Mutual termination of contract
Date of update
The employer and employee may decide, by mutual consent, to terminate the contractual relationship and to establish together the terms and conditions for terminating the permanent employment contract. They may then sign a mutual termination agreement.
The employment contract is terminated according to a specific procedure, further to the approval of the termination agreement by the relevant Regional Directorate for Enterprise, Competition, Consumption, Labor and Employment (DIRECCTE) or, for overseas departments and regions, the Directorate for Enterprise, Competition, Consumption, Labor and Employment (DIECCTE).
In such cases, the employee receives severance pay and may, under certain conditions, claim back-to-work allowance (Allocation de retour à l’emploi – ARE).
The contract termination may be individual or collective. Employees may not propose a so-called collective contract termination to their employer. Only the employer may instigate the negotiation of a collective agreement regarding a collective contract termination. All collective contract terminations are subject to a collective agreement.
This fact sheet focuses on individual contract terminations
Procedure
The contractual termination procedure may be initiated by either the employee or the employer. Under no circumstances may either party compel the other to terminate a permanent contract in this way; it is a termination by mutual agreement.
Should the employee or the employer wish to terminate the contract, they suggest it to the other party and an informal meeting is arranged to discuss the terms and conditions of the termination.
Key steps
- Meeting(s) between the employee and the employer, both of whom may ask someone to attend with them.
- Drafting of the mutual termination agreement setting out the termination terms and conditions (date and indemnity in particular).
- Online submission of the termination approval request form via the TéléRC portal, with the termination agreement attached where applicable.
Handwritten signature of the three forms by the employer and the employee. - Observance of a withdrawal period of 15 calendar days.
- Submission of the agreement to the employer’s local branch of the DIRECCTE or to the DIECCTE for approval (the contact details of the competent DIRECCTE are displayed on completion of the form).
- Approval time of 15 working days at most.
- Termination of the contract on the date set out in the termination agreement.
For any other queries, please see the Frequently Asked Questions
Step 1: Meeting(s)
One or more meetings take place between the employer and employee, during which they agree to terminate the permanent contract by mutual consent and discuss the terms and conditions of termination.
Both employee and employer are entitled to assistance during the meeting, provided they inform the other party beforehand.
There are two possible outcomes to the meeting(s):
- No agreement is reached and the permanent contract continues under the same terms.
- An agreement is reached; the employee and employer sign a contract termination agreement.
Template for requesting a meeting to discuss a mutual termination of contract
Step 2: Contract termination agreement and approval request form
The contract termination results from an agreement signed by the employer and the employee, the terms of which are set in legislation to ensure that each party is free to accept or reject the termination.
The agreement lays down the terms and conditions of termination as defined by the employer and the employee during the preliminary meeting(s), namely at least the date of termination of the employment contract and the amount of severance pay.
The date of termination of the contract must take into account the time required for the DIRECCTE or the DIECCTE to approve the contract termination (up to 15 calendar days).
Specific termination indemnity
When a contract is terminated by mutual consent, the employee receives a “specific termination indemnity”. The amount of the indemnity may be negotiated with the employer and is eligible for certain social security and income tax exemptions, subject to conditions.
In any case, the amount of the indemnity may not be less than statutory severance pay, which is calculated according to the rules set out in the French Labor Code:
- A quarter of a month’s salary per year of service up to ten years; then
- A third of a month’s salary per year of service over ten years.
If the amount of severance pay provided for in the company’s collective agreement is greater than statutory severance pay, this amount is taken into account when establishing the specific termination indemnity.
The TéléRC portal is an online service for requesting approval of a mutual contract termination. Users must complete an approval request form, making sure that the information entered is compliant (mandatory fields completed, statutory deadlines observed, termination indemnity at least equal to the statutory minimum, etc.)
The approval form includes the termination agreement. It is nevertheless possible to append a mutual termination agreement to the form, explaining the terms and conditions of the contract termination agreed upon by the employee and the employer.
Three copies can be printed from the “TéléRC” portal:
- One for the employer.
- One for the employee.
- One for the DIRECCTE or the DIECCTE for approval.
Each copy must be signed by the employer and the employee. A withdrawal period must be observed before sending the forms to the DIRECCTE or the DIECCTE.
Protected employee
In the event of a mutual contract termination between an employer and a “protected employee” (union delegate, employee representative, elected member of the delegation of the Social and Economic Committee, etc.), a specific approval request must be filed with the labor inspectorate.
