Understanding End of Engagement in France

In France, terminations can be quite complex and involve following detailed procedural steps outlined in French labor law and regulations that were enacted to protect worker rights. Understanding best practices and local regulations will be key to minimizing risk and liability when considering ending a contract with a worker.  

French Legal Framework 

France is known for having some of the strongest employment-related protections for workers in the world. Terminations in France are regulated by the “Code du Travail” (i.e., labor code), which provides considerable rights to workers.  The French labor code only permits dismissal as a last resort. Businesses are required to evaluate other available methods to avoid termination before deciding that it is the only viable option. There are strict procedures that must be followed to ensure compliance with local regulations that protect workers from unjust dismissals. Following proper procedures for the termination options in France protects companies from legal liability and extraneous legal costs.   

Termination Options in France 

Companies have limited options for terminating workers in France. Each option has its own regulations and procedures. Below, we will review these options, but please keep in mind that each termination will be unique to the specific circumstances and facts surrounding the worker’s engagement. Before choosing to end a worker’s engagement or entering into any conversations with the worker directly regarding a potential termination, it is important to evaluate the different options and in cases where your company is utilizing an employer of record (EOR) service, connect with the EOR before taking any action. 

Mutual Termination Agreement (MTA): 

A Mutual Termination Agreement (MTA) is one of the most common options taken to dismiss a worker in France. This provides a more flexible and collaborative process for all parties as both the worker and company will come to mutual terms to end the engagement.

With this option, both the worker and company actively negotiate the end of the contract, allowing the parties to end on mutually agreeable terms, often without involving the courts. However, while this option can be very appealing, it does open up the negotiation process with the worker.

These negotiations can take a bit of time since the worker will be allotted time to consider the offer and consult with their own legal representation if desired. While negotiations are in place, the worker will continue to be paid until there is an agreement reached and the MTA is signed.

On average, you can expect somewhere between 30-60 days (about two months) for an MTA to conclude (assuming agreeable terms can be reached). While there are some statutory payments that will be due to the worker, it is very common to offer additional incentive pay above what is statutorily owed to help encourage the worker to agree and sign the MTA quicker. 

The reasonable optional incentive pay recommendations can vary depending on the facts surrounding the worker’s engagement and, on average, can be between 3-6 months of additional salary. While there may be some additional costs associated with this option, with French labor laws and courts heavily favoring the worker in combination with costly legal expenses that are incurred with termination proceedings, this is still seen as a more favorable option in most situations.  

Termination for Poor Performance or Personal Reasons 

This form of termination can be used when there are documented concerns about the performance or behavior of a worker. Justified reasons to proceed with this type of termination will include misconduct or underperformance. There are strict documentation requirements and procedures that must be followed in this case, which involve a pre-dismissal meeting, written notice, notice period, and severance pay.

Written evidence is required to prove termination for cause for these reasons, both in the pre-dismissal meeting and if the case goes to court.  If the worker challenges the validity of the termination in court, this can open the company up to additional legal costs and extended timelines.

It is important that the procedures are closely followed with terminations of this nature and there is enough documentation to proceed with this option. Keep in mind that it is possible this option may not be available if there is not enough documentation, and workers often challenge terminations for cause in court since the laws are so favorable to workers.  

Termination for Economic Reasons 

Terminating a worker for economic reasons includes any termination related to the economic or financial health of the company. Justified reasons for this type of termination include internal restructuring, downsizing, or financial instability. To move forward with this option, it will need to be shown that the company must proceed with the termination due to internal changes in revenue, the decline in the economic situation, or operational efficiency issues.

Like termination for poor performance, written evidence is required to prove economic reasons as the cause. Depending on the number of workers affected, this could also involve a meeting with worker representatives from the Comite Social et Economique (CST) before being able to proceed with the dismissal. If available, there must also be documented attempts to offer alternative positions to affected workers. Severance payments would also be due in the case of terminations for economic reasons.

Similar to termination for performance-related issues, the workers could also choose to challenge this in court, which could produce increased costs for legal fees or damages if the court finds it in favor of the worker. While the timeline for this process could vary depending on the specific circumstances, information gathering, notice periods, and court proceedings, on average, 60-90 days (about three months) is common to have the initial procedure completed. 

With any option for termination in France, the procedures and regulations mandated by the labor code must be adhered to. Respecting the legal rights of the workers and following the local labor regulations and procedures will help ensure you remain compliant and avoid the risk of litigation.

When working with an Employer of Record (EOR) like TCWGlobal, your support team will provide information and support throughout the termination or MTA process.  When using an Employer of Record (EOR), it is imperative that prior to any communication with the worker, companies reach out to the EOR to ensure available options are fully understood and that proper procedures and notice requirements are being followed.  

Let Us Help!

While terminations in France can seem daunting, TCWGlobal is here to help! Our goal is to make even the most complex tasks manageable for our clients and assist in providing clear and legally compliant guidance. If you have any questions or would like information on how you can expand your workforce globally, let us know by contacting us at hello@tcwglobal.com! Let TCWGlobal handle the full lifecycle of your workforce both internationally and domestically so you can focus on growing your business.