Recent case law: The French high court has confirmed that the termination of an employment contract by mutual consent is possible, even if a dispute exists between the employer and the employee.
In the framework of a mutual termination agreement called “rupture conventionnelle homologuée” the employer and the employee can decide to terminate their relation by mutual consent. The indemnity to be paid to the employee is negotiated between the parties and must comply with a minimum amount corresponding to the mandatory legal or CBA severance indemnity. The other characteristic of this termination agreement is that it must be ratified by the Labor Inspector.
An existing dispute does not preclude a mutual termination agreement.
For a mutual termination agreement to be signed, until this new case law, some appeal courts considered that no dispute should exist between the employer and the employee at the time they decide to terminate their relation by signing a mutual termination agreement. This condition was intended to prevent this method of termination from being used to circumvent the dismissal procedure and to avoid the risk of signature under pressure of the employee.
In a recent decision (May 2013), the French High Court has now ruled that a mutual termination agreement can be signed even if a dispute exists between the parties, provided that the termination agreement was not imposed by either of the parties.
Therefore, the termination agreement must comply with the principle of mutual consent.
Practically this means that no threat, pressure or coercion must be exercised against the employee to obtain his/her signature of a mutual termination agreement.