Racine Avocats

 

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

All lawsuits arising from a dispute relating to an employment agreement must be brought before a French Labour Tribunal, i.e. “Conseil de Prud’hommes”. The judges are non-professional, being specified that half of them are representing employers and the other half are representing employees.

Judgments of the French Labour Tribunal may be appealed before the Court of Appeal (under certain limits of amounts at stake). The judges of the Court of Appeal are professional.

In case of emergency, parties may introduce a summary proceeding. If the conditions are met and if the employer has been ordered to pay a provisional payment of salaries by the French Labour Tribunal, he will have to make the payment even if a party has appealed this judgement.


The Main Sources Of Employment Law

All employment matters are governed by European Law, the French Labour Code, Collective Bargaining Agreements, company rules (i.e. Company level agreement, policy rules…), individual employment contracts, custom of a profession (“usages”) and local practice and lastly case law.


National Law And Employees Working For Foreign Companies

If the work is performed is France:

- French law will be applied if the employment agreement provides for its application.

- Even if the employment contract is governed by another law chosen by the parties, the French Public Policy Rules will still apply, pursuant to the Rome I Regulation (593/2008/UE). (e.g. French labour law regarding dismissal etc.)

- French law will also apply if there is no applicable law mentioned in the contract, as long as the work is performed in France.


National Law And Employees Of National Companies Working In Another Jurisdiction

The parties are free to maintain the application of French law to French employees working in a foreign country.

If nothing has been provided for in the employment contract, the usual place of performance of the work will determine the law governing the contract.

However where it appears from the circumstances as a whole that the contract is more closely connected with France (e.g. the employee pays taxes in France or is affiliated to French pension scheme etc.) French law may apply.


Data privacy

In accordance with the General Data Protection Regulation (GPDR) (European Regulation n°2016/679 / EU of 27 April 2016) the employee must be informed that, within the framework and during the duration of his employment contract, his personal data may be collected, stored, used, transferred and more widely processed for legal, administrative or managerial reasons.

The employee has a right to access to all personal data concerning him and related to protection of personal data, the employee has a right of rectification of those data.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

Since November 1st, 2023, employers must provide new employees with an extended list of information regarding the employment relationship. This information must be communicated in writing, in a separate document from the employment contract.

Within 7 calendar days after hiring:

- Identity of the parties (employer and employee) to the employment relationship;

- Workplace(s)

- Job title, duties, and professional category

- Hiring date

- For fixed-term contracts: termination date or expected duration;

- Conditions and duration of the probationary period, if any

- Details regarding remuneration (including overtime) and the frequency and procedure of payment of such remuneration;

- Working hours (daily, weekly, or monthly) and working time conditions.

Within one month:

- Professional training rights provided by the employer;

- Duration of paid leave or method of calculation of this duration;

- Procedures applicable in case of contract termination;

- Collective agreement applicable to the company;

- Mandatory affiliation schemes and additional provident and healthcare contract information;

For employees working abroad and governed by French law: the employer must also provide the country in which the work abroad is to be carried out and the planned duration ; the currency in which the remuneration is to be paid; where applicable, the benefits in cash and in kind linked to the tasks concerned; information indicating whether repatriation is organised and, if so, the conditions under which the employee will be repatriated.

Moreover the employment contract must provide information regarding the relevant healthcare and pension scheme applicable to which the employee is affiliated and the possibility of joining the voluntary insurance scheme of the “Caisse des Français de l'étranger” (CFE).

A permanent contract is not necessarily written. However the employment contract is generally in writing in order to avoid any misunderstanding as to its terms and conditions.

Employment contracts must be drafted in French. Foreign employees may request a bilingual version or a copy translated into their language for information purposes. The French version of the contract is the reference version.

Furthermore, it is mandatory, according to the French Labour Code, that some provisions shall be made in writing.


Mandatory Requirements
  • Trial Period

    • The employment contract may provide for a trial period during which the parties may decide to terminate the contract for no specific reason (subject to conditions). Any trial period must be specifically mentioned in the employment contract. A trial period is not mandatory.

    The duration of the trial period may vary depending on the employee’s profile and the position they hold in the company. The French Labor Code sets the duration of the probationary period up to a maximum of two (2) months for non-executives and four (4) months for executives.

    The trial period is renewable under specific conditions and requires the employee’s agreement.

