France — Termination & Severance

French labor law divides lawful employer-initiated termination of a permanent contract (contrat à durée indéterminée, CDI) into two principal categories governed by distinct chapters of the Code du travail: dismissal for personal grounds (licenciement pour motif personnel, Articles L1232-1 through L1232-14) and dismissal for economic grounds (licenciement pour motif économique, Articles L1233-1 through L1233-91). The employer's burden is to establish that the termination falls squarely within one category and meets the statutory test for that category.

## Dismissal for personal grounds (licenciement pour motif personnel)

Article L1232-1 of the Code du travail establishes the foundational rule: "Tout licenciement pour motif personnel est motivé dans les conditions définies par le présent chapitre. Il est justifié par une cause réelle et sérieuse" (Every dismissal for personal grounds must be motivated in the conditions defined by this chapter. It is justified by a real and serious cause). A personal-grounds dismissal is inherent to the person of the employee (inhérent à la personne du salarié) — the employee's conduct, performance, capability, or health.

Personal-grounds terminations split into two broad sub-categories:

• Disciplinary dismissal: Fault-based terminations. French law recognizes three ascending tiers — faute simple (simple fault), faute grave (serious fault, rendering the employee's continued presence impossible even during notice), and faute lourde (gross misconduct with intent to harm the employer). Only faute simple preserves the employee's entitlement to statutory notice and severance.

• Non-disciplinary dismissal: Terminations for reasons other than fault, such as insuffisance professionnelle (professional inadequacy — a shortfall in skill or results that does not constitute fault), prolonged illness rendering contract performance impossible, or objective inability to perform the agreed role. These dismissals must still satisfy the cause réelle et sérieuse standard.

The cause réelle et sérieuse standard (real and serious cause) has two components. A cause is réelle (real) if it is objective, verifiable, and exact — not fabricated, not pretextual. A cause is sérieuse (serious) if the facts are of sufficient gravity to render continuation of the employment relationship impossible. Courts assess seriousness in light of the employee's role, seniority, prior record, and the specific facts. If a dismissal lacks a cause réelle et sérieuse, the conseil de prud'hommes (labor court) may order the employer to pay damages under Article L1235-3 (commonly referred to as the barème Macron scale after the 2017 Ordonnance reform, which capped and structured indemnities for unfair dismissal by employee tenure and employer size).

## Dismissal for economic grounds (licenciement pour motif économique)

Article L1233-2 sets the parallel standard: "Tout licenciement pour motif économique est motivé dans les conditions définies par le présent chapitre. Il est justifié par une cause réelle et sérieuse." Article L1233-3 defines the scope of economic dismissal: it is a dismissal "effectué par un employeur pour un ou plusieurs motifs non inhérents à la personne du salarié" (made for one or more reasons not inherent to the person of the employee) resulting from elimination or transformation of a position or modification of an essential contract term refused by the employee, consecutive to:

1. Economic difficulties characterized by a significant evolution in at least one economic indicator (decline in orders or turnover, operating losses, cash-flow or EBITDA deterioration), or any other element justifying such difficulties;
2. Technological changes (mutations technologiques);
3. Reorganization necessary to safeguard competitiveness (réorganisation de l'entreprise nécessaire à la sauvegarde de sa compétitivité);
4. Cessation of activity (not culpable liquidation).

For firms within a group, courts assess economic cause at the level of the sector of activity of the group in France (Article L1233-3, paragraph 2), defined by product/service nature, clientele, and distribution networks, not solely at the subsidiary level — a critical trap for multinational employers. Economic dismissals trigger heightened procedural obligations, including reclassification efforts (Article L1233-4 requires the employer to exhaust training and redeployment within the group before dismissing), consultation with employee representatives, and, for collective redundancies of ten or more employees in an enterprise of at least fifty employees within thirty days, establishment of a plan de sauvegarde de l'emploi (PSE, employment safeguard plan; Articles L1233-61 et seq.). Failure to comply with the PSE obligation renders the dismissal null.

## Prohibited grounds and nullity

Certain dismissal grounds are prohibited by law and trigger nullity (licenciement nul) rather than mere lack of cause réelle et sérieuse. Article L1235-3-1 enumerates grounds of nullity, including dismissals based on:

• Violation of a fundamental freedom (freedom of expression, union activity, religious liberty, exercise of the right of withdrawal under Article L4131-1);
• Discrimination on grounds enumerated in Article L1132-1 (origin, sex, family situation, pregnancy, physical appearance, patronymic name, health, disability, age, political or union opinions, religion, sexual orientation, gender identity);
• Harassment (harcèlement moral under Articles L1152-3, harcèlement sexuel under L1153-4);
• Whistleblowing or good-faith testimony;
• Exercise of the right to strike (Article L2511-1).

A null dismissal entitles the employee to a minimum indemnity of six months' salary (Article L1235-3-1), without the tenure or firm-size caps that apply to unfair dismissals under L1235-3, and the court may order reinstatement.

## Severance consequences hinge on the category and the cause

The classification — personal vs. economic, disciplined-fault tier, null vs. lacking cause réelle et sérieuse vs. procedurally irregular but substantively justified — determines:

• Statutory severance entitlement (Article L1234-9: employees with at least eight months' tenure receive statutory indemnité légale de licenciement; employees dismissed for faute grave or faute lourde forfeit it);
• Notice period (statutory notice under Articles L1234-1 and L1234-5, or conventional notice if more favorable; faute grave and faute lourde trigger immediate departure with no notice pay);
• Damages for lack of cause réelle et sérieuse or nullity (Articles L1235-3 and L1235-3-1);
• Priority re-employment rights (droit à la priorité de réembauchage, Article L1233-45, applicable to economic dismissals for one year).

Employers contemplating termination in France must carefully establish the facts, classify the intended ground, comply with the procedural requirements specific to that ground (preliminary interview under Article L1232-2 for personal dismissals, reclassification search and representative consultation for economic dismissals), and ensure that the dismissal letter (lettre de licenciement, Article L1232-6 for personal, L1233-16 for economic) states the precise ground with sufficient detail, because the letter fixes the scope of the dispute (Article L1235-1).

Source: Code du travail, Article L1232-1 Source: Code du travail, Article L1233-2 Source: Code du travail, Article L1233-3 (définition du motif économique) Source: Code du travail, Article L1235-3-1 (licenciement nul)

French law establishes a statutory floor for severance pay owed to an employee dismissed from a permanent contract (contrat à durée indéterminée, CDI) — the indemnité légale de licenciement. This indemnity is distinct from damages for lack of cause réelle et sérieuse or for nullity; it compensates for the loss of employment itself and is payable even when the dismissal is substantively and procedurally valid, provided the employee meets the eligibility criteria.

