French employment law – Cost of dismissing an employee

Please note that the information herein is of a general nature and you should not act or refrain from acting on it without professional advice on the specific facts of your case. No liability is accepted by the author or Sykes Anderson Perry Limited in respect of this article. French employment law is a complex subject and the above is a basic outline only and is intended only as a general guide. Nothing herein constitutes financial advice.

Dismissing employees in France can be an expensive business. The basic rules and compensation payable is set out below.

Conditions for a claim by an employee

Article 1234-9 of the French Work Code provides that an employee has the right to compensation if he:-

(1) has an employment contract with no end date
(2) has been dismissed
(3) has worked for the same employer for one year
(4) has not committed a serious fault “grave faute”.

Faute grave – key requirement

A “faute grave” is a fault which makes it impossible for the employee to stay in the company. This includes a “faute lourde”. Any employee who is dismissed has the right to take his case to the French equivalent of an employment tribunal. Certain acts are likely to be viewed as fautes graves such as violence at work, sexual harassment, and racist insults. The employer has to show a fault on the part of the employee. So an employee who is not up to the job and is not wilfully making mistakes does not commit a fault. Similarly an employee who cannot get on with his employer does not commit a fault. Aspects of the personal life of the employee cannot usually be a fault.

A “faute lourde” is a fault carried out by the employee with the intention of damaging the employer. Examples are sabotaging machinery, giving confidential information to the press, blocking access to the employer’s premises and deliberate acts of violence.

From the above it can be seen from an English perspective that in the absence of fairly extreme behaviour by an employee it is likely to be quite difficult to show the employee has committed a grave faute. This is why although employers can dismiss staff in France the costs of so doing are usually high.

Amount of employees claim

The payment is 1/5th of the monthly salary per year of employment to which is added 2/15th for each month after 10 years with the employer. So someone who has worked for a salary of €3.000 for 7 years is entitled to (1/5 X €3.000) X 7 = €4.200. For someone who has worked for 15 years it is (1/5 X €3.000) X 15 + (2/15 X €3.000) X 5 = €9.000 + €2.000 = €11.000.

If there is a “collective convention” which applies, usually referred to in the contract of employment, then if this produces a higher amount the employer has to pay the higher amount i.e. whatever is best for the employee. “Collective conventions” are common in France and are industry or companywide agreements. Before employing anyone you should establish if one applies as it will inevitably be in the employees favour. Equally if the contract of employment provides for a higher amount then this higher amount will usually be payable.

Holiday claim

Employees are entitled to 2 ½ days holiday a month. The compensation for holidays not taken is calculated on the basis of 10% of the gross pay of the employee.

Companies with at least 11 employees and an employee with over 2 years employment

There is a special rule for companies with at least 11 employees and a dismissed employee with at least 2 years employment. If the dismissal has “no real or serious cause” the judge can ask (not order) the employer if he wants to take the employee back. If either party refuses the employee can claim for a payment equal to at least the last 6 months gross salary. This is in addition to the above two awards. It is not however in addition to any breach of the failure by the employee to follow the correct procedure (see below) which is limited in any event to 1 month’s salary.

If the dismissal has been abusive or vexatious the employee can claim further damages. If the employee has options or any other incentives he can also claim for the loss of these.

Companies with less than 11 employees or an employee with less than 2 years employment

The employee can claim but the legislator has set no maximum or minimum. It is up to the judge to decide the award.

Dismissal without the employer following correct procedures.

If the employer does not follow the correct procedures there are additional sanctions. In companies with at least 11 employees and an employee with over 2 years employment the employee can claim up to one month’s salary. This does not however cumulate with the immediately above award.

Companies with less than 11 employees or an employee with less than 2 years employment can also claim but there is no upper or lower limit.

Summary

If you take the case of an employee on €3.000 who has worked for 7 years in a bigger company and who can show he was dismissed without a grave faute on his part his compensation is likely to be at least €4.200 + €18.000 = €22.200.

In many cases this is going to be the likely outcome because it will be difficult for employers to show the fault required.

February 2018
David Anderson
Solicitor-Advocate and Chartered Tax Adviser