The ascent of the approved contractual termination

April 27th 2015

The Law no. 2008-596 of June 25, 2008 introduced the approved contractual termination into French labour law. This text formalised and defined an already existing practice for terminating, by mutual agreement, an indefinite-term employment contract. The contractual termination assumes that an agreement has been signed subject to an administrative approval or an authorisation for protected employees.

Henceforth, the termination by mutual agreement of an indefinite-term employment contract may only occur through an approved contractual termination [1], failing that the termination shall be considered as a dismissal without real and serious cause.

Since its emergence, the contractual termination has proved particularly successful, not only because it enables the employee to receive a termination indemnity and, if he meets the conditions, to benefit from an unemployment allowance, unlike when resigning, but also due to the legal security provided by this means of termination.

In which situations is the approved contractual termination authorised and in which situations is it still not possible to resort to such means of termination?

Over time, the Cour de cassation has built a secure framework around the contractual termination, by allowing its recourse, even in cases where the dismissal is prohibited.

- It is possible to enter into an approved contractual termination, despite the existence of a dispute between the parties at the time of its execution [2].

- Whether the employee is on sick leave for a work-related accident [3] or whether he was a victim of a work-related accident, and then declared fit with reservations for returning to work [4] does not prevent entering into an approved contractual termination. It can be reasonably concluded that the solution would be identical for an employee on sick leave for occupational illness or not.

- An approved contractual termination may also be concluded with an employee on maternity leave and within the four weeks following the end of her leave [5]. This case law contradicts the position adopted by the administration in a GLD circular (General Labour Directorate) of March 17, 2009, and this puts an end to the discrepancies between the Courts of Appeal.

The only means of challenging an approved contractual termination is to uphold – and prove – that the parties’ consent was not free and informed or that there had been fraudulent practice or when one of the procedural conditions guaranteeing the validity of the consent had not been complied with, as for example, the non-compliance with the fifteen-day withdrawal period (in which case the approval would undoubtedly be refused).

However, some prohibitions still remain concerning the recourse to this means of termination.

Firstly, it only concerns the termination of an indefinite-term employment contract. For the other types of contract, the contractual termination shall not apply. The vocational training contracts and the fixed-term contracts have their specific regime for amicable termination.

Furthermore, the French Labour Code formally excludes the contractual termination in the context of an employment and skills forecasting and planning agreement (GPEC) and an employment preservation plan (EPP) [6].

Finally, the possibility to enter into a contractual termination with an unfit employee would undoubtedly remain impossible.

The Cour de cassation has also ruled on the possible interferences between the contractual termination and the dismissal in three decisions of March 3, 2015 [7]. These decisions simply confirm the importance of the contractual termination and the judicial intent to further it.

- It is possible to waive the dismissal, even after it has been notified, by entering into a contractual termination;

- It is also possible to enter into a contractual termination after the initiation of disciplinary dismissal proceedings; if the employee uses his right of withdrawal within the fifteen-day period, the employer may resume the disciplinary proceedings, as the execution of the contractual termination agreement does not constitute waiver of the disciplinary power;

- Nonetheless, great care should be taken; it is preferable to initiate the disciplinary proceedings before signing the contractual termination. The signature of the contractual termination agreement, unlike the invitation to attend the preliminary meeting, does not halt the limitation period for the wrongful actions (two months), if the employee withdraws, it may be too late to dismiss him, or to issue another sanction for the same actions.

The question of the settlement subsequent to the contractual termination has also been resolved. It has been admitted that a settlement may be signed after the approval of the contractual termination but its use is limited as it may not be settled on the principle of the termination per se or an element included in the contractual termination agreement [8]. The settlement may also not provide, subject to nullity [9], that the employee waive, in consideration for a financial return, challenging the contractual termination before the courts.

The recourse to a settlement subsequent to a contractual termination remains of interest to settle difficulties related to the employment contract which had not been raised at the time of termination.

The contractual termination is becoming the privileged means of termination, when both parties are in agreement to terminate the employment contract. The case law is a great contributor as it has already responded to numerous questions likely to generate therefrom.

Marc Turquand d'Auzay

[1] Cass. Soc. October 15, 2014, no. 11-22.251
[2] Cass. Soc. May 23, 2013, no. 12-13.865
[3] Cass. Soc. September 30, 2014 no. 13-16.297
[4] Cass. Soc. May 28, 2014, no. 12-28.082
[5] Cass. Soc. March 25, 2015, no. 14-10.149
[6] Art. L.1237-16 of the Labour Code
[7] Cass. Soc. March 3, 2015, no. 13-20.549, 13-23.348 and 13-15.551
[8] Cass. Soc. March 26, 2014, no. 12-21.136
[9] Cass. Soc. March 25, 2015, no. 13-23.368