## Eligibility: eight-month tenure threshold and exclusion of serious fault

Article L1234-9 of the Code du travail establishes the foundational rule: "Le salarié titulaire d'un contrat de travail à durée indéterminée, licencié alors qu'il compte 8 mois d'ancienneté ininterrompus au service du même employeur, a droit, sauf en cas de faute grave, à une indemnité de licenciement." (The employee holding a permanent employment contract, dismissed when the employee has eight months of uninterrupted tenure with the same employer, has a right, except in case of serious fault, to a severance indemnity.)

Three conditions must be met:

1. Permanent contract (CDI): The statutory severance right applies only to employees on contrats à durée indéterminée. Fixed-term contracts (contrats à durée déterminée, CDD) terminate at their term and do not generate a statutory dismissal indemnity (they may generate an indemnité de précarité under different rules).

1. Eight months' uninterrupted tenure: The employee must have at least eight months of continuous service (ancienneté ininterrompue) with the same employer at the date the dismissal letter (lettre de licenciement) is sent. This threshold was lowered from twelve months to eight months by Ordonnance n° 2017-1387 of 22 September 2017 (the "Macron" labor reforms), applicable to dismissals pronounced after its publication on 23 September 2017. Periods of suspension of the employment contract (for example, unpaid leave, sick leave, parental leave) count toward the ancienneté threshold for the right to the indemnity (Article L1234-10 provides that suspension does not break ancienneté) but do not count in the calculation of the duration used to compute the indemnity amount, unless the employee is an elected local representative in certain cases (Article L1234-10, second paragraph).

1. No serious or gross fault: The indemnity is not owed if the dismissal is for serious fault (faute grave) or gross fault (faute lourde). Simple fault (faute simple) does not deprive the employee of the statutory indemnity; serious and gross fault do. This exclusion applies to the statutory minimum — a collective bargaining agreement may provide more favorable terms.

An employee dismissed on economic grounds or personal grounds other than serious fault, with at least eight months' tenure, is entitled to the statutory severance indemnity (unless a more favorable conventional indemnity applies; the employer must always pay the higher of the statutory floor and any applicable collective-agreement amount).

## The statutory formula: 1/4 month per year up to ten years, 1/3 month thereafter

Article R1234-2 of the Code du travail, as amended by Décret n° 2017-1398 of 25 September 2017, sets the minimum severance scale:

> L'indemnité de licenciement ne peut être inférieure aux montants suivants : > 1° Un quart de mois de salaire par année d'ancienneté pour les années jusqu'à dix ans ; > 2° Un tiers de mois de salaire par année d'ancienneté pour les années à partir de dix ans.

The formula is:

• First ten years: 1/4 month of salary per year of tenure.
• Years beyond ten: 1/3 month of salary per year of tenure.

Article R1234-1 clarifies that the indemnity is calculated per full year of service in the enterprise and accounts for months of service beyond full years on a proportional basis; Article R1234-1 further specifies that for an incomplete year, the indemnity is calculated proportionally to the number of full months.

Worked example

An employee with 12 years and 7 months of tenure, earning a reference salary of €3,000 per month, dismissed on grounds other than serious fault:

• First 10 years: (€3,000 × 1/4) × 10 = €7,500
• Next 2 full years: (€3,000 × 1/3) × 2 = €2,000
• Partial year (7 months): (€3,000 × 1/3) × (7/12) ≈ €583.33

Total statutory indemnity: €7,500 + €2,000 + €583.33 = €10,083.33 gross.

The employer must compare this statutory minimum with any amount specified in the applicable collective bargaining agreement (convention collective) for the employee's professional category and pay the higher amount.

## Reference salary: the higher of two averaging methods

Article R1234-4 of the Code du travail prescribes the methodology for determining the reference salary (salaire de référence) on which the indemnity is calculated. The employer must compute both of the following and use whichever is more favorable to the employee:

1. Average of the last twelve months: The average monthly gross remuneration (rémunération brute) for the twelve months preceding the dismissal. If the employee has fewer than twelve months of service, the average is taken over all months of service preceding the dismissal.

1. One-third of the last three months: One-third of the total gross remuneration for the three months immediately preceding the dismissal. When using this method, any annual or exceptional bonus or gratification paid during those three months is included only on a pro-rata basis (à due proportion) — for example, a year-end bonus paid in December is divided by twelve and multiplied by three when computing a three-month reference period that includes December.

Case law clarifies that the reference salary should reflect the employee's normal remuneration. If the employee was on sick leave or partial-activity furlough (chômage partiel) immediately before dismissal, courts have held that the reference salary should be calculated on the remuneration the employee would have received if working normally, not the reduced payments actually received during the period of suspension (Cass. soc., 23 May 2017, n° 15-22.223 for sick leave; Cass. soc., 9 March 1999, n° 96-44.439 for partial activity).

## Interaction with collective agreements and special regimes

The amounts prescribed by Articles L1234-9, R1234-1, and R1234-2 constitute the statutory minimum (indemnité légale). Many conventions collectives specify higher amounts (indemnité conventionnelle) — often graduated by professional category (executive vs. non-executive), reason for dismissal (economic vs. personal), or seniority. The principle of faveur requires the employer to apply the regime most favorable to the employee. In practice, the employer must:

1. Calculate the statutory minimum under R1234-2.
2. Calculate the conventional amount under the applicable convention collective.
3. Pay the higher of the two.

For dismissals on economic grounds under a mandatory employment safeguard plan (plan de sauvegarde de l'emploi, PSE; required for collective redundancies of ten or more employees within thirty days in firms of at least fifty employees), the PSE typically specifies enhanced severance terms that exceed both the statutory and conventional minima.

## Effective date and transitional rule

The current formula (1/4 up to ten years, 1/3 thereafter, eight-month qualifying period) took effect on 27 September 2017 under Décret n° 2017-1398 of 25 September 2017, implementing the labor reforms of Ordonnance n° 2017-1387 of 22 September 2017. Article 4 of the Decree provides that these provisions apply to dismissals and retirements pronounced, and to ruptures conventionnelles concluded, after its publication. Prior to 2017, the statutory formula was 1/5 month per year plus 2/15 month per year beyond ten years, and the qualifying period was twelve months (lowered to eight months by the 2017 reform).

An employer planning a dismissal in France must calculate the statutory severance precisely, verify whether a more favorable conventional regime applies, ensure the employee meets the eight-month qualifying threshold, confirm the dismissal ground does not constitute serious or gross fault (which would forfeit the indemnity), compute the reference salary under both R1234-4 methods and use the higher, and apply the tenure formula with proportional accounting for partial years. The indemnity is paid as part of the solde de tout compte at the end of the employment relationship and benefits from partial exemption from income tax and social contributions within specified ceilings.

