Since its introduction in 2008, the rupture conventionnelle individuelle (mutual termination agreement) has become one of the most commonly used methods for terminating indefinite term employment contracts in France. It offers a flexible and consensual alternative to resignation or dismissal, enabling both the employer and employee to agree on a departure while allowing the employee to access unemployment benefits, which would not generally be available to them following a resignation.

In 2024 more than 500,000 mutual termination agreements were signed, and these terminations accounted for 26% of the total cost of unemployment benefit and related public expenditure.

Recent legislative changes, however, signal a shift in the legal and financial framework governing mutual termination agreements. These reforms reflect the government’s aim of reducing public spending on unemployment benefits and limiting the perceived misuse of mutual termination agreements.

The first main change (affecting employers) is to increase the cost of this type of termination for the employer. As of 1st January 2026, the specific employer’s social contribution on termination indemnities has increased from 30% to 40%.

The second major change (affecting employees) is to reduce unemployment benefits (law of 2nd June 2026). This law which will be applicable from 1st September 2026, introduces a specific unemployment insurance regime for employees leaving under the terms of a mutual termination agreement.

The reform reduces the maximum duration of unemployment benefits, dependent on the age of the employee:

  • Under 55 years old: reduction from 18 months → 15 months
  • 55 years and over: reduction from up to 27 months → 20.5 months

The government’s objective is to reduce the financial impact of this termination regime on the unemployment benefits system and to encourage employees to return to work sooner by reducing the attractiveness of negotiated exits.

Whether this is a turning point is questionable. Indeed, this mechanism remains attractive as it is flexible and easy to use. The main risk, in our opinion, is that employees will try to negotiate higher severance packages to offset the reduced unemployment benefits. The future will tell if employers are still prepared to use a potentially more expensive mechanism to avoid unilateral termination whether by dismissal or resignation.