Termination of Employment in France: What Steps Do I Have to Take and What Will It Cost Me?

severance pay

If you have an employee working in your home, whether it be a nanny, housekeeper, gardener or other, they will have a work contract and you should be declaring them according to French law. As a result, there are steps to take when terminating the employment, whether it be the employer or the employee making the decision. In this article we will outline the various scenarios of employment termination and which steps need to be followed, as well as explain the various severance payments which may be required.

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How do I dismiss an employee?

You can terminate the employment contract for any reason constituting a real and serious cause of dismissal (moving, schooling of the child, misconduct, etc…).

You need to do the following:

  • Summon your employee to a preliminary interview by registered letter with acknowledgment of receipt or hand delivery against discharge (dated and countersigned by the employee). This summons indicates the purpose of the interview (possible dismissal);
  • Interview with the employee to indicate the reason(s) for the envisaged decision and to obtain explanations from your employee (at least 5 working days after receipt of the convocation letter with the employee);
  • Sending of a dismissal notification by registered letter with acknowledgment of receipt. It is the date of the 1st presentation of the registered letter that sets the starting point of the notice. The termination letter must clearly specify the reason(s) for termination. It cannot be shipped less than 2 working days after the date scheduled for the preliminary interview.

How can my employee resign?

If your employee decides to terminate their employment contract, they must express their desire to resign in writing effectively starting their notice period.

How much notice does my employee need to give or receive?

The seniority of your employee determines the length of the notice period. The notice may or may not be given by agreement between the parties.

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  • In the event of dismissal, retirement, or voluntary retirement

The period of notice to be given for reasons other than serious or gross negligence is:

  • 1 week if the employee has less than 6 months of continuous service with you;
  • 1 month if the employee has between 6 months and 2 years of continuous service with you;
  • 2 months if the employee has 2 years or more of continuous service with you.

In the event of failure to observe the notice, the party responsible for its non-performance must pay the other party compensation equal to the amount of remuneration corresponding to the length of the notice. In case of gross negligence or misconduct, no notice is required, an employment can be terminated effective immediately unless stipulated in their work contract.

  • In the event of the employee's resignation

Outside of the trial period, an employee who plans to terminate their contract must give a minimum notice of:

  • 1 week if the employee has less than 6 months of continuous service with you;
  • 2 weeks if the employee has between 6 months and 2 years of continuous service with you;
  • 1 month if the employee has 2 years or more of continuous service with you.
  • If you exempt your employee from giving their notice, you must pay them compensation equal to the amount of remuneration they would have received if they had looked after your child;

If your employee refuses to give notice, you can ask them to pay you compensation equal to the amount of remuneration they would have received.

Will I have to pay a severance compensation?

If you are the initiator of the termination of the employment contract, you must pay your employee a termination indemnity except in the event of termination for serious or gross misconduct. This is not subject to social contributions (cotisations).

To benefit from severance pay, the dismissed employee must prove at least 8 months of uninterrupted seniority in the service of the same employer.

How much severance will I have to pay?

The amount of compensation cannot be less than:

  • 1/4 month of gross salary per year of seniority for the first 10 years;
  • 1/3 of a month of gross salary per year of seniority from the 11th year.

The salary to be taken into consideration for the calculation of the termination indemnity is according to the most advantageous formula for the employee:

  1. either the monthly average of the last twelve months preceding the dismissal, or when the employee's length of service is less than twelve months, the monthly average of the remuneration for all the months preceding the dismissal;
  2. or one third of the last three months. In this case, any bonus or gratuity of an annual or exceptional nature, paid to the employee during this period, is only taken into account within the limit of an amount calculated in due proportion.

What are the final steps of terminating an employment?

When declaring the last salary, you must declare to Pajemploi the salary as well as the indemnities for paid leave and the employee’s notice period. Severance payments are not subject to social contributions and charges. The declaration of these indemnities is optional. It allows the amount of this allowance to appear on your employee’s pay slip. Indemnities must appear on the settlement receipt “reçu pour solde de tout compte”. The amount of this compensation will therefore not be taken into account on your tax certificate issued by the Urssaf service Pajemploi.

A new Pajemploi tool is available to simulate an end of contract. The employer does not have to wait until the last day to complete the process. This gives them a glimpse of what the end of the contract will represent. They can save it and come back to it at any time. Mandatory end-of-contract documents for the employee will be generated automatically including the work certificate, the “attestation d’employeur” for Pôle Emploi, and the “reçu pour solde de tout compte”, outlining all end of contract settlements paid.

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