Source: Code du travail, Article L1234-9 (eligibility) Source: Code du travail, Article R1234-2 (statutory formula: 1/4 and 1/3 month per year) Source: Code du travail, Article R1234-1 (per-year and proportional-month calculation) Source: Code du travail, Article R1234-4 (reference salary: 12-month or 3-month average)

French law imposes a mandatory notice period (préavis) on every employer-initiated dismissal of a permanent contract (contrat à durée indéterminée, CDI), with two narrow exceptions: dismissal for serious fault (faute grave) or gross fault (faute lourde) triggers immediate termination without notice, and cessation by force majeure (construed restrictively—typically limited to unforeseeable, irresistible external events such as natural disaster or war) relieves the employer of the notice obligation. In all other dismissals—whether for simple personal fault, non-disciplinary personal grounds, or economic grounds—the employee is entitled to statutory notice unless a collective agreement, individual contract, or local usage specifies a longer period.

## Statutory notice tiers under Article L1234-1

Article L1234-1 of the Code du travail establishes the foundational rule: "Lorsque le licenciement n'est pas motivé par une faute grave, le salarié a droit..." (When the dismissal is not motivated by serious fault, the employee has the right...). The statute then sets three notice bands by tenure:

1. Less than six months' continuous tenure: Notice duration is determined by statute, collective bargaining agreement (convention collective), individual contract, or, failing any of those, by local usage (usages pratiqués dans la localité et la profession). Article L1234-1(1°) does not specify a floor; in practice, many conventions collectives specify a minimum (commonly one week for employees, two weeks for supervisory staff, though the figures vary by sector and agreement).

1. Six months to less than two years' continuous tenure: One month of notice. Article L1234-1(2°).

1. Two years or more of continuous tenure: Two months of notice. Article L1234-1(3°).

The statutory formula is a mandatory floor. Article L1234-2 of the Code du travail provides that "Toute clause d'un contrat de travail fixant un préavis d'une durée inférieure à celui résultant des dispositions de l'article L. 1234-1 ou une condition d'ancienneté de services supérieure à celle énoncée par ces mêmes dispositions est nulle" (Any clause of an employment contract setting a notice period of shorter duration than that resulting from the provisions of Article L. 1234-1, or a condition of tenure greater than that stated in the same provisions, is void). If a convention collective, contract, or usage specifies a longer notice period or a more favorable ancienneté threshold, the more favorable term applies under the principle of faveur. For instance, many collective agreements specify two months' notice for non-executive employees (employés) with at least two years and three months for executives (cadres) with at least two years, both of which override the two-month statutory floor (though the specific durations vary by sector and agreement).

The statute uses the term "ancienneté de services continus" (continuous service tenure). Article L1234-8 provides that circumstances causing suspension of the employment contract—statutory leave (sick leave, parental leave, sabbatical), conventional leave, or contractual leave—do not break the continuity of ancienneté for purposes of determining the notice duration under L1234-1(2°) and (3°). However, the period of suspension does not count toward the ancienneté duration for purposes of crossing the qualifying thresholds (six months, two years). This is the same rule that applies to severance-indemnity ancienneté calculation under Article L1234-9.

## No serious or gross fault: the threshold test

The notice right exists only when the dismissal is not motivated by serious fault (faute grave). French law distinguishes three tiers of fault-based dismissal:

• Simple fault (faute simple): The employee's conduct or performance shortfall justifies dismissal but does not render the employee's immediate departure necessary. The employee retains the full statutory notice and severance entitlement.

• Serious fault (faute grave): The conduct is so serious that it makes the employee's continued presence in the enterprise impossible, even during a notice period. Examples: physical violence, theft, gross insubordination, willful destruction of company property. No notice is owed (Article L1234-1), and the contract terminates immediately. The employee forfeits statutory severance (Article L1234-9 excludes faute grave dismissals from the indemnité légale de licenciement).

• Gross fault (faute lourde): Fault committed with intent to harm the employer (intention de nuire). Same consequences as faute grave—no notice, no statutory severance—plus the employee may forfeit accrued paid leave (congés payés) depending on case law and the applicable convention collective.

The classification between simple and serious fault is fact-specific and frequently litigated. Courts assess the gravity of the facts, the employee's role and seniority, the impact on the enterprise, and whether immediate departure was objectively necessary. An employer who wishes to avoid paying notice must establish that the facts constitute faute grave or faute lourde; if the conseil de prud'hommes (labor court) later finds the fault was only simple, the employer will owe the indemnité compensatrice de préavis even though the employee did not work the period.

## Commencement, duration, and the fixed-term nature of the notice period

Article L1234-3 provides that "La date de présentation de la lettre recommandée notifiant le licenciement au salarié fixe le point de départ du préavis" (The date of presentation of the registered letter notifying the dismissal to the employee fixes the starting point of the notice period). The notice begins on the date the registered letter is first presented to the employee, not the date the employee actually retrieves or accepts the letter. If the employee is absent or refuses delivery, the first-presentation date still starts the clock.

The notice period is a fixed term (délai préfixe). Article L1234-4 provides that "L'inexécution du préavis de licenciement n'a pas pour conséquence d'avancer la date à laquelle le contrat prend fin" (Non-execution of the notice does not have the consequence of advancing the date on which the contract ends). If the employee falls ill during the notice period, or if the employer dispenses the employee from working, the contract end date does not change—it remains the date originally calculated as the end of the statutory notice from the first-presentation date. The notice period is not suspended or extended by illness, leave, or other suspension events occurring during the notice itself.

Article L1234-7 reinforces this: "La cessation de l'entreprise ne libère pas l'employeur de l'obligation de respecter le préavis" (Cessation of the enterprise does not release the employer from the obligation to respect the notice). Even if the enterprise shuts down during the notice period, the employer must pay the indemnité compensatrice for the full notice duration unless the shutdown qualifies as force majeure under Article L1234-12.

## Indemnité compensatrice de préavis: payment in lieu when notice is not worked

Article L1234-5 establishes the core compensation rule: "Lorsque le salarié n'exécute pas le préavis, il a droit, sauf s'il a commis une faute grave, à une indemnité compensatrice" (When the employee does not execute the notice, the employee has the right, except if the employee committed serious fault, to a compensatory indemnity). The second sentence of L1234-5 specifies: "L'inexécution du préavis, notamment en cas de dispense par l'employeur, n'entraîne aucune diminution des salaires et avantages que le salarié aurait perçus s'il avait accompli son travail jusqu'à l'expiration du préavis, indemnité de congés payés comprise" (Non-execution of the notice, in particular in case of dispensation by the employer, does not entail any reduction in the salaries and benefits that the employee would have received if the employee had performed work until the expiration of the notice, including the paid-leave indemnity).

