The termination in the French Payroll.

In France there are 2 main types of termination.

One is the agreed termination called “Rupture conventionnelle” the second one is the classic termination.

Agreed termination

This termination is an agreement between the employer and the employee. The process is simpler than the basic termination one and avoid any notice period.

The process

The process is simple:

  1. The employer or the employee request to termination from the other party.
  2. The 2 parties meet (sever times if needed) and agree on the terms of the termination.
  3. The 2 parties sign the official termination document. This document is provided by the administration.
  4. Once the document is signed, both parties have 15 calendar days to change their mind.
  5. Once the 15 calendar days are past, the company sends the official document to the administration. The administration then has 15 workable days to refuse the agreement.
  6. Once this delay is past the employment contract can be terminated.

The cost

The cost of this termination is the cost of the legal (or conventional) termination indemnity.

Legal cost is ¼ of the average gross salary per year of seniority.

Collective bargaining agreement can state a higher indemnity.

Termination payroll

Classic termination

The basic termination process is also called the termination with cause. It is more complex and subject to court judgment than the agreed termination.

The process

The process his more complex and imply more delays than the one for the agreed termination.

  1. The employer invites the employee to an interview to discuss the termination.

The invitation must be sent by registered letter. It must include

  1. the subject of the interview.
  2. The place date and time of the interview.
  3. The possibility for the employee to be assisted and the place where he can find this assistance.

The interview must take place at least 5 days after the registered letter is first presented to the employee’s contact address.

  • The interview takes place

During the interview, the employer explains the reason for the termination and hear the employee’s explanations.

  • If the employer doesn’t change his mind, he sends the termination letter.

The employer must wait at least 2 workable days after the interview to send the termination letter.

The termination letter must include all the employer’s motive for the termination.

With 15 days after receiving the termination letter, the employee can ask for additional explanation from the employer. This request must be done by registered letter.

The employer then has 15 days to answer the employee by registered letter.

  • The employee’s notice period starts the day after receiving the termination letter.
  • The end of the notice period is the last day of employment.

The cost

Except in case of misconduct, the cost of the termination is the payment of the legal or conventional termination indemnity.

Legal cost is ¼ of the average gross salary per year of seniority.

Collective bargaining agreement can state a higher indemnity.

WARNING

The cause of the termination must be a legal one. The employer must keep every proof the cause should the employee complain to the court of unlawful termination.

This is the reason why French Payroll Expert always recommends seeking the advice of a lawyer in case a classic termination.

Increase of the Legal Termination Indemnity

Labour Law

The new labor law change things slowly but steadily. One these changes is the increase of the termination indemnity.

Previously

In the previous labor law, the termination indemnity was calculated for terminated employees of at least 1 year of seniority.

The indemnity was worth 1/5 of the average monthly salary.

For employees with at least 10 years of seniority, the indemnity was increased of 2/15 of the average monthly salary per year of seniority over 10 years.

The average monthly salary was the best of the average salary over 12 months or over 3 months.

The termination indemnity is not to be paid in case of a termination for grave misconduct.


Example

An employee of 25 years of seniority was paid an indemnity of:

[25*(1/5)] + [15*(2/15)] = 7 times the average monthly salary.


With the new law

For all termination signed after the 26th of September 2017 the termination indemnity is calculated for terminated employees of at least 8 months of seniority.

The indemnity is worth 1/4 of the average monthly salary for the first 10 years of seniority. And 1/3 of the average monthly salary for the rest of the seniority.

The average monthly salary is the best of the average salary over 12 months or ,if the employee has less than 12 months of seniority, the average monthly salary over all the months previous to the termination, or over 3 months.

The termination indemnity is not to be paid in case of a termination for grave misconduct.


Example

An employee of 25 years of seniority was paid an indemnity of:

[10*(1/4)] + [15*(1/3)] = 7,5 times the average monthly salary.


French Payroll advises

There are 2 things to keep in mind:

  1. The collective bargaining agreement termination indemnity can exceed even the new legal. Have a look at your CBA before calculating your termination indemnity.
  2. Other indemnities such as retirement indemnities and mutual agreement indemnities are linked to the legal termination indemnity. Therefore, their calculation method evolves the same way.

 

French Payroll Expert


Source: https://www.service-public.fr/particuliers/vosdroits/F987

Lying during a recruitment is cause for termination

Recruitment

An employee lied during his recruitment interview. He claimed he had an experience as regional director which wasn’t true.

This previous experience was a requirement for the employer. Therefore, the cassation court judged that the termination for grave misconduct was legit.

An employee cannot claim a false experience during his recruitment.

An employer can fire an employee for grave misconduct if the employee lied on his resume.

However, for such a termination to be valid, the employer must prove that because of the lie, the employee does not have the skills required for the job.


Source
RF Social : http://rfsocial.grouperf.com/depeches/35388.html

FPExpert

The judge cannot be too generous.

Court judgement

In this specific case, and employee has had successive short term employment contracts.

When the final contract ended, the employee asked the judge to have the contracts reclassified as one undefinite term contract.
The judge agreed. He then condemn the company to the pay the employee:

  • 2 indemnities for dismissal without just cause.
  • 1 notice period indemnity.
The cassation court disagreed with the judge.
The employee could only have claimed:
  • One indemnity for reclassification. Which cannot be inferior to one-month salary.
  • One indemnity for dismissal without cause.

The judge of the court of appeal has been too generous and the judge of the cassation court has cancelled the judgment.


Reminder
Without proper cause successive short term employment contracts can be reclassified as one indefinite term contract.
In case this the company must pay the termination indemnity as if the short term contract has been an indefinite one. And the employee is untitled to an indemnity for dismissal without just cause as the process for termination of an indefinite term contract has not been completed.

Source
RF Paye : http://rfpaye.grouperf.com/depeches/35094.html
FPExpert

No more « sommes isolées » as of the 1st of January 2016.

Termination payroll

The “sommes isolées” are exceptional gross amounts paid to the employee and due to the termination of his employment contract.

The retirement contributions paid on these gross amounts were distinct from the normal retirement contributions.

As of the 1st of January this will no longer be the case.


Exemple of “sommes isolées” :
Indemnity for unpaid vacation | indemnity for unpaid RTT | Termination indemnity subject to social contributions | Definite term contract indemnity | Indemnity for non-concurrence clause …

Reduction by half of the termination indemnity exempted from social contributions

Part of the termination indemnity is exempted from social contributions and CSG/CRDS contributions. However, when a termination indemnity exceeds 10 times the annual social security sealing it is fully subject to social contributions.

This may change in 2016 as the parliament modified the 2016 finance law to have this exemption limit reduced to 5 time the annual social security sealing.


Reminder :
2015 annual social security sealing: 38 040 €
Expected 2016 annual security sealing : 38 616 € (to be confirmed)

FPExpert