The TéléRC online service cannot be used to file an approval request for this type of employee. The employer must use a special form to request permission to terminate the contract of a protected employee. This form (CERFA no. 14599*01) is available at modernisation.gouv.fr
Step 3: Withdrawal period
The employer and employee have the option of reconsidering and withdrawing from the mutual termination agreement within 15 calendar days, starting from the date of handwritten signature of the approval request form.
If either the employer or the employee wishes to withdraw, they notify the other party in writing, most of the time by registered letter with acknowledgement of receipt or by hand delivery. In this case, the permanent contract continues under the same terms.
Calculate the withdrawal period on the TéléRC portal
Step 4: Sending the form to the DIRECCTE or the DIECCTE
At the end of the 15-calendar-day period, the form must be sent to the employer’s local branch of the DIRECCTE (or the DIECCTE).
The assessment department’s contact details are automatically displayed when the form has been completed. The form may be uploaded via the TéléRC portal, sent by post or delivered by hand.
Step 5: Approval by the DIRECCTE or the DIECCTE
The competent DIRECCTE (or the DIECCTE) has 15 working days to complete its assessment, starting from the day after it receives the request. The purpose of the approval process is to verify that due procedure has been followed and that both parties have given their free consent: observance of the withdrawal period, completion and signature of the request form, payment of the statutory termination indemnity.
To determine the start date of the assessment period, the DIRECCTE sends an acknowledgement of receipt showing two dates:
- The date of receipt.
- The date on which approval will be deemed to be granted.
Step 6: Termination of the contract
If the approval request is rejected by the DIRECCTE or the DIECCTE
The permanent contract continues under the same terms as before.
If the approval request is accpeted by the DIRECCTE or the DIECCTE
The permanent contract is terminated on the date specified in the approval form, without further notice.
If the approval request goes unanswered by the DIRECCTE or the DIECCTE
It is deemed to be accepted and the permanent contract is terminated on the date specified in the approval form (the day after the expiry of the 15-working-day assessment period at the earliest, without further notice). Since the approval request has been neither rejected nor deemed inadmissible, an approval certificate can then be obtained via the TéléRC portal.
The employer must provide its former employee with all necessary documents (work certificate, full and final settlement receipt, declaration for Pôle Emploi, etc.)
Unemployment
Employees whose permanent contract has been terminated by mutual consent may be entitled to unemployment benefits, provided they meet all the necessary criteria.
The specific termination indemnity may under no circumstances be less than what the employee would have received had they been dismissed for personal reasons.
The eligibility criteria for the back-to-work allowance (allocation de retour à l’emploi – ARE) and the rules on compensation are the same as those applicable in the event of dismissal on personal grounds.
Calculate the amount of unemployment benefits you are entitled to on the Pôle Emploi website:
Impact on right of residence
All nationals of non-EU and non-EEA countries – with the exception of Switzerland and the United Kingdom – 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 “(family) talent passport”, etc.
Holders of a temporary residence permit for employees
- If the interested party finds a job before their residence permit renewal date, their new employer must apply for a work permit from the DIRECCTE.
- 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 Pôle Emploi declaration established by the employer upon termination, the residence permit will be extended for one year.
When the permit is next due for renewal:
- If the interested party has found a new job, they must apply for a work permit from their local Prefecture, which will forward the application to the DIRECCTE for assessment.
- If they are still out of work, they will receive a new, temporary residence permit for employees, valid until their unemployment insurance rights expire.
Holders of a general, multi-year residence permit for employees may engage in any salaried professional activity without observing any particular formalities.
Holders of a “Talent Passport” multi-year residence permit
- If the interested party finds a job before their residence permit renewal date:
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- Prior to the end of the second year of validity of the residence permit, the new employer must consult the Prefecture that issued the residence permit. If the holder no longer meets the conditions for granting a “Talent Passport”, they must apply to change their status at the Prefecture.
- If they find a job after the end of the second year, a “Talent Passport” for skilled employees or a European Blue Card will allow them to engage in any salaried activity subject to compliance with the conditions of issuance. Failing this, a change of status will be necessary.
- If they are unable to find a job before their residence permit renewal date:
If they have a “Talent Passport” that allows them to undertake salaried work, and if they are unemployed on the renewal date through no fault of their own, the permit will be renewed until their eligibility for the back-to-work allowance (ARE) expires.
To renew the permit, the holder must provide the Prefecture with the following:
- The employer’s declaration for Pôle Emploi.
- The certificate from the organization paying the unemployment benefits, showing the remaining period of coverage.