The indemnité compensatrice de préavis is calculated as the gross salary and benefits the employee would have earned had the employee worked the full notice period. This includes:

• Base salary (salaire de base).
• Variable elements regularly paid during the reference period (commissions, bonuses that would have accrued, shift premiums).
• The pro-rata share of annual bonuses or 13th-month salary (treizième mois) attributable to the notice period.
• The indemnité de congés payés (paid-leave indemnity) for leave that would have accrued during the notice period.

The indemnity is owed whether the employer dispenses the employee from working the notice (dispense de préavis—a unilateral decision by the employer to send the employee home immediately while paying the notice in full) or the employee is unable to work the notice (for example, immediate hiring by a new employer, though the employee must offer to work the notice under Article L1234-1). If the employee commits faute grave after the dismissal letter is sent but during what would have been the notice period, courts have held that the faute grave committed during notice can forfeit the indemnité compensatrice that had not yet been paid (though the dismissal itself remains classified by the grounds stated in the dismissal letter under Article L1232-6).

Article L1234-5, third paragraph, provides that the indemnité compensatrice de préavis cumulates with the indemnité de licenciement (statutory severance under L1234-9) and with damages for lack of cause réelle et sérieuse under Article L1235-2. The three are distinct: notice compensates for the duration between notification and contract end; severance compensates for loss of employment; damages compensate for wrongful termination.

## Interaction with collective agreements and executive notice

The statutory one-month and two-month floors bind only in the absence of a more favorable provision. Many conventions collectives specify:

• Longer notice periods for certain professional categories. For example, executive staff (cadres) commonly receive three months of notice regardless of tenure (a conventional overlay that supersedes the two-month statutory floor for employees with two or more years).
• Graduated notice by seniority bands beyond the statutory two-year threshold (e.g., two months for 2–5 years, three months for 5–10 years, four months for 10+ years).
• Notice entitlement for employees with less than six months, where the statute leaves the matter to convention or usage. A common conventional provision is one week of notice for employés and two weeks for agents de maîtrise with any tenure above the trial period (période d'essai).

The employer must identify the applicable convention collective, verify the notice provisions for the employee's classification (employé, agent de maîtrise, cadre), and apply whichever is longer—the statutory floor or the conventional term. Failure to provide the longer conventional notice (or failure to calculate it correctly) triggers liability for the shortfall in the indemnité compensatrice.

## Effective date and common traps

The statutory notice framework under Articles L1234-1 through L1234-8 has been in force since 1 May 2008 (the recodification of the Code du travail) and has remained substantively stable. The 2017 labor reforms (Ordonnances Macron) did not alter the notice-period formula, though they reformed the severance formula and the damages scale for unfair dismissal.

Common traps for employers standing up payroll in France and planning a first termination:

1. Starting the notice clock from the wrong date. The notice begins on the first presentation of the registered letter, not the date the employee signs for it or retrieves it from the post office. Article L1234-3 is unambiguous.

1. Assuming two months is always sufficient. Many collective agreements specify three months for executives or for long-tenured employees. Always check the applicable convention collective.

1. **Confusing faute simple with faute grave**. Only faute grave or faute lourde forfeit notice. If the employer misjudges the gravity and the court later finds the fault was simple, the employer will owe the full indemnité compensatrice de préavis plus potential damages for the wrongful immediate termination.

1. Suspending the notice period for illness or other leave. Article L1234-4 is clear: the notice is a fixed term; suspension events during the notice do not extend it. The contract ends on the originally calculated date.

1. **Forgetting that the indemnité compensatrice includes paid-leave accrual**. Article L1234-5 expressly includes "indemnité de congés payés comprise." The employer must calculate the pro-rata leave that would have accrued during the notice period and include its cash value in the compensatory indemnity.

An employer contemplating dismissal in France must identify the applicable notice period (statutory or conventional, whichever is longer), confirm the dismissal ground does not constitute faute grave or faute lourde (which would eliminate notice), calculate the commencement date from the first presentation of the registered dismissal letter, apply the correct tenure band, decide whether to dispense the employee or require the employee to work the notice, and prepare to pay the indemnité compensatrice de préavis as part of the solde de tout compte if the notice is not worked in full.

Source: Code du travail, Article L1234-1 (statutory notice periods by tenure) Source: Code du travail, Article L1234-2 (nullity of less favorable contract clauses) Source: Code du travail, Article L1234-3 (commencement: first presentation of registered letter) Source: Code du travail, Article L1234-5 (indemnité compensatrice de préavis) Source: Code du travail, Article L1234-8 (suspension periods and ancienneté calculation)

French employment law imposes a specific regime for collective redundancies (licenciements collectifs pour motif économique) through the mandatory "Plan de sauvegarde de l'emploi" (PSE, Employment Safeguard Plan). This obligation is codified in Articles L1233-61, L1233-63, and L1235-10 of the French Code du travail.

When is a PSE mandatory?

A PSE is triggered when an employer with at least 50 employees plans to dismiss at least 10 employees for economic reasons within any period of 30 consecutive days at the same enterprise (Article L1233-61). The law is clear: "Dans toute entreprise d'au moins cinquante salariés, tout projet de licenciement économique d'au moins dix salariés sur une même période de trente jours donne lieu à l'élaboration et à la mise en oeuvre d'un plan de sauvegarde de l'emploi." This threshold applies per legal employing entity operating in France, not group-wide.

Minimum content requirements for the PSE

Article L1233-63 of the Code du travail states that the PSE must include a set of measures "afin d'éviter les licenciements ou d'en limiter le nombre et de faciliter le reclassement des salariés dont le licenciement ne pourrait être évité." The statute specifically requires the plan to set out:

• Actions for internal or external reclassification (vocational training, job search assistance, support for business creation or takeover);
• Financial compensation or other specific assistance to employees, beyond the statutory minimums, aimed at reintegration into the workforce;
• Procedures for monitoring and implementing the plan.

The details, including scope and required resources, depend on the enterprise's size, financial position, and circumstances, as spelled out in L1233-63.

Consequences of non-compliance: nullity of dismissals

Article L1235-10 provides: "Le licenciement collectif pour motif économique prononcé sans que l'entreprise ait élaboré un plan de sauvegarde de l'emploi dans les cas où il est obligatoire est nul." This means that any collective redundancy above the statutory threshold, completed without a compliant and implemented PSE, exposes the employer to nullification of all affected dismissals. Employees may seek reinstatement or damages in such cases.

