The French Employment Contract
Understanding the contractual employee-employer relationship.
French labour laws are very complex and extensively regulated, especially when compared to other countries. It is therefore essential for any company wishing to hire employees in France to familiarize itself with the specifics of Labor Laws in France, notably when it comes to employment contracts.
Before concluding a French employment contract, it is critical to be aware of existing types of employment contracts as well as specific contract clauses. It is also recommanded to be informed about the different options for terminating an employee in France such as dismissal or mutual termination agreement.
First things first: the Collective Bargaining Agreement
When drawing up the French employment contract for your first employee, it is important to determine the collective bargaining agreement. These exist for a wide range of industries (e.g. CBA SYNTEC of the IT industry, CBA of the wholesale industry, CBA of the textile industry) and they are often universally binding. As such, there application is obligatory and the employment contract must comply with it.
In France, there are different categories of employees such as workers, technical staff and supervisors referred to as ETAM, and executive level staff. These are in some cases treated differently, notably when it comes to notice period or, in some cases, severance payment. The status and classification of your employee should be mentioned in the employment contract. This step is not to be neglected as the minimum salary is determined based on this classification.
Any clause of the employment contract that conflicts with the collective agreement will only be valid if more favorable to the employee.
What are CDD and CDI contracts in France?
In the private sector, there are two contract forms, the permanent contract (contrat à durée indéterminée – CDI) and the fixed-term contract (contrat à durée déterminée – CDD). The permanent contract is the most common form in France. Opposed to other jurisdictions, a fixed-term contract is very strictly regulated in France. Indeed, it is only authorized in very few cases. These include for instance, substitution of an absent employee or the event of a temporary increase of the business activity.
What is the Standard Working Week in France?
Even though the 35 hours week was introduced 20 years ago as the new standard working time in France, longer working hours are very common. These should be fixed contractually. Every exceeding hour is considered overtime and as such is subject to an extra pay. This needs to be mentioned explicitely in the employment contract as well as on the French Payslip.
Weekly working hours might seem to be rather unsuitable for some employee categories. There are other forms of working times such as fixed number of annual working hours, often for sales staff. For executive level employees, it is common to agree on a fixed number of annual working days. In that case, overtime pay does no longer apply. To agree upon a fixed number of annual working days in the employment contract, this must first be authorized either by the collective agreement or by a company agreement.
The most Important Clauses of the French Employment Contract
The employment contract governs the employer-employee relation. As such, it will contain a number of clauses that both parties are in principle free to negotiate. These clauses lay down rules concerning various areas, such as the trial period, mobility or non-competition. Certain have to be fixed in writing to be valid. Others, such as the notice period, apply automatically.
Employers wishing to hire in France should be familiar with the most common contract clauses.
Trial Period - a standard clause of the French employment contract
It is strongly recommended to include a trial period in the employment contract. It has to be fixed by writing to be valid.
From the employer’s perspective, the trial period allows to assess whether the employee is suitable for the position for which he was recruited. From the employee’s perspective, it allows to assess whether the positions and the work conditions meet his expectation.
The procedure for terminating a trial period is less stringent than for a dismissal. There is no severance payment and the notice period is significantly shorter than the notice period for a termination after the trial period.
The duration of the trial period varies depending on the type of employment contract, permanent or fixed-term contract.
For a permanent contract, its duration varies further based on the employee’s professional category.
| Permanent contract | Trial period |
|---|---|
| Workers | 2 months |
| Technical staff, supervisor | 3 months |
| Executive level staff | 4 months |
For a fixed-term contract, the duration is calculated based on the duration of the contract, within these limits:
| Fixed-term contract | Trial period |
|---|---|
| Contract duration < 6 months | 14 days maximum |
| Contract duration > 6 months | 1 month maximum |
Certain Collective branch agreements stipulate that the trial period is renewable.
To implement this, the following 3 conditions have to be met:
- the possibility of renewal of the trial period is provided for by collective agreement;
- the renewal of the trial period is explicitly and clearly stated in the written employment contract;
- the employee has agreed, during the initial trial period, to the renewal by writing.
