By Katell Deniel-Allioux
Salans
A new law enacted on June 25, 2008, offers employers and employees the possibility to use a new type of termination for their contractual relations: the amicable termination (or “rupture conventionnelle”).
Prior to the enactment of this law, employers/employees could only terminate their contractual relations if either party made a unilateral decision to terminate employment. Termination of employment contracts occurred one of two ways:
1) Employee-Initiated Termination
An employee could decide to resign from his/her job. However such employee could risk becoming ineligible for unemployment coverage - which could translate to the loss of unemployment coverage in the amount of about 57.4% of the employee’s last wage.
2) Employer-Initiated Termination
If the employer dismissed the employee on the other hand, such termination could also pose a problem for the employer. Under French law an employer-initiated termination would have to be backed by a real and serious cause because dismissal without cause is considered unfair and the terminated employee can be eligible to receive damages to compensate for the prejudicial/unfair treatment. The Court considers various factors when determining if a termination is unfair or done without cause.
This new process of amicable termination could however be beneficial for both employers and employees as it provides them with a non contentious way to terminate their relations without creating artificial debate while cushioning both parties from the financial risks they could incur under the unilateral means of termination.
In order to prevent abuse and undue influence by the employer, the terms of “rupture conventionnelle” provide for the intervention of the Labor authorities in order to ensure the amicable termination is done with the employee’s clear consent.
Since its enactment this type of termination has been successfully applied and observers hope it will lead to less litigation over employment termination.
A new law enacted on June 25, 2008, offers employers and employees the possibility to use a new type of termination for their contractual relations: the amicable termination (or “rupture conventionnelle”).
Prior to the enactment of this law, employers/employees could only terminate their contractual relations if either party made a unilateral decision to terminate employment. Termination of employment contracts occurred one of two ways:
1) Employee-Initiated Termination
An employee could decide to resign from his/her job. However such employee could risk becoming ineligible for unemployment coverage - which could translate to the loss of unemployment coverage in the amount of about 57.4% of the employee’s last wage.
2) Employer-Initiated Termination
If the employer dismissed the employee on the other hand, such termination could also pose a problem for the employer. Under French law an employer-initiated termination would have to be backed by a real and serious cause because dismissal without cause is considered unfair and the terminated employee can be eligible to receive damages to compensate for the prejudicial/unfair treatment. The Court considers various factors when determining if a termination is unfair or done without cause.
This new process of amicable termination could however be beneficial for both employers and employees as it provides them with a non contentious way to terminate their relations without creating artificial debate while cushioning both parties from the financial risks they could incur under the unilateral means of termination.
In order to prevent abuse and undue influence by the employer, the terms of “rupture conventionnelle” provide for the intervention of the Labor authorities in order to ensure the amicable termination is done with the employee’s clear consent.
Since its enactment this type of termination has been successfully applied and observers hope it will lead to less litigation over employment termination.