  • Hours Of Work

    • The legal weekly working time is 35 hours. Hours worked beyond this limit constitute overtime: the employee is entitled to extra hours and/or compensatory time-off.

    However, regarding employees who have autonomy in the organisation of their time schedule and whose nature of duties lead them to accomplish regular overtime (i.e. high level executives) it is possible to conclude an annual lump sum agreement that provides for a working time different from the legal 35 hours working time. Instead of counting their workhour, their working time is counted in days over the year. This agreement is subject to legal conditions and must be made in writing and requires the employee’s agreement.

    This working time can also be exceeded through a company’s agreement signed by the employer and the company’s trade union(s) representative(s). However, even if a company agreement exists, individual agreements between the employers and the employees may be required. Moreover the duration of work shall not exceed daily and weekly limits and rest periods provided by the French Labour Code.

    The hours of work may be distributed either from Monday to Friday, or Monday to Saturday, depending on the activity. Sunday is normally a legal day of rest. But exceptions do exist (administrative or legal derogations).

  • Special Rules For Part-time Work

    • Under French law, the employment contract can be concluded as a part time contract provided it is specified that the duration of work cannot be less than 24 hours per week (unless the collective bargaining agreement provides for an exception, or unless the employee expressly asks for an override).

    Failure to do so would allow the employee to claim for an adjustment of his salary, based on a full-time calculation.

  • Earnings

    • A minimum salary (“S.M.I.C.”) - hourly and monthly - is fixed each year by the French Government, below which an employee cannot be hired.

    Collective Bargaining Agreements may also provide for minimum salaries that may be (and usually are) higher.

  • Holidays/Rest Periods

    • Employees are entitled to a minimum of 2.5 working days holiday per month. They may benefit from paid vacation days from the first month of their employment.

    During the above mentioned legal weekly working time, employees must have a minimum of:

    - 20 minutes of rest for 6 hours of work.

    - 11 hours of rest between 2 days of work.

    - 35 hours of rest per week.

  • Minimum/Maximum Age

    • The minimum working age is 16 years old and the maximum age to retire is 70 years old. However, employees are free to retire as soon as they may be entitled to a retirement allowance (between the age of 62 and 64 years for now – this topic being actively discussed before the French Parliament on a regular basis). From the age of 67, the employer may suggest that the employee considers retirement but may not automatically place him to do so. One the employee is 70 then the employer can put him/her unilaterally on retirement.

  • Illness/Disability

    • In case of illness, the employee must inform his employer and send him a medical certificate. During the illness, he receives (subject to conditions) daily allowances (IJ) from the French social security, which do not cover the entire loss of salary. The employer pays additional compensation if the employee meets certain conditions. The employee may have to go through one or two medical visits to get back to work.

    It is forbidden to dismiss an employee because of his/her illness, which constitute discrimination.

  • Location Of Work/Mobility

    • The employer can specify in writing the employee’s normal place of work.

    According to case law in the absence of a mobility clause, the change of workplace in a different geographical sector requires the agreement of the employee and his refusal cannot be considered as wrongful.

    Mobility clauses can be included in the employment contract but cannot be used by the Company in bad faith.

    Constraining mobility clauses are valid only if they are justified by the needs of the business, if they clearly define their geographical limit at the date of hiring, and if they do not interfere with the employee’s right to a family life.

  • Pension Plans

    • The employer must:

    - contribute to a general pension plan for the employee;

    - subscribe to a supplementary pension scheme;

    - join a provident/complementary fund for executive employees and/or if the collective agreement of the branch of my activity so requires.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • The French Labour Code provides for parental rights (i.e. maternity/paternity/adoption/parental leave and compensation) and specific protection against dismissal during this leave.

    These leaves suspend the employment agreement. When the employee returns in the Company, he/she must be assigned to the same position as before he/she left, or to a similar position.

    The French Labour Code provides for payments for maternity and disability leave in order for the salary to be maintained. The duration and amount of these payments depends on the Collective Bargaining Agreement.

  • Non-Compulsory Terms

    • Other terms can be provided for in the employment contract, as long as these provisions are at least as favourable to the employee than the law or the relevant Collective Bargaining Agreement would be.


Types Of Agreement

French labour legislation favours permanent employment contracts. But other types of contracts exist, such as fixed term employment contracts, part time employment contracts, temporary employment contract and for apprenticeships.