Statutory silence and procedural steps

While French labor practice and regulation provide further detail on consultation steps, submission process, and review authorities (including the role of the works council and labor administration), these specific procedures are beyond the precise scope set by Articles L1233-61, L1233-63, and L1235-10. The cited articles set the threshold, mandatory content, and the sanction for noncompliance, but do not describe the full procedural roadmap. Practitioners should verify current regulatory requirements for notice, consultation, and timelines, as these may be updated by regulation outside the direct statutory text.

Source: Code du travail, Article L1233-61 (PSE trigger) Source: Code du travail, Article L1233-63 (PSE content) Source: Code du travail, Article L1235-10 (nullity for no PSE)

Article L1235-3 of the French Code du travail establishes the "barème Macron," a statutory indemnity grid fixing minimum and maximum damages awarded by labor courts (conseil de prud’hommes) for employees with a permanent contract (CDI) whose dismissal is ruled without cause réelle et sérieuse (real and serious cause, i.e., unfair dismissal). In force since September 2017 (Ordonnance n° 2017-1387), the barème applies to all dismissals notified after 24 September 2017 and introduced a uniform scale (tenure grid) that both limits and guarantees indemnity.

Statutory grid (barème Macron): minimum and maximum damages by tenure

For employers with at least 11 employees, Article L1235-3 sets the following (as of June 2024):

| Tenure with employer | Minimum indemnity | Maximum indemnity | |---------------------|------------------|------------------| | < 1 yr | 1 month salary | 1 month salary | | 1 yr | 1 month salary | 1 month salary | | 2 yrs | 3 months | 3.5 months | | 3 yrs | 3 months | 4 months | | 4 yrs | 3 months | 5 months | | 5 yrs | 3 months | 6 months | | 10 yrs | 3 months | 10 months | | 15 yrs | 3 months | 15.5 months | | 20+ yrs | 3 months | 20 months |

The statute provides a complete table for every full year of service up to 29 years. (See Article L1235-3 for the full grid, which should always be consulted for precise years.) Indemnity is calculated on gross monthly salary.

For employers with fewer than 11 employees, a parallel grid sets lower minimums and maximums. Employees with less than one year of seniority are owed damages of up to one month's salary, with a lower minimum.

Exceptions and application

• The barème applies to dismissals judged unfair for lack of cause réelle et sérieuse, but does NOT apply to dismissals ruled "null" (nullité) under Article L1235-3-1, such as for discrimination, maternity, or violation of fundamental rights. In those cases, the minimum damages are six months' salary, with no statutory maximum, and the employee may also request reinstatement.
• For failures of procedure alone (when real cause is recognized), damages are limited to one month of salary.
• The rule is binding. Since 2019, the Cour de cassation (supreme labor court) has held the statutory grid is mandatory, upholding its applicability against international-law-based constitutional challenges.

Employer takeaway: When assessing risk and settlement posture in French unfair-dismissal scenarios, always consult the full grid in Article L1235-3 as updated and distinguish between lack of cause and nullity grounds.

Source: Code du travail, Article L1235-3 (barème Macron)

French law imposes absolute statutory bars on dismissal during specified protected periods, rendering any purported termination null and void (licenciement nul), irrespective of the substantive or procedural grounds otherwise advanced. These protections cover employees in categories where legislative policy deems continued employment essential—most notably during maternity and parental leave, occupational accident/sickness leave, certain periods following birth, and when exercising special union or staff representative mandates.

1. Maternity and related leave: Articles L1225-4 and L1225-4-5 Article L1225-4 of the Code du travail provides that an employer "ne peut rompre le contrat de travail" (cannot terminate the employment contract) of a woman during her pregnancy, throughout her statutory maternity leave, and for a period of 10 weeks following the end of maternity leave (18 weeks in the case of multiples or complications). This protection is near-absolute: dismissal is void except in two statutory cases—serious fault (faute grave) not related to the pregnancy, or the impossibility to maintain the contract for a reason unrelated to the pregnancy/birth. The same framework applies to adoption leave and certain periods of paternity, parental, and childcare leave (Articles L1225-35, L1225-66, L1225-16).

As of 1 January 2026, a new Article L1225-4-5 provides that the employer also may not dismiss an employee during an additional statutory period of congé supplémentaire de naissance (extended birth leave), unless serious fault or impossibility to maintain applies for unrelated reasons. This extends the nullity bar to cover new forms of birth-related leave introduced in recent reforms. Employers must now check both the traditional statutory maternity window and the new extended leave when considering any dismissal, as both periods are protected and independently trigger nullity if violated.

2. Workplace accident or occupational disease: Article L1226-9 Under Article L1226-9, an employee absent following a workplace accident (accident du travail) or occupational illness enjoys dismissal protection throughout the entirety of the prescribed leave and for an additional period of four weeks after returning to work. Dismissal is permitted only for fault "d'une particulière gravité" (of particular seriousness) or if the employer can show the impossibility of maintaining the contract unrelated to the accident or illness.

3. Protected staff representatives: Article L2411-1 et seq. Labor law grants special status to elected délégués du personnel, works council members, and union representatives. Article L2411-1 et seq. require the employer to obtain prior labor inspector ("inspection du travail") authorization before taking any dismissal action, even for gross misconduct. Any bypass results in nullity and, at the employee's request, reinstatement with back pay. This protection also covers candidates for election and former representatives for defined periods post-mandate (Articles L2411-5, L2411-8).

Practical consequences of nullity A null dismissal compels the employer to reinstate the employee if so requested, with back pay from the date of dismissal. Failing reinstatement, damages cannot be lower than six months’ salary, regardless of tenure (Article L1235-3-1). These protections override the damages scale for unfair dismissal (barème Macron).

The Code du travail specifies further protected periods—for example, suspension due to sick child care (L1225-62), parental education leave, and others. Employers must systematically verify protected status—including the new congé supplémentaire de naissance—before contemplating any dismissal.

Source: Code du travail, Article L1225-4 (maternity protection) Source: Code du travail, Article L1225-4-5 (congé supplémentaire de naissance, effective 2026) Source: Code du travail, Article L1226-9 (accident du travail protection) Source: Code du travail, Article L2411-1 et seq. (representative protection) Source: Code du travail, Article L1235-3-1 (nullity: reinstatement and damages)

Material change note: This update incorporates Article L1225-4-5, effective 1 January 2026, which creates additional dismissal protection during extended birth leave.

French law imposes a mandatory dismissal procedure for most employer-initiated individual terminations of permanent contracts (CDI), anchored in Articles L1232-2 to L1232-6 of the Code du travail. Failure to meet these requirements exposes the employer to damages even where substantive grounds for dismissal exist.

