The general rule under French law is that when employment contracts are terminated, employees are entitled to a prior notice period, the length of which depends on the status of the employee (executive or non-executive), their length of service, and in some cases their age.
The applicable rules are generally set by the sector-wide collective bargaining agreement (a large majority of employers in France are subject to such collective bargaining agreements).
Employees may either be asked to work during their notice period, or be released from working during it. In the latter case, they are entitled to receive their full salary until the expiry of the notice period, as if they had continue to work.
The right to a notice period is however not applicable when an employee is dismissed based on a serious or a willful misconduct, in which case the employment contract is terminated upon the date of notification of the dismissal.
It may happen that an employee whose employment contract has been terminated for reasons other than serious or wilful misconduct (for example due to a dismissal for real and serious cause) and who is working during his notice period then commits serious misconduct during the worked notice period,.
What measures can be taken by the employer in such case?
First: The employer can immediately notify the employee of the termination of the notice period, with no need to reiterate the dismissal procedure. This has been established long ago by French case law.
Second, such early termination of the notice period will obviously have financial consequences.
Naturally, the employee is not entitled to any salary for the rest of the notice period. The employment contract is terminated with immediate effect, and no further notice period applies.
However, employers have in the past tried to claim that the employee was also ineligible in such circumstances to receive any dismissal indemnity. French courts however have enunciated a principle that given that the requirement to pay dismissal indemnity is triggered by the notification of the dismissal (which in this situation occurs before the beginning of the notice period during which the employee committed the subsequent act of serious or wilful misconduct), employers are still required to pay such dismissal indemnity.
A very recent court decision has however provided a welcome complement to such position. In that case, the French Supreme Court held that although the employer was indeed required to pay the dismissal indemnity, the calculation thereof should be based on the employee’s length of service calculated as at the date of expiry of the notice period (i.e., the date on which the employee is immediately terminated due to the occurrence of the serious misconduct).
Therefore, the dismissal indemnity of an employee committing serious misconduct during the notice period will be reduced taking into account the anticipated expiry of the notice period.