Notice Period
The duration of the notice period differs for a termination, during and after the trial period. For a termination after the trial period, the notice period is the same for both, employer and employee.
The duration of the notice period is fixed by law, by collective agreement, or by usage (general application, constant and fixed within a profession). For instance, according to the collective branch agreement ‘Sytnec’ in the IT sector, the notice period is 3 months for executive staff.
The employment contract may stipulate a notice period. It applies if its duration is shorter than that provided for by the collective agreement or usage.
Exclusivity
The exclusivity clause prohibits the employee from combining his job with another professional activity, whether paid or not. This clause is only valid if it is essential for the protection of the legitimate interests of the company, if it is justified by the nature of the task to be performed and proportionate to the purposes to be achieved.
Mobility clause
The mobility clause allows the employer to request the transfer of the employee to another location, based on the needs of the company. The mobility clause must provide for a certain geographical area and must not be abusive. A reasonable period of notice has to be respected and the clause should be used only in the interest of the company.
Non competition clause
Whereas the employee is not allowed to exercise a competitive activity during the duration of the work contract, he is free to do so after the end of the contract.
If the employer wants to prevent the employee from harming his interests after the end of the contract, he can include a non competition clause in the contract.
It limits the freedom of an employee to exercise, after termination of his contract, equivalent functions with a competitor or on his own account.
To be valid, the clause must meet several criteria:
- it must be of limited duration;
- its geographic application must be limited;
- it must only apply to a specific activity;
- it must provide for a financial compensation.
The employer may waive the application of the non-competition clause, either based on the employment contract, or the collective agreement. If neither the contract nor the collective agreement provides for a waiver, the parties can agree to waive the clause.
Company car
A company car is a great benefit in kind to offer to your employee. However, many questions come with it, notably regarding the use. Firstly, can it be used for business and private purposes? Does the Company reserve the right to vary or withdraw the use of it? Under which conditions?
All this should be clear to both the employee and employer and as such, should be explicitly mentioned in the employment contract.
Home office
Home office is becoming more and more common. It is important to determine the conditions under which home office will take place.
In the event of an accident at work, the clause is particularly important. Based on the clause, the employment contract is presumed to be performed in home office. This is critical when an accident occurs at home during office hours.
Futhermore, the employer will have to refund the employee’s expenses, including a home occupancy allowance.
Formal requirements of a French Employment Contract
A written contract is not only recommended in order to stipulate certain contract clauses, some contract types actually must be in writing. Furthermore, the contract language has to be French.
Written contract
The absence of a written contract can have major consequences. A temporary contract that was not fixed by writing can be reclassified by the Labor Court to be a permanent contract. The same applies for part-time contracts. They can be reclassified to be full-time contracts.
Most often, a written employment contract is signed and this then needs to meet further formal requirements such as in regard to the language.
Contract Language of the French Employment Contract
When drawn up in writing, the work contract must be drawn up in French. A bilingual version, for instance French – English is recommended for foreign companies.
Promise of Hire
In France, it is common to confirm the employment proposal to the future employee, while the employment contract is drawn up. This is referred to as ‘promesse d’embauche’, literally ‘promise of hire’. This proposal, or promise, can become legally binding if it contains sufficiently precise elements on the definition of the proposed job, the place of work, the salary and the starting date.
This is often requested by candidates when they are not immediately available. This allows the future employee to resign from the current position with the security of a new job.
However, employers should be aware of the different legal implications, notably, in the event of a revocation by the employer. The revocation of a unilateral promise of an employment contract, is assimilated to a dismissal without real and serious cause.
French Employment Contracts - Conclusion
Companies who consider hiring in France, should be familiar with all aspects of the French employment contract. It is critical to determine the collective bargaining agreement and to familiarize yourself with the most common contract clauses as well as formal requirements.
Furthermore, before agreeing on a salary, you should know about Payroll Taxes in France.
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