Employment contract clauses
Date of update
The employment contract governs the relationship between employer and employee, regardless of its form or duration.
Because a permanent contract is not necessarily written, its form and content are in principle unconstrained, unless the collective agreement applicable to the company requires certain mandatory information to be included.
However, a fixed-term contract must include certain mandatory information.
When a permanent contract is in written form, it must specify:
- The identity and address of the parties.
- The job title and professional qualifications.
- The place of work.
- Working time.
- Remuneration (salary and bonuses)
- Paid leave.
- Notice periods in the event of contract termination.
Its content may be supplemented by a number of clauses governing specific aspects of the employment relationship, such as the probationary period, contract fulfilment terms, remuneration and termination of the employment contract.
The collective agreement applicable to the company may provide for additional terms, obligations or restrictions (requirement for permanent contracts to be written, duration of the probationary period, validity period of the non-competition clause, drafting of the mobility clause, etc.).
What is a collective agreement?
A collective agreement is an agreement between employee representatives and employers in a given business sector. It addresses specific employment conditions (specificities of employment contract clauses, health & safety, leave, remuneration, dismissal, etc.). Employers must refer to it.
The employment contract may provide for a probationary period that allows:
- The employer to assess the employee’s ability to perform their new job.
- The employee to assess whether they are suited to the role they are required to perform.
During the probationary period, the employer and employee may decide to terminate the contract for no specific reason, subject to conditions.
Any probationary period must be specifically mentioned in the employment contract. A probationary period is not mandatory.
Duration of the probationary period
The duration of the probationary period may vary depending on the employee’s profile and the position they hold in the company.
The French Labor Code sets the duration of the probationary period to:
- Two months for blue-collar and office workers who perform their role according to a line manager’s instructions.
- Three months for supervisors and technicians, who perform their role with a degree of autonomy and possess specific expertise.
- Four months for executives, who carry out managerial duties and have full autonomy in performing their role.
In the absence of a legal definition of these different types of profile, the collective agreement applicable to the company defines the professional categories of a given business sector and may provide for different probationary periods that must be complied with.
The option of renewing the probationary period must also be provided for in the employment contract and by a sectoral agreement covering the company’s business sector.
When an employment contract is drawn up, the location at which the employee will perform their role must be specified.
This workplace may change according to the company’s business needs, e.g. if another of its establishments experiences an increase in business volumes.
In principle, if they are required to perform their role in a location that is a significant distance from their original workplace, the employee must consent to the transfer, because the place of work specified in their employment contract has been modified. The employee may refuse to be transferred in such cases.
If the employer is aware that the employee’s place of work is liable to be modified in the future, a mobility clause may be inserted into the employment contract.
To be valid, a mobility clause must therefore:
- Be included in the employment contract.
- Specify the geographical area to which the employee could be transferred.
- Be consistent with the employee’s duties and profile.
When the employer decides to trigger the mobility clause to serve the needs of the company, in principle the employee cannot refuse to be transferred to the geographical area specified in the employment contract. If they refuse to move to a different workplace, they may be the subject of disciplinary action, which can include dismissal.
If the employer wishes to trigger the mobility clause, they must notify the employee with a reasonable amount of notice, so that the latter can make the necessary arrangements. The employee’s personal circumstances must be taken into account and if their right to lead a personal and family life is unreasonably affected, this may block the transfer.
An employee may hold several jobs, provided that they do not perform a role that would place them in competition against their employer and that they do not exceed the maximum number of working hours permitted. In principle, working time must not exceed 10 hours per day and 48 hours over the course of a week.
The employer may decide not to authorize an employee they are recruiting to hold another role elsewhere, whether it be for another company or on a self-employed basis. To legally prevent them from doing so, the employment contract must feature an exclusivity clause.
To restrict an employee’s right to hold another professional role, the exclusivity clause must describe in detail why it is essential to protect the interests of the company, as justified by the nature of the tasks performed.
Performance target clause
When justified by the nature of the employee’s role, the employment contract may contain a clause setting them targets to be attained (e.g. in a sales position). This enables the employer to assess the individual’s results. The attainment of targets may justify payment of the variable portion of the employee’s remuneration.
To be valid, these targets must be realistic and achievable by an individual holding the position in question.
When performing a role on their company’s behalf, an employee is party to information regarding the company’s strategy and development.
When their employment contract is terminated, an employee seeking a new job may consider working for a company that is in competition with their previous employer. This eventuality could be detrimental to the latter.
To prevent a former employee from immediately working for or setting up a competing company, the employer may decide to include a non-competition clause in the employment contract.
Such a clause prevents the employee from joining the competition upon termination of their employment contract to perform a role similar to their previous position. However, it must not prevent the employee from finding a job.
To be valid, this clause must therefore meet specific conditions. It must:
- Be time-limited. If there is no specific time limit, the length of time for which the clause is applicable must be determined according to the employee’s role and the level of responsibility held in their previous position. Collective agreements often govern the duration of such a clause.
- Be limited to a specific geographical area.
- Be suited to the employee’s profile.
- Provide for financial compensation, i.e. payment of compensation to the employee, because it affects their freedom to work. This compensation is paid upon termination of the employment contract, regardless of the motive (dismissal, resignation, termination agreement, etc.)
If a non-competition clause is provided for in the contract, the employer is required to pay the employee the compensation specified. Within this clause, the employer may also include the option of waiving its application. In this eventuality, the employee is free to take on any professional role and does not receive financial compensation.