France has a simple and effective contract termination procedure called ‘termination by agreement’ (‘rupture conventionnelle’) that meets the needs of employers and employees alike. This new procedure for terminating contracts by mutual consent has proved to be very successful. In 18 months, nearly 250,000 agreements have been signed – over 600 per day! Employers and employees are clearly convinced by this new type of “amicable divorce”, which offers both flexibility and security.
Termination “flexicurity”
‘Termination by agreement’ has the advantages of flexibility, security and simplicity. The employee can receive unemployment benefits and the employer does not need to provide a reason for the termination. Both parties agree on an end date for the contract and no specific advance notice is required. A termination payment is made equal to what would be provided as a redundancy payment…
Simplified formalities
The parties have at least one meeting and agree upon the terms of the termination. After reaching an agreement on the payment amount and when the contract will end, all that is left to do is fill in a simple legal form and after a two-week waiting period the form is sent to the Labor Office. The authorities can veto the termination, but it is tacitly approved if more than two weeks pass by without a response.
Multiple uses
This type of termination may be used in a number of instances, including with labor representatives. The only real limitation would be using the procedure for large numbers of employees instead of implementing a redundancy plan.
Disputes
This “amicable divorce” is not suitable either in cases where the employer and employee disagree, for example, on a salary component. Employees can actually refer the case to a judge after signing the termination agreement to demand payment of any money their company owes them or any damages due if they have suffered an injustice (discrimination, harassment, etc.).
Stéphanie Stein, Attorney/Partner, Eversheds LLP
with Ludovic Bergès, legal expert