The use of fixed-term contracts is governed by the law. This type of contract may only be used when a temporary role needs to be fulfilled (e.g replacement of an employee, temporary increase in business volume), unlike a permanent contract, which allows a permanent position to be filled within a company.

Fixed term contracts must be written.

A fixed-term contract must specify:

- The reason for which it is being used.

- The start and end dates of the contract.

- A renewal clause, in case the fixed-term contract needs to be extended.

- The minimum contract duration if there is no specific term, i.e. if the end date of the fixed-term contract is not specified in the contract, e.g. when replacing an absent employee.

- The duration of the probationary period.

- The job title.

- The name and professional qualifications of the employee being replaced, if applicable.

- Remuneration.

- Collective agreement applicable to the company;

If this is not the case, the contractual relationship may be considered as permanent in the event of a dispute.


Secrecy/Confidentiality

There is a general obligation of confidentiality during and after employment contract even if there is no written clause in it. This obligation concerns the employer’s commercial and business information as well as his know-how.


Ownership of Inventions/Other Intellectual Property (IP) Rights

There are legal provisions in the French IP Code as well as in most Collective Bargaining Agreements relating to IP Rights.

Generally, inventions made by an employee will belong to the employer if they fall within the employee’s job description.


Pre-Employment Considerations

A pre-recruitment declaration (“déclaration préalable à l’embauche” – “DPAE”) must be submitted by all employers before they recruit an employee who is covered by the French social security system. This is mandatory for all recruitments, regardless of the form and duration of the contract and the position held by the future employee. It must be submitted within 8 days prior to recruitment. The employer must declare this recruitment to the URSSAF (the government organization in charge of collecting social security and family allowance contributions).

All employers must create a general personnel register when they recruit their first employee. This register must be made available to employee representatives and the Labor Inspectorate. It must include an up-to-date list of all employees and related information (identity, type of contract, etc).


Hiring Non-Nationals

French citizens do not need a work permit to be hired in France. No work permit is required to hire EU nationals. Non-EU citizens must apply for a work permit.


Hiring Specified Categories Of Individuals

Companies with over 20 employees must ensure that disabled people constitute at least 6% of the total staff (after one year).

People under 18 years of age cannot work at night.

Pregnant women cannot occupy dangerous jobs.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

There are legal provisions relating to subcontracting which mean that the employer has to apply the same rules regarding salary, work at night, safety rules and maternity rights to all detached/outsourced employees.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

During the performance of the employment contract, the employer may need to change the employee’s terms and conditions of employment The measure envisaged is subject to different rules depending on whether it leads to major modification to the employment contract or a simple change in working conditions.

1. A measure that affects an essential element of the employment contract (such as remuneration, position of the employee, working time) corresponds to a modification of the employment contract requiring the agreement of the employee. The employee's refusal to accept the proposed change is not in itself wrongful. The employee cannot therefore be dismissed simply for refusing to sign the new employment contract (unjustified dismissal) and the employment relationship must continue under the previous conditions.

2. However, a simple change in working conditions may be imposed unilaterally by the employer according to its management power. The employee’s refusal to accept a change in his working conditions is wrongful and may expose him to disciplinary sanctions.


Change In Ownership Of The Business

The French Labour Code provides for an automatic transfer of the individual contracts to the new employer in case if a transfer of undertaking. All the obligations and benefits related to the individual contracts are transferred (seniority, remuneration, position, etc.).

The Social and Economic Committee (“CSE” also known as “Works Council”) of the concerned companies need to be consulted on the proposed operation.

In principle, there is no legal requirement in France to inform each employee before the transfer, (except in companies with less than 250 employees / and companies in which there is no obligation to implement a Social and Economic Committee - in which the employer must inform the staff in the event of a plan to sell the company, in order to facilitate its takeover by the employees).

An employee cannot object to a transfer of undertaking as the transfer is operated automatically. A refusal could constitute grounds for dismissal for disciplinary reasons.

However if there is a major modification to the contract (change of functions, salary, place of work etc), the employees are allowed to refuse.


Social Security Contributions

Social Security Contributions are paid both by the employer and the employee and are aimed at financing the allowances paid to the employees, such as sick pay, maternity pay and unemployment allowances.

The amount payable is approximately 22% for employees and 50% for employers.

In the case of illness and maternity, employers are required to contribute towards allowances payable to employees, depending on the provisions of the relevant Collective Bargaining Agreement.