1. Convocation to preliminary interview (entretien préalable) Article L1232-2 requires that, before taking any dismissal decision (except collective redundancies covered by the PSE, or end-of-probation), the employer must summon the employee to a preliminary interview (entretien préalable). The summons—delivered by registered letter or hand-delivered against receipt—must:

• State the purpose as a potential dismissal;
• Specify the date, time, and place of the interview;
• Inform the employee of the right to be assisted by a fellow employee or (for firms without union representatives/works council) an external advisor (conseiller du salarié), with details on where to find the local advisor list (Article L1232-4).

The interview must occur at least five working days after the first presentation of the convocation letter (L1232-2). Any shortfall in this waiting period invalidates the process.

2. Conduct of the interview During the entretien, the employer must explain the reasons for contemplated dismissal and hear the employee's explanations (L1232-3). This is a genuine opportunity for dialogue, not a formality. Absence of the employee does not bar further procedure if the convocation was valid.

3. Notification of dismissal: written letter and timing A dismissal may not be notified less than two working days after the interview (L1232-6). The employer must send a written decision by registered letter, which establishes the date of termination notice. The letter must state the grounds for dismissal with sufficient detail—these fix the scope of any subsequent dispute (L1235-1). Failure to provide precise grounds, or deviating from those in the interview, exposes the employer to damages for procedural failure or, in some cases, reclassification to an unfair dismissal.

Common pitfalls

• Omitting advisor mention or advisor list in the convocation for qualified firms;
• Shortening minimum notice periods;
• Weak or vague dismissal letter grounds;
• Using inappropriate means of delivery (email or SMS is invalid).

These steps do NOT apply to PSE-based collective redundancies (see Articles L1233-8 et seq.), end of trial period, or certain dismissals of temporary/short-term staff.

Source: Code du travail, Article L1232-2 (convocation) Source: Code du travail, Article L1232-3 (interview) Source: Code du travail, Article L1232-6 (written reason and timing) Source: Code du travail, Article L1235-1 (scope of dispute)

Before any economic dismissal (licenciement pour motif économique) in France, Article L1233-4 of the Code du travail requires employers to undertake every effort to reclassify the affected employee elsewhere within the company or the group. The statute provides: "Le licenciement pour motif économique d'un salarié ne peut intervenir que si tous les efforts de formation et d'adaptation ont été réalisés et si le reclassement de l'intéressé dans l'entreprise, et, le cas échéant, dans les entreprises du groupe auquel l'employeur appartient, n'est pas possible." (Economic dismissal can occur only if all training and adaptation efforts have been made and redeployment within the company, or the group where applicable, is not possible.)

Key statutory elements (as of June 2024):

• The reclassification search must target jobs in the same job category as that previously held by the employee, or, if not available, equivalent positions—even if they require a change to the employment contract (with the employee’s consent).
• The duty covers vacant jobs within both the legal employing entity and, if applicable, other companies within the same group as defined by Article L2331-1 of the Code du travail. The obligation to search the group applies only for positions located in France, unless an existing contract or employee agreement covers international reclassification.
• The reclassification obligation applies before issuing any dismissal—an employer may not proceed with economic dismissal unless it establishes this search has been performed and no suitable opening exists.
• The employer must make good faith efforts to identify and offer relevant available roles, though the statute does not define precise procedural steps, documentation, or notification standards in detail.

If the reclassification obligation is not met, the economic dismissal is at risk of being found invalid for want of legal cause under Article L1235-3, exposing the employer to unfair dismissal damages (see section on 'barème Macron'). Courts and labor inspectors scrutinize both the existence and the sincerity of the effort to reclassify, even if the statute itself states only the basic obligation. Jurisprudence clarifies procedural expectations, but these are not set out in the text of Article L1233-4.

Practitioner's note: The black-letter statutory obligation is contained in Article L1233-4. French courts have added detail by requiring that employers demonstrate individualized, serious efforts, but the core legal requirement remains as stated here. Extra-statutory requirements and remedies should be reviewed in current case law or procedural guidance.

Source: Code du travail, Article L1233-4 (obligation de reclassement)

The "rupture conventionnelle" is a mutual agreement process unique to French employment law, allowing an employer and an employee with a permanent contract (contrat à durée indéterminée, CDI) to end the employment relationship by consent, independently of resignation or dismissal. The rules are codified in Articles L1237-11 to L1237-16 of the Code du travail and set out a mandatory multi-step framework.

Eligibility

• Only employees on an open-ended (CDI) contract are eligible (L1237-11); fixed-term (CDD) and apprenticeship contracts are excluded (L1237-16).
• The process here covers individual agreements; a different procedure applies to collective mutual terminations (not covered by these articles).

Statutory procedure

1. Either party may propose a rupture conventionnelle at any time. At least one negotiation meeting ("entretien") between the parties is required (L1237-12). During this entretien, the employee may be assisted as specified by statute.
2. The terms of termination (including the indemnity amount) are agreed upon and set out in writing. The law requires both parties to sign the agreement after the final entretien.
3. Following signature, each party has a statutory right to withdraw—rétractation—within 15 calendar days (L1237-13). The method of withdrawal must be clear and documented, but the statutory articles do not mandate a specific form of notification.
4. At the end of the withdrawal period, the employer must submit the agreement for approval (homologation) by the local labor authority (DREETS). The DREETS then has 15 business days to verify legal compliance and raise any objections; if no decision is notified, approval is deemed granted (L1237-14).
5. The employment contract terminates on the date specified in the agreement—never before DREETS homologation (L1237-15).

Indemnity

• The indemnity paid to the employee must be at least equal to the minimum statutory severance (indemnité légale de licenciement) as set out in Article L1234-9. It may be higher if the parties agree or if a more favorable collective bargaining agreement applies (L1237-13).

No substantive justification (cause réelle et sérieuse) is required for rupture conventionnelle, and the DREETS' role is to ensure the statutory process is respected. If the DREETS finds defect in consent, process, or minimum indemnity, it may refuse homologation. The process is heavily used in practice across France as an alternative exit route to dismissal or resignation.

Source: Code du travail, Articles L1237-11 to L1237-16 (rupture conventionnelle)

French fixed-term employment contracts (contrats à durée déterminée, CDD) are governed by a distinct legal regime under Title IV, Book II, Part I of the Code du travail (Articles L1241-1 et seq.), with termination and end-of-contract rules that differ sharply from open-ended contracts (CDI).

1. Expiry at term and indemnité de précarité A CDD ends automatically either on the date specified or upon completion of the object for which it was concluded (Article L1243-1). At expiry, unless the employee is hired immediately under a CDI for an equivalent position, the employer must pay the "indemnité de précarité"—an end-of-contract payment equal to 10% of total gross remuneration received during the contract, per Article L1243-8. Exceptions: This payment is not owed if the employee resigns, commits gross misconduct (faute grave), refuses a CDI for the same role, or if the contract falls within certain excluded categories (notably seasonal work and certain public programs, also detailed in L1243-8).

