Grounds for Termination
In the case of an indefinite-term employment contract, there should be real and serious grounds for dismissal. There are two types of valid grounds: personal grounds and economic grounds.
Personal Grounds
Personal grounds can include:
- poor performance or unsatisfactory professional skills;
- inability to perform the assigned tasks;
- misconduct within the company; and
- an employee’s repeated absence or absence over a long period of time (which is not related to a work-related accident or illness) which, in certain circumstances, can also constitute valid grounds for dismissal;
- physical inaptitude;
- following the employee’s refusal of a modification to his employment contract proposed by the employer.
Economic Grounds
The Labour Code allows two main economic grounds for dismissal:
- economic difficulties facing the relevant business sector at a group level in France,
- technological changes,
- necessity to safeguard the competitiveness of the relevant business sector at group level, and
- cessation of business activity.
The company must implement measures to prevent the dismissal of the employee. Therefore, before or during the process, the company is required to implement various preventive measures, support and prior reclassification of the employee.
Collective Dismissals
a. Common Rules
The common rules that apply to collective dismissal procedures, which are applicable in redundancy cases, are:
- order of dismissals;
- prior redeployment efforts;
- informing the labour authorities.
The redeployment efforts should be carried out throughout the group in France. The employer should provide precise and written offers.
Employers must send job offers to employees personally, or send them the list of available positions, and any updates to this list, by any means that can be relied on to provide a definite date.
In case of failure to comply with these rules, the dismissal may be considered unfair by the Labor Courts.
b. Procedure
The procedure will vary in function of the number of employees made redundant over a period of 30 days and whether the company has fewer than 50 or more than 50 employees.
c. Less than 10 redundancies over 30 days
Employers planning to lay off fewer than 10 employees within a 30-day period must convene and consult the Economic and Social Committee (CSE) on the project. In the absence of a CSE (due to the absence of a CSE or a company with fewer than 11 employees), the procedure is limited to formalities with regard to employees and the authorities. In practice, an economic note will be handed in to the workers’ representatives presenting the reasons for the redundancies and the measures to be taken.
The employees will be individually convened to a pre-dismissal meeting where the project will be described and the economic motives detailed. The employer will also have to present information on a redeployment scheme (i.e. “Contrat de Sécurisation Professionnelle” (CSP) or redeployment leave, depending on the size of the company).
The employer will have to inform the Labour Authorities in writing of certain details of the redundancies, within 8 days of the sending of the dismissal letters.
d. At least 10 redundancies over 30 days
Here again, the procedure will vary in function of the size of the company.
e. In companies employing 50 employees or more
A new system of collective redundancies applies as a result of the law of 14 June 2013 on the security of employment (“loi de la sécurisation de l’emploi”). As such, in companies of more than 50 employees dismissing at least 10 employees, the employer should undertake the following steps:
Establish a “Job Preservation Plan” (“PSE”)
The PSE should provide concrete, accurate and detailed measures to avoid redundancies or limit the number of redundancies and, notably, any alternative to redundancy such as the reduction of working time, redeployment opportunities on national territory (since the Macron law of 6 August 2015, the employer is no longer obliged to offer reclassification in group companies abroad) or training.
The employer may then formalise the PSE by:
- entering into an agreement with the relevant unions; or
- where this is not possible, make a unilateral decision.
In both cases, the plan must be approved by the Labour Administration.
Consult the CSE and Provide Information
The employer should meet with the CSE to announce the proposed plan and inform it in writing of the reasons for the restructuring project and of the number and the category of workers to be made redundant.
The CSEl holds at least two meetings at least 15 days apart.
The consultation procedure is now limited to:
- 2 months where the number of redundancies is less than 100 employees;
- 3 months if the number of redundancies is between 100 and 250 employees; and
- 4 months if the number of redundancies is above 250 employees.
In the absence of an opinion within these time limits, the CSE is deemed to have been consulted.
Seek the Approval of the Labour Administration
The agreement or unilateral decision on the PSE should be approved by the Labour Administration.
Time limits are imposed on the approval of the Labour Administration:
- 15 days where an agreement has been reached; and
- 21 days where a unilateral decision was made.
In the absence of any response, approval by the Labour Administration is deemed to be given.
Notify Affected Employees
Once the PSE has been authorised, the employer should make every effort to find employees facing redundancy another position within the same company or group in France (it is important to note that the employee, if interested, can ask his employer to make redeployment offers outside France). If the internal redeployment is not possible, the employer should give each of the affected employees notice of his/her dismissal and indicate in each letter the reason for the redundancy.
It is important to note that there is a specific procedure for the dismissal of “protected employees”, including staff representatives, trade union representatives, candidates to professional elections, and former staff representatives. Regardless of the type of procedure under way (for personal or economic grounds), the employer should, in most cases, inform and consult the Works Council (where one exists) and request the prior authorisation of the Labour Inspector for the proposed dismissal.
Companies employing less than 50 employees
The employer should consult the CSE on the project after having provided an economic note detailing in particular the economic motive, as well as the measures to be implemented to prevent or limit the number of redundancies and to facilitate the redeployment of employees made redundant.