Accidents At Work

Employers have a duty to ensure the safety of their employees and are liable for any failure in such respect.

The French Labour Code provides specific requirements relating to “occupational” accident or illness.

These requirements are more constraining than those provided for in cases of “regular” illness or disability and impose binding procedures on the employer.

Any employee who suffers an occupational accident, i.e., one relating to their occupation (including accidents that occur during commuting), or develops an occupational illness will be covered. To receive compensation, the employee must declare the occupational accident to their employer within 24 hours. The employer then has 48 hours to inform the relevant CPAM office (French Health Insurance Fund).


Discipline And Grievance

Discipline and grievance issues are provided for in the French Labour Code. For companies employing more than 50 people, company rules must outline the disciplinary procedures.


Harassment/Discrimination/Equal pay

The French Labour Code deals with:

1. In France, harassment is prohibited by national law and takes the form of both sexual and moral harassment.

Moral harassment is defined as repeated conduct which is designed to or which leads to a deterioration of the employee’s conditions of work liable to harm his rights and his dignity, to damage his physical or mental health or compromise his career prospects.

The definition of sexual harassment is extended to include sexist behaviour and moral harassment.

Sexual harassment is characterized by repeated comments or behaviour with sexual or sexist connotations which either undermine the dignity of the victim by their degrading or humiliating nature, or create an intimidating, hostile or offensive situation for the victim.

French labor Code also provides that Sexual harassment also occurs:

a) When the same employee is subjected to such comments or behaviour by several persons, in a concerted manner or at the instigation of one of them, even though each of these persons has not acted repeatedly;

b) When the same employee is subjected to such comments or behaviour, successively, by several persons who, even in the absence of concerted action, know that such comments or behaviour constitute repetition;

c) When consisting of any form of serious pressure, even if not repeated, exercised with the real or apparent aim of obtaining an act of a sexual nature, whether this is sought for the benefit of the perpetrator or for the benefit of a third party.

The employer, who has a duty of safety toward its employees, must prevent harassment and, put an end to it and punish the harasser.

2. Anti-Discrimination Laws :

According to the French Labour Code, it is forbidden to punish or dismiss employees, or exclude potential employees from the recruitment process (for a job, a training position or an internship), or cause them to endure direct or indirect discriminatory measures with respect to remuneration, incentive schemes, share distribution, training or redeployment programs, posting, qualification, classification, career development, working hours, performance obligation, mobility or contract renewal, on the basis of their nationality, ethnic or racial origin, sex, gender identity, sexual orientation, morals, family name, age, marital status, pregnancy, genetic characteristics, financial situation, religious beliefs, political opinions, trade union activities, physical appearance, medical condition, whistle-blower status and/or disability.


3. Equal pay principle. Since 2009, French law provides for negotiations in companies with regards to equal pay between men and women.


Compulsory Training Obligations

Employers have a general obligation to train their employees so that they can perform their function adequately. Moreover, the French Labour Code provides for compulsory training obligations for employees, up to € 500 per year of work, within a limit of € 5,000.


Offsetting Earnings

If an advance has been paid to an employee, the employer can recover it by deduction from wages.

The French Labour Code stipulates that in the event of advances paid to the employee, these may not exceed 1/10th of the net salary.


Payments For Maternity And Disability Leave

All employees are covered by the French Social Security in the event of maternity and disability.

Incapacity to work due to maternity will lead to the payment of daily compensation paid by the French Social Security (calculated on the basis of monthly salary with a cap fixed by a law).

Collective bargaining agreements may provide for more favourable terms of compensation than those offered by the Social Security system, up to 100% of the salary maintenance.

When an employee becomes totally or partially unable to work due to a disability that is unrelated to their occupation, they may apply for disability allowance to compensate for loss of wages. The allowance amount will vary according to their capacity to work.


Compulsory Insurance

By paying social fees, employers are insured in case of receivership procedures or judicial winding-up. In such case, salaries will be paid by the French Administration.


Absence For Military Or Public Service Duties

Public service duty no longer exists in France.


Works Councils or Trade Unions

According to the French Labour Code, companies with over 11 employees must establish a Social and Economic Committee (“CSE” also known as “Works Council”). The number of representatives depends on the number of employees in the Company.

CSE is informed and consulted on general business issues affecting employees and they can also be consulted through exceptional meetings if need be (the attributions are not the same depending on the workforce of the company. They are much more important in companies with at least 50 employees).

