France offers various means of preventing the economic difficulties that may be encountered by companies located within its territory. However, companies may experience difficulties such that one or more dismissals cannot be avoided.
When employees are dismissed for reasons unrelated to their behaviour at work, their performance or their productivity, the dismissal is deemed economic. Such dismissal must have a genuine and serious economic basis.
To protect employees, the employer must implement training, rehabilitation and redeployment measures prior to any dismissal. If dismissal is still inevitable, a specific procedure must be followed.
An economic dismissal is deemed individual if it concerns just one employee in the company. From two to nine employees, it is referred to as a “small” collective dismissal. If it concerns more than ten employees over a 30-day period, it is a “large” collective dismissal.
The dismissal procedure varies depending on the number of employees involved. When an employer plans a collective layoff (affecting at least 2 employees), additional obligations apply. Specifically, the employer must convene and consult with the Social and Economic Committee (CSE) and inform the DREETS of the number of layoffs being considered.
This fact sheet focuses solely on individual economic dismissal.
Le code du travail français a connu de nombreuses évolutions dont l’objectif est de simplifier le dialogue social et d’apporter davantage de flexibilité dans l’organisation des entreprises.
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An economic dismissal is never caused by the actions of one or more employees, be they wrongful or not, but by one of several statutorily defined reasons, namely:
Economic difficulties (a decline in orders or revenue, operating losses, etc.).
Technological changes.
The company ceasing to operate.
Reorganization of the company to safeguard its competitiveness.
These reasons must be genuine and serious, and have repercussions on the employment of one or more employees, namely:
The loss of one or more jobs.
Significant changes in one or more jobs.
The amendment of one or more employment contracts, rejected by the employee(s) concerned.
Preliminary steps
Before proceeding to dismiss an employee on economic grounds, the employer must take the following steps:
Define the criteria for deciding which employee will be dismissed (order of dismissals established in consultation with staff representatives).
Explore the possibility of redeploying the employee concerned.
Any redeployment offer must be put in writing to the employee(s) and must be precise.
Procedure
If redeployment is not possible, or if the employee rejects the redeployment offer, the employer must observe the following procedure:
Invite the employee to a preliminary interview (by registered letter with acknowledgement of receipt or hand delivery with receipt).
Notification of dismissal (by registered letter with acknowledgement of receipt or hand delivery with receipt), at least seven to 15 working days after the interview.
Inform the DREETS, withing 8 days of the dismissal letter being set to the employee
The employee may refer the matter to the Industrial Tribunal within one year of dismissal. If the dismissal is considered to be without genuine and serious cause, the employee will be compensated according to a compensation scale that the judge is obliged to accept.
The amount of compensation varies depending on the employee’s length of service and the number of employees in the company. This amount may not be lower than a minimum amount or greater than a maximum amount established by the scale in question.
If the dismissal is justified but there has been a procedural error, the compensation may not exceed one month’s salary.
When the employment contract is terminated, the employer pays the redundant employee severance pay and compensation in lieu of paid leave.
Severance pay
An employee is entitled to severance pay if certain conditions are met. Severance pay is due to permanent employees who have been dismissed on economic grounds.
It will be calculated based on the employee’s gross salary (from eight consecutive months of service, except in the event of gross or serious misconduct), and will amount to:
At least a quarter of a month’s salary per year of service for the first ten years.
Then a third of a month’s salary per year from the 11th year. A different method of calculation may be used, which is more advantageous for the employee, according to the provisions set out in the collective agreement or the employment contract, or the practices in force in the company.
Compensation in lieu of paid leave
Compensation in lieu of paid leave is due when, on the date of termination of their contract, an employee has not taken all the paid leave to which they were entitled.
It is due even in the event of dismissal for gross misconduct, retirement, resignation and termination of the employment contract during the trial period.
To calculate the amount due, several factors must be considered:
Basic salary and salary increases.
The salary the employee would have received had they not been on maternity leave, paternity leave or sick leave following a workplace accident, for example.
Holiday pay for the previous year.
Seniority bonus, monthly attendance bonus and on-call bonus.
Expatriation bonus.
Benefits in kind.
However, the end-of-year bonus, the incentive bonus, the profit-sharing bonus, professional expenses and the 13th month’s pay are not considered when calculating the due amount of compensation in lieu of paid leave.
Unemployment
Redundant employees may be eligible for unemployment benefits, provided they meet all the necessary criteria.
The back-to-work allowance (Allocation de retour à l’emploi – ARE) is an income maintenance benefit provided by France Travail under certain conditions. It is intended for registered job seekers who are out of work through no fault of their own. Payments will cease if the redundant employee returns to paid employment.
You can calculate the amount of unemployment benefits you are entitled to on the France Travail website:
All nationals of non-EU and non-EEA countries – except for Switzerland – who wish to live and work in France for more than three months must have a residence permit.
Where a foreign employee is considered to have lost their job through no fault of their own, their situation will depend on the type of residence permit they have.
Holders of a residence permit authorizing the exercise of any professional activity
The residency rights of persons whose residence permit authorizes them to engage in any professional activity will not be affected by the termination of their employment contract. This includes persons with a temporary or multi-year “private and family life” residence permit, a “family member of a European national” resident permit, a permanent residence permit, a “ talent (family) ” status, etc.
Holders of a temporary residence permit marked "Employees"
If the employee finds a job before their residence permit renewal date
If they are unable to find a job before their residence permit renewal date:
In the event of involuntary termination of the employment contract, and on presentation of the France travail declaration established by the employer upon termination, the residence permit will be extended for one year.
Holders of a multi-year “employee” residence permit are allowed to engage in any salaried employment, if they possess a work authorization. If there is a change of employment, the employer must apply for a new work authorization. For more information, please refer to our Fact sheet : work permit
Holders of a “Talent ” multi-year residence permit
If the employee finds a job before their residence permit renewal date:
If the new job matches the conditions of the previous residence permit (such as contract type, salary, profile, etc.), no additional steps are required from the employee. However, the employer must request the residence permit authentication at least two days before the employee starts the new job.
If the conditions for the residence permit are no longer met, it will be necessary to apply for a change of status with the Prefecture to ensure the residence permit aligns with the individual’s new situation.
If they are unable to find a job before their residence permit renewal date,
Then the holder no longer meets the requirements for the residence permit, it will not be renewed. However, if the resignation is considered legitimate and the individual qualifies for unemployment benefits, the residence permit may be renewed for the duration of the unemployment benefit period.
For the renewal of their residence permit, the following documents should be provided to the Prefecture:
The employer’s certificate intended for France Travail
The certificate from the unemployment benefits agency indicating the remaining period of coverage
