Employers may only use fixed-term employment contracts in certain cases governed by law. Similarly, fixed-term contracts can only be terminated in certain specific cases.
This study focuses on the most common type of termination : automatic termination of a fixed-term contract , i.e. on the date agreed in the fixed-term contract.
What formalities must the employer observe?
Unless provided for by contract or agreement, the employer is not obliged to observe a notice period.
The situation is different if the employee is ” protected “.
In this case only, the employer must notify the labor inspector one month before the end of the employment contract. The contract will only be terminated if, and only if, the labour inspector has previously established that the employee is not the subject of a discriminatory measure (Article L. 2421-8 of the French Labour Code).
Does the employer have to pay a ” termination indemnity” in the event of automatic termination?
Principle : the employer is required to pay a ”
end-of-contract indemnity (also known as “
indemnité de fin de contrat“)
indemnité de précarité “) designed to compensate for the precariousness of an employee’s situation when he or she becomes unemployed (article L. 1243-8 of the French Labor Code).
Exceptions :
The employer is not required to pay termination compensation in the following cases (article L. 1243-10 of the French Labor Code):
–
seasonal jobs : these are jobs that are normally repeated every year, on more or less the same fixed dates… the employer must meet certain specific conditions in order to use them;
–
jobs in sectors where it is common practice not to use open-ended contracts : in legal terms, this is .
jobs in use ” : some examples of sectors of activity : audiovisual, hotel and catering, leisure and vacation centers, etc. : here again, the employer must meet certain conditions in order to use them;
–
jobs related to grape harvesting : the term “grape harvesters” is used.
vendanges ”
contract for preparation, harvesting and storage. It meets specific requirements (maximum duration of one month, etc.) ;
–
jobs created as part of ” employment measures ” (e.g. professionalization contract);
–
youth employment for a period limited to school or university vacations ;
In addition, termination benefits are not payable in the following cases :
– if the contract continues as an open-ended contract ;
– if the employee refuses to accept a permanent employment contract (CDI), even though the employer offers the same or a similar job, with remuneration at least equivalent to that offered under the fixed-term contract ( ): if the employee hired on a fixed-term contract refuses to renew his or her fixed-term contract, this does not entail the cancellation of the end-of-contract indemnity, unless the contract expressly provided for the renewal of the fixed-term contract from the outset, and the employee refuses);
– In the event of early termination of the contract due to the employee’s initiative, gross misconduct or force majeure.
NB : Temporary work : at the end of their assignment, temporary employees are entitled to an indemnity at the end of their contract, unless they are immediately hired on an open-ended contract by the user company.
The same applies if the temporary employee accepts a promise of employment after the end of the assignment, even if he or she received this offer before the end of the assignment (Cass. Soc. October 5, 2016, n°15-28.672).
Example : a temporary employee is hired for a two-month assignment from January 3, 2017, i.e. until March 2, 2017. If the user company offers him a permanent contract on February 25, 2017, and he accepts it on March 3, 2017, the temporary employee is entitled to the precariousness indemnity.
How much is the end-of-contract indemnity?
Principle : the end-of-contract indemnity corresponds to 10% of the total gross remuneration paid to the employee throughout the term of the fixed-term contract.
The indemnity must appear on the last pay slip issued to the employee, and of course be paid at the same time as the last salary.
Exceptions : It is possible for this amount to be higher if, moreover, it is provided for by a collective agreement. Similarly, the indemnity may be limited to 6% by collective bargaining agreement or company or establishment agreement, in return for professional training, which may take the form of a skills assessment outside actual working hours. In this case, as the employer, you must offer the employee concerned individual access to this training.
The employee has three years to request payment of this termination indemnity, in accordance with current statute of limitations.
How do you calculate the amount of severance pay?
To determine the annual remuneration on which the termination indemnity is based, we use the “gross salary” of the employee.
gross salary “This includes all other sums in the nature of wages, such as extra pay for overtime, night work, vacation pay, benefits in kind, certain types of bonus, etc.
What is the applicable system for severance pay?
Termination payments have the status of wages. It is therefore subject to social security contributions and income tax.
Article written by Maître Ingrid Desrumaux,
Avocat au Barreau de Bordeaux, Droit Social et Droit des Affaires – Updated on March 31, 2017