French employment law provides that, in companies with at least 50 employees, trade unions, which are representative within the company, may appoint union representatives (“délégués syndicaux”) among the employees of the company in order present claims regarding employee’s working conditions and negotiate and sign collective bargaining agreements applicable within the company.

In companies with less than 50 employees, a member of the staff delegation of the CSE may be appointed, for the duration of his mandate, to simultaneously fulfil the role of union delegate.

A trade union may also be represented, within a company, by a union section (“section syndicale”), which gathers the members of the same trade union and represents its material and moral interests at a company level.

There is a specific protection for staff representatives in order to prevent discrimination in the performance of their duties: in particular, their employment agreement cannot be modified without their consent, and their employment contract cannot be terminated unless the Labour Administration has authorised such termination.

Moreover, all such employees are entitled to delegation hours (that is to say, hours paid by the employer to perform such functions, even during working time).


Employees’ Right To Strike

In France, the right to strike is a constitutional right. A strike is defined by the French Supreme Court as “the collective, concerted and total cessation of work in order to raise to the employer professional demands”. All of these conditions must be fulfilled to benefit from the protection attached to the right to strike. When a work stoppage does not meet these criteria, it may be classified as unlawful.

In the public sector, there are certain limits to the right to strike, and notably the principle of continuity of public service (“continuité du service public”/i>), where there is no right to strike.



Employees On Strike

Except in cases of a serious offence such as violence or destruction of company equipment, the employer cannot punish or dismiss employees for having gone on strike, nor can be discriminated against. Employees on strike cannot be replaced by employees with a fixed term contract.


Employers’ Responsibility For Actions Of Their Employees

Employers are responsible for the actions of their employees under the French Civil Code. However, the employer will not be liable when the employee acts beyond the scope of his duties (e.g. gross misconduct “faute grave” or heavy misconduct “faute lourde”).

With regards to security issues, the employer is liable for damages caused by an employee to another.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

The employer may terminate an indefinite term employment agreement at any time, but it must prove a real and serious cause ("cause réelle et sérieuse") for the termination of the employment agreement and (comply with a specific dismissal procedure.

In the event of dismissal without real and serious cause, the employee is entitled to damages for unfair dismissal. The amount of damages for unfair dismissal is set by a legal scale provided by the French Labor Code (so called “Macron Scale”) and depends on the seniority of the employee.

There are two different kinds of dismissals: for personal reason or for economic reasons.

The three basic types of personal grounds are:

- the employee's personal behaviour (misconduct, serious misconduct or gross misconduct) ;

- the employee's poor/bad performance;

- the employee’s incapacity (assessed by the Labor doctor).

The dismissal must comply with a 3-steps procedure :

1. Summoning to a pre-dismissal meeting (hand-delivered or sent by registered letter with acknowledgement of receipt) ;

2. Pre-dismissal meeting :

a. 5 working days must separate the receipt of the letter and the meeting;

b. The employee can be assisted by another employee of the company;

c. The purpose of the meeting is to expose the reasons for the planned termination. The employee can make all his comments;

3. Dismissal letter sent by registered letter with acknowledgement of receipt (the letter must detail the grounds of the dismissal). It cannot be notified before 2 days from the individual meeting (15 days in case of individual dismissal for economic reasons).


Instant Dismissal

Gross misconduct is a disciplinary ground based on the employee’s personal behaviour and covers for instance: stealing office equipment, harassment, aggressive or intimidating behaviour, making fraudulent expenses, threats of violence, clear breach of health and safety rules.

According to case law, gross misconduct implies serious faults that make impossible to keep the employee within the company.

Moreover, the employer must provide evidence of the reality and the heaviness of the misconduct of the employee.

Where a gross misconduct is recognized, the employee is not entitled to any notice and therefore is not entitled to any pay in-lieu of notice, nor severance pay.


Employee's Resignation

Employees may resign but have to respect a notice period. The resignation does not entitle the employee to unemployment allowances.

There is no specific procedure required for resignation. Employees may notify their employer either in writing or in person. Before leaving the company, the employee must observe a notice period.

French case law also provides that the employee is entitled to an “instant resignation” in cases of gross misconduct by the employer and subject to specific conditions.


Termination On Notice

Termination on notice is possible (e.g. in case of minor misconduct or poor performance etc). The notice depends on the type of professional qualification held by the employee and generally varies between one to three months.

