According to the data published by the French labour administration, mutual termination agreements (ruptures conventionnelles) have never been so popular. Indeed, in June 2017, more than 35,700 mutual terminations agreements have been validated by the French labour Administration.
But why are mutual termination agreements so popular?
First, mutual termination agreements represent – for the employer and the employee – a quick and easy way to terminate an incompatible working relationship.
The procedure for entering into a mutual termination can be summarized as follows:
- Invitation to a negotiation meeting
- Agreement between employee and employer on the principle of a mutual termination – regarding in particular the amount to be paid to the employee and the date of termination – and signature of a pro forma document
- Mandatory waiting period of 15 calendar days during which either party may withdraw
- Submission of the mutual termination agreement to the French labour Administration
- Mandatory homologation period of 15 working days
- Termination of the employment agreement at a chosen date
(subject to the homologation, whether tacit or express, being obtained)
Pursuant to the French labour Code provisions, employers are required to pay the employee a specific indemnity. This indemnity must correspond at least to the dismissal indemnity he/she would have received – calculated by reference to the French labour Code or to the applicable collective bargaining agreement. The amount of this specific indemnity constitutes the core point of scrutiny by the French labour authorities.
Second, mutual termination agreements allow employers and employees to benefit from several advantages:
- the employee voluntarily leaves the company, with a termination payment and is also entitled to unemployment benefits;
- the employers are not required to furnish any justification to terminate the employee, and are not required to pay any notice period indemnity.
However, mutual termination agreements are not free from any risks as they do not trigger any waiver of claims. Therefore, the employees are not prevented from:
- challenging the validity of the termination – within a one-year period after the homologation – on vitiated consents grounds;
- lodging claims before the Employment Tribunal regarding the performance of their employment agreement.