FRANCE Law and Practice Contributed by: Laetitia Tombarello and Audrey Demourgues, Bredin Prat
7.4 Termination Agreements Mutual Termination Agreements
Collective bargaining agreements can provide for a more favourable procedure. Dismissed employees are entitled to a severance indemnity, which is determined by the law or the industry-wide collective bargaining agreement, on the basis of their average remuneration and seniority. Misconduct If the cause for dismissal is misconduct, the employer must, in principle, act within two months of learning of such misconduct, and the final decision to dismiss must be notified within one month after the pre-dis - missal meeting. In the case of a dismissal for serious misconduct ( faute grave ) or gross negligence ( faute lourde ), the employee is dismissed without any notice or any severance indemnity. Before initiating dismissal proceedings, or to mitigate operational risks between the employee’s invitation to the pre-dismissal meeting and the meeting being held, companies can temporarily suspend the employee by way of “preventative suspension” ( mise à pied con - servatoire ). This measure allows companies to carry out investigations on alleged misconduct while tem - porarily relieving the employee from their duties. Pre - ventative suspension can lead to dismissal if the com - pany finds that the employee’s actions are sufficiently “real and serious”, or to the employee’s reintegration within the company, potentially including reclassifica - tion of all or part of the preventative suspension as a “punitive suspension” ( mise à pied disciplinaire ), if a minor misconduct was committed. In this case, remu - neration will not be due to the employee during the punitive suspension period. Economic Reasons In respect of a dismissal for economic reasons (except for collective redundancies), additional steps must be observed, such as establishing the selection criteria that will be used to determine which employees will be made redundant and attempting to redeploy employ - ees within the company or other group companies in France.
Indefinite-term employment contracts may be termi - nated by means of a “mutual termination agreement” ( rupture conventionnelle ) between the company and the employee. Under this agreement, both parties agree to terminate the employee’s contract on a date of their choice, with the employee being entitled to a severance payment at least equal to the severance indemnity provided by the law or the industry-wide collective bargaining agreement. Several steps must be followed to conclude a valid mutual termination agreement, including: • the organisation of one or several meetings to dis - cuss the agreement; • the execution of a legal form, which can be supple - mented by a written agreement; and • a validation by the Labour Inspection. The whole process usually takes approximately 40 days. An individual mutual termination agreement is not a settlement agreement under which the employee waives their right to bring future claims; an employee who has only signed a termination agreement can still file claims in connection with the performance of their employment contract (such as requests for back pay). Settlement Agreements When disputes arise in relation to the termination of an employment contract, the parties can settle the dispute by way of a so-called “transaction” or “settle - ment agreement”, whereby the employee waives their right to file an action in relation to their employment contract against payment by the employer of a set - tlement indemnity. To be valid, a settlement agreement cannot be con - cluded before the actual termination of the employ - ment contract. In other words, employers have to be very careful when opening discussions in view of a settlement when the contract has not yet been duly terminated (eg, when such termination is only contem - plated or the process is in progress).
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