Works Council hold at least two meetings separated by a period that cannot exceed 14 days.
As the case may be, the employees should be informed of their right to benefit from the CSP at the end of the second meeting with the CSE.
Within 21 days of notification, the Administration verifies that the employer has consulted the CSE and complied with its obligation to draw up and implement measures to avoid redundancies.
Redundancy letters may not be sent to employees before 30 days have elapsed from notification of the redundancy project to the Administration.
Individual Dismissals
Once an employer believes that there is a valid ground for dismissal, it should send a letter giving the employee five working days’ notice of a meeting. This letter should set out the time and place of the meeting and the employee’s right to be accompanied by a fellow employee or a third party.
During the meeting, the employer should state why it intends to dismiss the employee and take note of the employee’s explanations if the dismissal is based on the employee’s performance or misconduct.
The employer must notify the employee of its decision and, if appropriate, specify the grounds for dismissal in a letter delivered by registered post. The letter notifying dismissal may not be send less than 2 working days after the date of the preliminary interview.
The employee may request additional information on their dismissal within 15 days. The employer then has 15 days from receipt of the request to provide the information.
The employee may dispute the grounds for dismissal before a Labour Court.
If the contemplated individuals’ dismissals are based on economic grounds, the employer should elect which employees to make redundant by considering:
- the number of the employees’ dependents (especially for single parents);
- the employees’ length of service;
- potential difficulties that the employees may face in finding new employment (such as age or disability); and
- the employees’ professional skills.
The employer should also make every effort to find the employee facing redundancy another position within the same company or group, on the national territory (France). It should also ensure that the employee can adapt to the changes in their job position by way of training programs. Non-compliance with these rules may render the redundancy unfair.
If the employer is unable to find a suitable replacement for the employee, he must notify the employee of his dismissal within 7 working days (15 working days for an executive) of the date on which the employee was summoned to the preliminary interview.
The employer should inform the Labour Administration of its decision to make the employee redundant within 8 days of the formal notice of dismissal.
Separation Agreements
The legislator imposes that a separation agreement, other than a dismissal or resignation, should be done through a specific procedure called the “rupture conventionnelle” (mutually agreed termination), which is subject to specific regulations and conditions.
Hence, the “rupture conventionnelle” is the only method to terminate, on an individual basis an employment contract by mutual agreement.
a. Is a Separation Agreement required or considered best practice?
The employee who signs a mutually agreed termination with his employer receives severance indemnity, which cannot be less than the dismissal indemnity the employee is entitled if he/she had been dismissed.
A specific homologation procedure (or approval by Labor inspector for a protected employee) applies to the “rupture conventionnelle”. Once signed, the employee as well as the employer has a right of withdrawal of 15 calendar days, after which either party will send the form to the French Administration for homologation (or authorisation by Labor Inspector for a protected employee). The French Administration (or the Labor Inspector in case of protected employee) will have 15 business days from the reception of the form to homologate or authorize. In the absence of response, the form is deemed homologated or authorised.
This method of separation will allow the employee to be entitled to unemployment benefits (if they meet general allocation conditions).
b. What are the standard provisions of a Separation Agreement?
A specific governmental form called a Cerfa should be filled out, either by hand or online. The form requests basic information on the parties, and will require the following provisions:
- date of the meetings between employer and employee and whether they were assisted during these meetings;
- termination indemnity amount (which cannot be less than the dismissal indemnity that the employee would have received in case of dismissal);
- date of signature of the form;
- date of projected end of the work contract (which cannot be earlier than the day following the homologation by the French Administration or authorisation by the Labor inspector)
c. Does the age of the employee make a difference?
The age of the employee may affect the amount of the specific termination indemnity, as certain collective bargaining agreements provide for specific additional indemnities depending on the employee’s age.
d. Are there additional provisions to consider?
Additional provisions may be considered and indicated directly on the form, such as waiving of non-compete clauses.
Remedies for Employee Seeking to Challenge Wrongful Termination
When seeking remedies, the employee may request before the Labour Courts:
- the nullity of the dismissal (only possible where a text provides for a nullity, such as harassment or discrimination): as appropriate, reinstatement within the company or compensation of unfair dismissal;
- damages for unfair dismissal (e.g. insufficient economic grounds or insufficient redeployment efforts in a redundancy, or gross misconduct not demonstrated): these damages are now set out in a binding grid containing minimum and maximum amounts, based on the employee’s length of service;
- damages for irregularity of the dismissal (i.e. the dismissal procedure was not correctly followed): damages equal to a 1-month salary maximum in the event that the dismissal is considered as grounded;
- damages for any additional demonstrated prejudice.
Employee’s individual action to contest dismissal is time-barred after 12 months, whether the dismissal is for personal or economic reasons.
Please note that when entering into a “rupture conventionnelle”, the remedies are also limited. The employee may only challenge the mutually agreed termination in Court within a year of the homologation or authorisation and only on the grounds that he did not consent to signing the agreement.