2. Early termination: closed statutory grounds Early termination before the agreed end-date is possible only in the circumstances strictly enumerated in Article L1243-1:

• Mutual agreement of both parties;
• Gross misconduct (faute grave);
• Force majeure;
• Employee incapacity as certified by an occupational physician (inaptitude) under the conditions stipulated in labor law;
• Employee obtains a CDI elsewhere and notifies the employer (Article L1243-2).

Termination on grounds not listed—even in cases of economic difficulty or professional inadequacy—is not permitted and exposes the party at fault (employer or employee) to pay damages in an amount not less than the wages the employee would have earned until contract expiry, plus any indemnité de précarité (Article L1243-4).

3. Exclusions and documentation at end of contract Exclusions from the indemnité de précarité are set out explicitly in Article L1243-8: seasonal contracts and certain subsidized or public-employment programs. The law also provides that, at the conclusion of the contract for any reason, the employer must immediately deliver all compulsory employment-end documentation (including the certificat de travail and payment of any owed wages or leave indemnities), though this requirement is embedded throughout the Code du travail and not specifically listed in L1243-1 or L1243-8.

A practitioner must: (a) identify if the employment qualifies for a CDD, (b) verify the ground for any early termination matches the exclusive statutory list, (c) calculate the indemnité de précarité unless a specific exemption applies, and (d) ensure prompt compliance with documentation and payment at contract end. The closed nature of lawful termination grounds for CDDs is consistently enforced by French courts, and attempts at unauthorized early termination almost uniformly result in the employer owing the employee the full remaining salary and prime de précarité.

Source: Code du travail, Article L1243-1 (end and authorized early termination) Source: Code du travail, Article L1243-4 (damages for unlawful early termination) Source: Code du travail, Article L1243-8 (indemnité de précarité and exceptions)

French law imposes a tightly regulated process when an employee is declared medically unfit (inapte) for their position by the occupational health physician (médecin du travail), with the employer’s obligations differing depending on whether the unfitness is linked to occupational accident/illness or to a non-professional cause. The framework is set out in Articles L1226-2 to L1226-15 of the Code du travail, and non-compliance can result in damages or nullity.

1. Certificate of inaptitude and immediate steps A certification of inaptitude follows at least one medical examination by the occupational doctor (Article L4624-4) and must specify either that no position is suitable or that continued employment would seriously endanger the employee’s health. After this, the employer must consult staff representatives (CSE), as required by L1226-2 (non-professional inaptitude) or L1226-10 (professional origin), on possible redeployment options before acting.

2. Redeployment obligation (‘reclassement’) The employer must search for suitable roles (including adaptations or adjustments advocated by the physician) in the company and, if applicable, within the group’s entities established in France. The redeployment obligation is satisfied only if: (i) no suitable position exists given the physician's recommendations, (ii) the physician declares explicitly that any redeployment is impossible, or (iii) the employee refuses all compatible offers (L1226-2, L1226-10). For professional inaptitude, reclassification must also take into account equivalent pay where feasible.

3. Lawful grounds for dismissal Dismissal for inaptitude is permissible only if these redeployment options have been exhausted, or if the doctor states that reclassification is impossible. The employer must then follow the usual procedural steps: a preliminary interview and a written, reasoned dismissal letter by registered post (these are required under broader dismissal procedure rules: see Code du travail, Article L1232-2 and L1232-6; not directly cross-referenced in the inaptitude articles). Dismissal on grounds inconsistent with the doctor’s opinion or without this process risks damages or nullity.

4. Notice/pay obligations If, after a professional inaptitude finding, no redeployment or dismissal has occurred within one month, the employer must resume payment of salary as if the employee were still working (L1226-4). No such guarantee applies for non-professional inaptitude.

5. Indemnities owed On lawful termination, severance is owed: (i) for professional inaptitude, an indemnity equal to at least twice the legal or contractual minimum severance (L1226-14); (ii) for non-professional inaptitude, the regular statutory minimum (L1234-9).

6. Practical traps Frequent pitfalls include failing to consult the CSE, inadequately documenting the redeployment search, or delaying beyond the statutory one-month clock (for professional inaptitude) and triggering renewed pay. All steps must be prompt and traceable to avoid liability.

Source: Code du travail, Article L1226-2 (non-professional inaptitude: redeployment) Source: Code du travail, Article L1226-10 (professional inaptitude: redeployment) Source: Code du travail, Article L1226-4 (wage guarantee: professional inaptitude) Source: Code du travail, Article L1226-14 (double-severance indemnity)

French employment law imposes statutory consultation and notification steps involving the works council (comité social et économique, CSE) and the labor administration (DREETS, formerly DIRECCTE) in the context of economic dismissals. These obligations, set apart from the individual preliminary interview and dismissal letter, are critical for compliance when terminating employees for economic reasons.

1. CSE consultation in economic dismissals — Article L1233-8 If an establishment has a CSE (mandatory in firms with at least 11 employees), the employer must meet and consult the CSE before any economic dismissal (licenciement pour motif économique) is implemented. Article L1233-8 provides: “L’employeur réunit et consulte le comité social et économique lorsqu’il envisage de procéder à un licenciement pour motif économique.” The employer must communicate the reasons for the proposed economic dismissal, the number of employees concerned, selection criteria, and possible measures for reclassification or limiting impact. The CSE’s formal opinion must be sought and documented before any notifications to employees. Absence or improper conduct of this consultation exposes the employer to injunctive remedies and, potentially, nullity or damages (remedies specified in other articles, not L1233-8 itself).

2. Notification of the labor administration — Article L1233-19 Article L1233-19 requires the employer to notify the administration (DREETS) in writing after the CSE gives its opinion (or directly, if there is no CSE). Notification must include the rationale for dismissal, the number of employees, CSE’s opinion, and details of reclassification steps. Dismissal notices to employees may not be sent before this notification is completed; administration may request further information or object if procedural steps have not been met. The exact waiting period and additional group thresholds are addressed in related provisions (e.g., L1233-39 and following), but the baseline requirement to notify is clear in L1233-19.

3. Distinction from individual (personal grounds) dismissal For individual dismissals not based on economic grounds (licenciement pour motif personnel), neither L1233-8 nor L1233-19 imposes a CSE consultation or DREETS notification. Article L1232-6, cited here, requires that if a meeting with the CSE occurred before a personal dismissal, the dismissal letter must mention it, but does not itself establish a general consultation mandate for these cases.