The notice period can be executed or not : the employee can ask to waive the notice period or the employer may also agrees to waive the notice requirement and pay compensation in lieu of notice.

The notice period may be extended by consent.


Termination By Reason Of The Employee's Age

An employee can only be obliged to retire once he / she reaches the age of 70.


Automatic Termination In Cases Of Force Majeure

Termination of the employment contract due to force majeure is a specific way terminating an employment contract. It is not a dismissal.

Force majeure is an event that meets all 3 of the following criteria: (i) the event is not foreseeable, (ii) it could not have been avoided and (iii) it is outside the control of the employer.

In practice, this way of terminating the contract is rarely implemented by employers.


Collective Dismissals

Collective dismissal a ruled for when based on economic reasons and not for personal reasons. Different rules would apply depending on the size of the company at stake, the number of employees that can possibly made redundant and, if the company belongs to a group, the size of that group (both in France for some criteria and un Europe for other criteria).

The length of the procedure is also function of those elements.

It is alternatively possible to implement a collective mutual termination (“RCC”). Such mechanism is a softer way to make employees leaving the company on a voluntary basis. An RCC can be implemented only if the company enters into a collective agreement with its Staff representatives and if this agreement is validated by the French Labour Administration.

The geographical concentration of departures (either by dismissal or on a voluntary basis) may also lead large companies (or belonging to a large group) to be subject to a contribution to be paid to the administration for the so-called “revitalization of the employment area”.


Termination By Parties’ Agreement

The employer and the employee may mutually agree on the termination of a permanent employment contract by signing an agreement subject to administrative approval and called “rupture conventionnelle” (“RC”).

The parties do not have to justify a reason/ground for the termination but the employee must freely agree to mutually terminate the contract.

It is not a settlement agreement: It is only a way to terminate of the employment contract by mutual agreement.

The date of the termination is fixed by the parties. There is no notice period and no compensation for notice period. The employer must pay a mandatory termination indemnity which shall be at least equal to the indemnity provided by the law or the CBA (not the contract) in case of dismissal.


Directors Or Other Senior Officers

French law does not consider executive officers to be employees. Disputes are therefore governed by corporate law and brought before the Commercial Courts.

Generally Directors or other senior officers may be dismissed without just cause, provided that the company's statutes do not require just cause for dismissal.

However they may cumulate their corporate office with an employment contract provided that the executive officer performs technical duties distinct from those of the mandate, is paid for these duties and a subordinate relationship exists between the executive and the company. In this situation the Company must comply with French Labour Law rules.


Special Rules For Categories Of Employee

Approval from the French Labour Administration is necessary to dismiss staff representatives. Termination by mutual agreement (“rupture conventionnelle”) must also be approved by the French Labour Administration.

Pregnant women: dismissal is not possible. However is possible to terminate the contract by mutual agreement (“rupture conventionnelle”). Women on maternity leave: dismissal is not possible except in cases of gross misconduct or absolute necessity to terminate (e.g. Closure of the company)

Sick employees: termination is not possible on ground of illness except in specific cases where the absence of an employee is harmful to the company or in case of physical incapacity duly observed by the labour doctor.

Employees with a fixed term contract: termination is not possible except in cases of an agreement between the parties, gross misconduct, force majeure (act of god), if the employee is hired under a contract for an indefinite term or in case of physical incapacity duly observed by the labour doctor. Except these cases, early-termination of a fixed-term contract at the initiative of the employer entitles the employee to damages. The amount of damages is at least equal to the remuneration the employee would have received until the end of the fixed-term contract. Professionalization contracts / apprenticeship contracts, which are linked to the employee’s studies, cannot be terminated except in cases of gross misconduct.


Specific Rules For Companies in Financial Difficulties

In French labor law, companies facing financial difficulties must comply with specific rules, particularly regarding employment protection and restructuring.

Several procedures are available for companies in difficulty:

- Safeguard procedure: for companies that are not yet insolvent but are in danger;

- Judicial reorganisation: used when a company is unable to meet its debts but wishes to continue trading.

- Judicial liquidation: applied when recovery is impossible, resulting in the termination of employment contracts.

These procedure may justify the dismissal of one or more employees on economic grounds. If this is the case, the conditions of validity of each dismissal vary according to the company's situation.

