence of a response by the Labor authorities within such time period, the mutual termination is deemed valid, and the employment contract is automatically terminated at the expiry of such time period unless the parties have agreed on a later termination date.
In this case, an employee had signed a mutual termination agreement which was validated by the Labor authorities in February, but which provided for the termination of the employment contract in June. However, in April, the company dismissed the employee for serious misconduct i.e. without any indemnities being due, after having discovered that he had committed acts of sexual harassment.
The French Supreme Court ruled that the company could terminate the employee’s contract earlier than was originally agreed under the mutual termination agreement (i.e. April instead of June) but that the mutual termination indemnity was nevertheless due. It would not have been due however if the dismissal had taken place before the Labor authorities had registered the mutual termination.
Key Action Points for Human Resources and In-House Counsel
Ensure you know the different time periods involved when entering into a mutual termination agreement.
