Roselyn Sands, of Paris law firm
Proskauer Rose, examines the strict rules that French employers have to comply
with before they can end an employee’s contract and how legal action can result
if the company deviates from the established procedure
Under French labour
law, the dismissal of any employee working under a French employment contract
of undefined duration must be supported by a “real and serious cause” based on
personal reasons or economic reasons. Moreover, the employer must comply with
the procedural rules for a dismissal.
Substantive Rules for
Dismissal
Following the employee’s trial
period, dismissal of an employee must be justified. To satisfy the legal
standard for a real and serious cause, the cause for dismissal must be:
– Objective, in that any grievance
against the employee must be concretely verified
– Real, in that any reasons
submitted by the employer in support of the termination must be established as
fact
– Precise, in that the reasons
submitted by the employer in support of the termination must correspond to the
actual cause underlying the termination
– Sufficiently serious to justify a
termination
A dismissal for personal reasons may
be based on a variety of reasons, including insubordination, professional
incompetence, acts of disloyalty or failure to observe rules of security.
A dismissal for economic grounds
will only be justified based on serious economic difficulties of the company
(and the group to which it belongs) or the necessity to restructure in order to
maintain a competitive position if it is at risk.
Moreover, Article L 122-45 of the
French Labour Code provides that an employee may not be sacked because of
sexual orientation, moral opinions, family situation, appearances, ethnic
origin, religious beliefs, trade union activities, political opinions or state
of health.
Procedural Rules for
Dismissal
French law requires that formal
procedures be followed when an employee’s contract is terminated. The
procedures differ according to whether the termination is individual or collective.
A collective dismissal is defined as a termination for economic reasons of two
employees or more within a 30-day period.
The procedure for an individual
dismissal (for personal and economic grounds) begins when the employer sends a
letter to the employee, calling him/her to a preliminary meeting, pointing out
the employee’s right to help during the meeting.
In the talks the employer states its
grievances against the employee and asks for reaction. The employee has, on
this occasion, the chance to explain him/herself. No decision regarding the
dismissal should be stated at the meeting as the employer must respect a
waiting period for reflection before making such decision.
Following this minimum statutory
number of days, the dismissal letter is sent by registered mail, return receipt
requested, setting out the precise reasons for the termination. The content and
form of the letter are important, as the employer may not justify the dismissal
on grounds that are not set forth in the letter itself.
The
dismissal letter marks the beginning of the notice period, which generally
varies between one and three months, based on the nature of the employee’s
duties. However, if an employee is dismissed because of gross misconduct (faute
grave), the termination is effective immediately upon receipt of the dismissal
letter.
In
such case, the employee is deprived of a notice period. A faute grave in French
law is defined as a cause for termination so serious that it renders the
continuation of the employment agreement impossible. This would also be the
case for a termination based on conduct intended to harm the employer (faute
lourde).
For
collective economic dismissals (defined as two or more employees within 30 days),
the French Labour Code requires the consultation of personnel representatives
on: the reasons for the proposed termination; the number of employees to be
affected; the professional categories to be affected; the order of termination
criteria; and the provisional timetable for termination.
A
works council may request the assistance of an accountant, to be paid for by
the company, who will analyse the causes and effects of termination. In
addition, the Labour Inspector must be informed and given the opportunity to
comment before the employer notifies the employee of his/her dismissal.
Most
important, when termination involves more than 10 employees in a company with
more than 50 employees, the employer must present a social plan. The purpose of
this is to demonstrate the efforts made by the company to avoid and limit the
number of dismissals and to minimise the impact for those employees whose
dismissal could not be avoided. This would include, for example, internal and
external placement, job training and other out-placement services.
If
a company does not establish a social plan when required, or if the plan is
insufficient, the termination procedure, as well as the dismissals themselves,
could be rendered void by a court. As a result, the process would begin from
ground zero and dismissed employees would be entitled to reinstatement.
Termination Indemnities
and Damages
The
employer may exempt the employee from performing his/her duties during the
notice period. In such case, the employee is entitled to a notice period
indemnity in lieu of salary. The employee is also entitled to a termination
indemnity, as provided by law and the company’s collective bargaining
agreement. This indemnity varies according to the seniority of the employee,
and whether the employee is a manager (cadre). The employee is entitled to
accrued vacation pay as well.
In
addition, the employee may institute legal action against the employer for
violation of the dismissal procedure and/or for
an
unjust dismissal. If the dismissal is held to lack a real and serious cause, an
employee with at least two years’ seniority is entitled to a statutory
presumption of at least six months’ salary as damages.
The
employee may obtain additional damages upon proof of the prejudice suffered;
punitive damages are not available and are not recognised under French law.
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In
conclusion, the dismissal of an employee under French law, regardless of the
employee’s nationality, requires the observance of strict procedural and
substantive requirements that vary depending on the reason for the termination,
the number of employees to be terminated, the number of employees in the
company and the presence of a works council or other employee representative
institutions.
Edited
by Clare Murray, employment law partner at Fox Williams and editor of
hrlaw.co.uk, Fox Williams’ online employment law information service