Practical takeaway: For any economic dismissal where a CSE operates, the employer must (a) carry out a documented CSE consultation before selection or notification, and (b) file statutory notice with the labor administration after the CSE’s opinion. Non-compliance risks injunctive relief or damages separate from other process failures. Additional rules for group dismissals, collective redundancies, and their waiting periods are specified elsewhere in the Code du travail.

Source: Code du travail, Article L1233-8 (CSE consultation: economic dismissals) Source: Code du travail, Article L1233-19 (Labor administration notification) Source: Code du travail, Article L1232-6 (individual dismissal: CSE mention in letter)

Article L1234-11 of the French Code du travail creates a specific framework for dismissal of employees on permanent contracts (CDI) due to force majeure—that is, an unforeseeable, irresistible, external event which renders the continuation of the contract objectively impossible. This is a highly restrictive exception. The Code provides: "Lorsque le licenciement résulte d'un cas de force majeure, le salarié a droit à une indemnité compensatrice correspondant au montant de l'indemnité de préavis et de l'indemnité de licenciement prévues aux articles L. 1234-1 et L. 1234-9."

Key features:

• The employee is entitled to a compensatory indemnity equal to both (i) the statutory notice (préavis) and (ii) the statutory severance (indemnité légale de licenciement) they would have received in an ordinary dismissal, calculated per Articles L1234-1 (notice) and L1234-9 (severance).
• This indemnity applies regardless of the cause, provided that the employer can show force majeure as strictly defined. Force majeure is not mere economic difficulty or bankruptcy unless the cessation is the direct result of an unforeseeable, irresistible external event. Voluntary closures or anticipated hardships do not qualify—a point consistently confirmed by the Cour de cassation (though not set out in L1234-11 itself).
• The statute does not set out a separate or reduced dismissal procedure for force majeure cases, nor does it address practical questions of employer solvency or the order of payments in insolvency—those are outside the article's text and handled elsewhere in French law.

This indemnity is due only when all force majeure criteria are satisfied and does not apply to standard economic or personal dismissals. Practitioners must verify that the event qualifies as force majeure under French legal standards and apply the compensation as the statute directs.

Source: Code du travail, Article L1234-11

French law requires employers conducting economic dismissals to apply objective, pre-established selection criteria—referred to as "critères d’ordre des licenciements économiques"—when the redundancy affects only a portion of the workforce, in order to determine which employees in an affected category will be dismissed. This obligation is codified in Article L1233-5 of the Code du travail and applies in all economic redundancy cases, whether or not a Plan de sauvegarde de l’emploi (PSE) is required.

Scope and mandatory criteria Article L1233-5 states: "L’employeur définit les critères retenus pour fixer l’ordre des licenciements. Ces critères prennent notamment en compte, sauf dispositions conventionnelles plus favorables, la situation de famille des intéressés, notamment celle des parents isolés, l’ancienneté de service dans l’établissement ou l’entreprise, la situation des salariés présentant des caractéristiques sociales rendant leur réinsertion professionnelle particulièrement difficile, notamment les handicapés et les salariés âgés, ainsi que les qualités professionnelles appréciées par catégorie."

The article requires the employer to consider at least the following criteria, unless more favorable collective-agreement rules apply:

• Family situation (especially single parents);
• Seniority within the enterprise or establishment;
• Social characteristics impairing re-employment (e.g., disability, age);
• Professional skill (assessed by category).

Collective agreements (conventions collectives) frequently elaborate or reweight these criteria and may specify order and scoring. In their absence, the employer must define and document the criteria used, and the weighting assigned to each, in advance of any dismissal decision.

Procedural requirements and contestability

• The selected criteria, and their application to each affected worker, must be disclosed to employee representatives (CSE) and, upon request, to individual employees (Article L1233-17).
• Employees may challenge the application of the criteria before the conseil de prud’hommes (labor court), but not (barring discrimination or manifest error) the employer’s chosen weightings, unless otherwise required by a convention collective.

Failure to apply, communicate, or correctly document the selection criteria exposes the employer to damages and, in group dismissals, risks nullification of the dismissals themselves.

Practitioner note: In any French economic dismissal—individual or collective—the employer must anticipate this step, document the chosen criteria (or adhere to the applicable convention), maintain records showing individualized application, and communicate the criteria transparently to both employee representatives and at-risk employees. The statutory minimum is as per L1233-5, but local or sectoral collective bargaining may modify the content or order.

Source: Code du travail, Article L1233-5 (critères d’ordre) Source: Code du travail, Article L1233-17 (communication of order criteria to CSE/employees)

French law permits an employer and an employee to resolve a post-dismissal dispute by written transaction (settlement agreement), as defined in Articles 2044 to 2052 of the Code civil. A "transaction" is a contract in which parties make mutual concessions to settle an existing or potential dispute—codified at Article 2044: "La transaction est un contrat par lequel les parties terminent une contestation née, ou préviennent une contestation à naître." This is the primary pathway for post-dismissal settlements outside of court proceedings.

Scope, timing, and content A transaction is only valid if it addresses a real dispute (existing or foreseeable) and is executed after the facts giving rise to the dispute (i.e., after dismissal is notified). Any agreement signed before a dismissal—when no dispute exists—is generally void as a settlement under French law. The transaction must be in writing, signed by both parties, and specify with sufficient precision the claims being settled and the consideration provided. The effects of a transaction extend only to those matters that were within the parties’ dispute or contemplation at signature (Article 2048), and the settlement is binding and has the force of res judicata (prevents future litigation on the same claims) as per Article 2052.

Statutory requirements and limitations The transaction extinguishes only those rights and claims that the parties specifically intend to cover. General language of waiver is not sufficient to bar claims that were not actually in dispute or known at the time; rights arising after the execution of the transaction (for example, a subsequently discovered occupational illness) are not covered unless expressly contemplated. The statute is silent on restrictions relating to public-order rights or future claims, and the black-letter rule is that the agreement bars further litigation only on the points resolved by the transaction itself.

Judicial review Labor courts retain the power to annul a transaction for want of real dispute, lack of mutual concessions, or defect of consent, but this is a matter for judicial analysis if challenged. The legal effects—the closure of the dispute and prohibition of new litigation on the same claims—are set out in Article 2052, but the Code civil itself gives no list of unwaivable topics. Case law further delineates which rights can or cannot be settled, but the statute is silent on these specifics.

Contrast with rupture conventionnelle Unlike the statutory mutual termination procedure (rupture conventionnelle) under the Code du travail (covered elsewhere), a transaction does not itself end the employment relationship—it settles the consequences after separation. The two regimes are distinct under French law.

Source: Code civil, Article 2044 (definition of transaction) Source: Code civil, Article 2052 (transaction: res judicata effect)