Contrary to the U.S., which has the concept of “at-will” termination, to dismiss an employee in France, an employer must have a “real and serious cause” and must comply with a specific procedure. The cause is not pre-determined by the employment contract.
1. The cause:
As a consequence, when an employer contemplates dismissing an employee, it needs to demonstrate that the dismissal is based on:
- A real cause, which is defined as an existing, accurate and objective cause, meaning that the reason for dismissal must be precise, cannot vary from time to time and is independent from the good or bad mood of the employer;
- A serious cause, which means that the reason for the dismissal must have a certain level of seriousness that renders impossible the continuation of the employment relationship without the employer being harmed;
- For example, a real and serious cause could be a poor performance of the employee, gross misconduct, etc..
2. The process:
In any event, when dismissing an employee under French law, the employer needs to apply a specific procedure which differs upon the ground of termination.
The employer needs to:
- invite the employee to a preliminary meeting to discuss with him the reasons for the contemplated dismissal,
- hold the preliminary meeting at least 5 business days after the invitation, and
- notify the employee of the dismissal at least 2 business days after the preliminary meeting.
The employer should also observe the applicable collective bargaining agreement as it may contain provisions that must be complied with concerning the termination process.
3. Indemnities to be paid:
In terms of severance indemnities, a dismissal leads to:
- the payment of severance pay as provided by law or by the applicable collective bargaining agreement (except in case of gross misconduct of the employee),
- the indemnity in lieu of notice period (except in case of gross misconduct of the employee), and
- the indemnity in lieu of paid holidays.
It is important to cautiously apply the above mentioned rules in order to avoid a Labor Court requiring the employer to pay damages for failure to comply with the above-mentioned dismissal procedure or to pay damages for unfair termination (i.e. termination without cause).
Once the dismissal is notified, to obtain a full release of chains from the employee, the employer must:
- pay him an additional indemnity on top of the severance indemnities;
- conclude a settlement agreement with the employee.
In the U.S., absent an agreement to the contrary, employment is “at will,” meaning that the employment relationship can be terminated at any time, by either the employee or employer, for any lawful reason.
Further, termination can be without any advance notice and there is no specific procedure for termination. One exception is the federal Worker Adjustment and Retraining Notification (WARN) Act, which requires an employer with over 100 employees to give 60 days’ notice of termination when laying off at least 50 employees at a single site of employment. Some states, such as California, have their own “WARN” laws.
Unlike in France, there is no mandatory severance. Employers, of course, may choose to provide severance to terminated employees, usually in exchange for the employee’s signing a full release of claims. If the employee is over 40 years old, in order for him or her to release a claim for age discrimination under the federal Age Discrimination in Employment Act (“ADEA”), the employee must be given 21 days to review the severance agreement, and 7 days to revoke his release. If the employer is terminating more than one employee, the employees over 40 years of age must then be given 45 days to review the agreement, and the employer must also disclose the ages and job titles of the other employees in the applicable affected “decisional unit.”
We wish you a happy and healthy holiday season!