In France, the wage guarantee (AGS : Association for the Management of the Wage Earners' Debt Guarantee Scheme) ensures that the sums due to employees (wages, notice, severance pay, etc.) are paid in the event of safeguard, judicial redress or liquidation proceedings. This guarantee is financed by an employer's contribution obligatory for all employers.


Restricting Future Activities

It is possible to include in the employment contract a non-competition clause upon termination, if the clause is essential to protect the interests of the Company.

Such clause must be limited in time and space and it must take into account the specificities of the employee’s job. The clause must include the obligation for the employer to pay a financial compensation to the employee. The compensation is generally proportional to the employee's salary and to the duration of the prohibition of competition. It must be calculated taking into account the gross salary, and generates paid holidays (in practice usually between ¼ - ½ month of salary - depending on the Collective bargaining agreement or the employment contract).

The employer may unilaterally waive the non-compete clause if this is provided for in the employment contract.


Whistleblower Laws

Under French labor law, employees may report to their employer or to various authorities outside the company information concerning a crime, an offence, a threat or harm to the general interest.

The warning given to the employer may also concern a serious risk posed by the company to public health or the environment.

A protection is provided for whistle-blowers who report or disclose information, without direct financial compensation and in good faith.

The whistleblower is protected against any disciplinary or other retaliatory action, including the following: Suspension, lay-off, dismissal, refusal of promotion, tansfer of duties, change of workplace, reduction in salary, suspension of training, negative performance appraisal, disciplinary measures, discrimination, non-renewal of a fixed-term or temporary employment contract.

An employer who acts or takes a decision against a whistleblower that is contrary to the principle of protection may have his action annulled by the court.


Special Rules For Garden Leave

In French law, the notion of garden leave is not as formalized.

However, it is possible for an employer to exempt an employee from performing his or her work while maintaining his or her salary, for example during a period of notice or to preserve sensitive information. However, this practice is subject to the rules of proportionality and good faith, and must not be used as a disguised punitive measure.



Severance Payments

Except in case of dismissal for gross misconduct, the employer must pay to the employee:

- Pay in-lieu of notice (of the notice requirement is waived)

- Pay in lieu of paid leave;

The amount of the severance indemnity is the most favourable between:

a. The legal termination indemnity (1/4 of the monthly gross salary per year of services up to 10 years);

b. The one provided by the applicable CBA;

c. The contractual indemnity provided by the employment contract.



Special Tax Provisions And Severance Payments

There is a specific social and tax exemption regime applicable to the dismissal indemnity which may lead, taking into account all the indemnities paid with regards to the termination of the employment contract:

- up to €94.200 for social exemption (for 2025)

- up to €282.600 for tax exemption (for 2025).

A 9,7% tax payed by the employee (CSG/CRDS) is applied to the dismissal indemnity for its part exceeding the amount of the legal or CBA severance payments due to the dismissed employee.

If the amount of severance indemnities exceeds the overall amount of 471.000 euros (for 2025), social charges are to be paid on the total amount.

The indemnity paid in case of mutual termination (“rupture conventionnelle”) also benefits from the tax and social exemption regime described above. However, the part of the indemnity that is exempted from social security charges is subject to a specific tax paid by the employer (rate of 30%).


Allowances Payable To Employees After Termination

In the event of involuntary loss of employment (redundancy, mutual contract termination, etc.), an insuree can receive unemployment benefits (paid by “France Travail”) on condition that they have worked for at least 6 months. The amount of job seeker’s allowance, and the length of time for which it will be paid, depend on the contributions the individual has paid into the General Social Security System and the duration for which they have done so.


Time Limits For Claims Following Termination

For claims relating to the performance of the employment contract there is a time limit of 2 years.

For claims relating to the termination of the employment contract there is a time limit of 1 year.

Claims relating to the payment of salaries must be brought within 3 years.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

In the event of dismissal without real and serious cause, the employee may be entitled to damages for unfair dismissal. The amount of damages for unfair dismissal is set by a legal scale provided by the French Labor Code (“Macron Scale”) and depends on the size of the company (more or less than 11 employees) and the seniority of the employee.

However this scale does not apply if the dismissal is considered as void (ex: in case of harassment or discrimination).



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Philippe Rogez
Racine Avocats
France


Margaux Succurro
Racine Avocats
France


Disclaimer:

© 2024, Racine Avocats. All rights reserved by Racine Avocats. as author and the owner of the copyright in this chapter. Racine Avocats. has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: October 2024