Contractual termination (“rupture conventionnelle”) in France and Monaco

Contractual termination, introduced into French law in 2008, is a method of terminating the employment contract of an employee on a permanent contract, which allows the employer and the employee to mutually agree on the conditions of this termination (articles L 1237 -11 et seq. of the Labor Code).

With the contractual termination, the employee can benefit from the payment of severance pay, the amount of which cannot be less than the legal severance pay and unemployment benefits, which presents a great advantage compared to resignation.

This method of terminating the permanent contract also presents an advantage for the employer in that it allows him to avoid the cumbersome formalities linked to dismissal and the risks of litigation relating thereto.

Due to these advantages for both parties to the employment contract, the number of contractual terminations continues to increase in France. Since 2022, more than 500,000 contractual terminations have been signed per year and in the first quarter of 2024, 132,500 conventional terminations have already been signed.

 

Source : dares.travail-emploi.gouv.fr

 

Areas of application

Contractual termination is only possible for permanent contracts (in the private and public sectors). It cannot be concluded during the trial period.

The contractual termination system does not apply to employees on fixed-term contracts, temporary contracts or apprenticeship contracts.

Procedure

The request/proposal for a contractual termination can come from either the employee or the employer. There is no formalism to respect. The employer or employee who receives a request for a conventional termination has no obligation to respond, even if the request is made by registered letter.

When the request for a contractual termination is accepted, the employer and the employee must set the date of an interview, during which they together define the conditions of the termination. The employee’s departure date cannot occur before the day after the day of approval of the agreement. The amount of compensation is negotiated between the parties and must be fixed by mutual agreement.

The employer and employee can meet several times if necessary to negotiate the conditions, before signing the agreement. The drafting of the conventional termination agreement is done online by completing the form on the TéléRC website, unless this is impossible, in which case the employer and the employee sign the Cerfa 14598 form.

After signing the agreement by both parties, the employer gives a copy to the employee.

From the day after signing the termination agreement, the employer and the employee have a period of 15 calendar days to exercise their right of withdrawal.
At the end of this 15-day period, the employer or employee sends a copy of the agreement to the DREETS (Regional Directorate of the Economy, Employment, Labor and Solidarity) with territorial jurisdiction via the site TéléRC.

DREETS has 15 working days to verify the validity of the agreement. Beyond this period, if the DREETS does not issue a refusal decision, the conventional termination agreement is approved.

The employee’s employment contract is terminated on the departure date indicated in the termination agreement.

Litigation

Contesting a contractual termination is possible before the industrial tribunal for 12 months from the date of approval of the agreement (article L 1237-14 of the Labor Code). Beyond this period, any appeal will be deemed inadmissible (Court of Cassation, Social Chamber, May 11, 2023, 21-18.117).

However, in the event of fraud, the starting point of the limitation period may be postponed to the day on which the person invoking it became aware of it, if the purpose of the fraud was to prevent the employee from carrying out his action in the legal period of 12 months.

When the nullity of the contractual termination is attributable to the employee, the contractual termination produces the effects of a resignation and the employee must reimburse the termination compensation to the employer and the unemployment benefit to France Travail (Cour de cassation, Social Chamber, June 19, 2024, 23-10.817).

French government’s position

At the end of 2023, due to the significant increase in the number of contractual terminations in recent years and that of unemployment and unemployment insurance debt as a result, the government considered a possible elimination of conventional termination.

This information, revealed by the newspaper Tribune du Dimanche on November 26, 2023 and relayed by several newspapers, sparked strong reactions from unions and lawyers.

In February 2024, the Minister of Labor, Catherine Vautrin, denied this information by ensuring that the elimination of the contractual termination was “neither studied nor envisaged”.

 

Contractual termination in Monaco

While the French government was considering the possible removal of the contractual termination system, the Principality of Monaco decided to introduce conventional termination following the example of French law.

Dismissal in Monaco : “Article 6”

Under Monegasque law, the dismissal without cause of an employee on a permanent contract is possible thanks to Article 6 of Law No. 729 of March 16, 1963 concerning the employment contract which provides:

Article 6
The indefinite employment contract can always end at the will of one of the parties; it ends at the end of the notice period.

Under this provision, the employer can dismiss an employee without justifying a reason inherent to the employee.

Article 6 severance pay is higher than that for dismissal for misconduct and is calculated based on the number of days of pay that the employee has actually worked for the employer. The reference salary is that of the month preceding the dismissal and the daily salary is obtained by dividing the monthly salary by 25 days. This compensation is, however, capped at six months’ salary, regardless of the number of years of seniority of the employee (article 2 of Law No. 845 of June 27, 1968 on dismissal and redundancy compensation for employees) .

Article 6 dismissal does not prevent the employee from seizing the Labor Court, which then rules on the existence or not of unfair dismissal (and not dismissal without real and serious cause). The Labor Court upholds the employee’s grievance for unfair dismissal and grants compensation for the damage suffered by the employee in the event of:

• Dismissal for false cause (when the dismissal on the basis of Article 6 conceals an individual economic dismissal);
• Insufficiency of the severance pay paid to the employee by the employer; And
• Brutal and vexatious dismissal or dismissal with reprehensible levity.

This provision of Article 6 has long been criticized by the USM (Union of Trade Unions of Monaco) but has never been called into question by the Prince’s Government.

Introduction of contractual termination in Monegasque law

Since the end of 2022, reflection on the establishment of contractual termination as an alternative method of terminating the employment contract upon dismissal Article 6 has been carried out and on November 28, 2023, the National Council, the unicameral parliament of Monaco, adopted the proposed law no. 259 amending certain provisions of Law no. 729 of March 16, 1963 relating to the employment contract, amended and establishing the contractual termination of the employment contract.

This bill, addressed to the Prince’s Government on December 5, 2023, will be transformed into a bill which will be tabled no later than June 1, 2025.

 

 

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