Terminating an Employee in France
From terminating the trial period to dismissal for personal or economic reasons.
Terminating an employee in France is very stringently regulated by French labor laws. These laws are complex and tend to be pro-employee. Especially, when compared to countries like the U.S. where employees can be fired at any time and for any reason.
There are different ways to terminate a French employment contract, from the mutual termination agreement to employer initiated termination based on personal or economic reasons. Familiarizing yourself with these different termination types can help to safeguard your company’s interests.
In France, besides the administrative burden, the costs associated with a termination can be significant. Some terminations incur a severance payment which cannot be neglected and a non-justified dismissal can result in hefty damage claims by the employee.
Some of the following information is specific to permanent contracts, in certain cases different rules apply to fixed-term contracts in France.
Terminating an Employee in France
Sometimes it is just not possible to find a mutual termination agreement with an employee, or the reasons for the separation might be so severe that the employer does not even consider it. In that case, the employer can examine the possibilities of a termination.
In France, these are very stringently regulated. First of all, there is the termination of an employee during the trial period. Furthermore, the employer can terminate the employment relationship based on specific reasons like serious misconduct.
Terminating the Trial Period in France
During the trial period, the employer is free to terminate the employment contract. This termination must be related to the employee’s skills for the job. In general, no particular procedure is imposed, only a notice period has to be respected. Its duration varies based on the duration of the contract. For a contract duration longer than three months, the notice period is at least one month.
What is a Valid Reason for Terminating an Employee in France?
Based on French labor laws, the employer who wishes to terminate an employment contract must provide proof of a reason for dismissal. This ground must be based on a real and serious cause. The employee can contest his dismissal by appealing to the labor court.
Dismissal based on personal reasons
Dismissal for personal reasons is dismissal for which the reason is based on the behavior or actions of the employee. The labor law in France distinguishes:
- dismissal for disciplinary reason (e.g. in the event of employee misconduct),
- dismissal for non-disciplinary reasons (e.g. in the event of insufficient results).
In order to be considered a real and serious cause of the reason for dismissal it must meet the following 3 criteria:
- It must be based on real facts (e.g. absence of the employee from his company without valid justification)
- It must be precise and verifiable (e.g. absence of the employee from his company from March 10 to 22, for example)
- It must be important enough to justify the termination of the employment contract (e.g. disruption of the functioning of the company, for example)
A complex procedure has to be respected.
A disciplinary reason can further be broken down based on the gravity of the misconduct, with an impact on severance pay and the notice period.
Dismissal for economic reasons
Any company can dismiss, under conditions, an employee for economic reasons. The labor law in France stipulates that a company must implement measures to avoid the dismissal of the employee. Consequently, before or during the dismissal procedure, the company is required to implement preventive, support and redeployment measures for the employee.
A complex procedure has to be respected.
What Is The Duration Of The Notice Period In France?
The duration of the notice of resignation is fixed by collective agreement, by law or by usage. It can vary based on the employees category and the seniority in the company.
As an example, for executive level staff with a seniority of two years, a notice period of two months applies based on the Labor Code. Many collective agreements provide for a longer notice periode, so in the case of the CBA SYNTEC in the IT sector which stipulates a notice period of 3 months for executive staff.
This might seem rather long, especially if the relationship with the employee is poor. The employer might not want that the employee continues working. In that regard, it has to be noted that the employer cannot impose taking remaining vacation days. If the employee doesn’t work at the request of the employer, salary payment is due.
Lastly, it has to be noted that there are exceptions. In general, the notice period does not apply if the employee committed a serious or gross misconduct.
What are the Costs involved in Terminating an Employee in France?
Depending on the type and reason of the termination, different costs are involved. To simplify, these can be classified as in below table. Some exceptions may apply.
| Type of payment | Resignation by the employee | Mutual termination | Termination of the trial period | Dismissal for simple misconduct, for non-disciplinary reason or for economic reasons | Dismissal for serious misconduct | Dismissal for gross misconduct, with the intention to harm the employer |
|---|---|---|---|---|---|---|
| Payment of remaining vacation days | yes | yes | yes | yes | yes | no |
| Notice period | yes | no | yes, but significantly shorter than for a dismissal | yes | no | no |
| Severance payment | no | yes, possibility to negotiate a higher amount | no | yes | no | no |
What is the Amount of the Severance Payment in France ?
To benefit from a severance pay in France, the employee must have at least 8 months of uninterrupted seniority. The amount depends on the length of service and the employee’s average wage.
According to the Labor Code, the minimum legal severance payment corresponds to
- 1/4 monthly salary per year of seniority, for the first 10 years
- 1/3 monthly salary per year of seniority, from the 11th year on
Many collective branch agreements provide for higher severance payments, so in the case of the CBA SYNTEC in the IT sector. It stipulates a severance payment corresponding to 1/3 monthly salary for executive level staff with a seniority of two years. Other collective bargaining agreements that significantly increase the severance payment are the CBA Telecommunication and the CBA: Distance Trading.
Some collective bargaining agreements like the CBA of the pharmaceutical industry increase the severance payment for aged employees.
The severance payment for dismissal can be exempt from employer’s contributions and payroll taxes in France within certain limits.
What is the Amount of Damages in case of a Wrongful or Unfair Dismissal?
In the event of an unjustified dismissal, the Labor Court can award an employee compensation payable by the employer. Its minimum and maximum amount is fixed in a table. It depends of the employee’s length of service and the size of the company. For instance, an employee with four years of seniority can receive between one and five months’ salaries in a company of less than 11 employees. In a company with 11 or more employees, the same employee could receive between three and five months’ salaries. The French government provides for a table of minimum and maximum indemnity claims.
Termination Documents
When leaving the company the employee will receive his final French Payslip as well as the following documents:
- attestation for the unemployment insurance
- last payment confirmation
- work certificate
Terminating an Employee in France - Conclusion
Terminating an employee in France is very stringently regulated. You will need a valid reason. A separation might be costly.
It is important to familiarize yourself with the different options and the costs involved before making key decisions. It is crucial to have a partner on your side like My Payroll Pro France. We are a French payroll provider with a network of perfectly bilingual lawyers that will be of your assistance. Our payroll services in France include cost estimations for instance in the event of an employee termination in France.
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