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France – Courts continue to support payment of fixed term contract severance bonus

29 August 2013

A string of recent rulings from the Court of Cassation clarify the rules that grant fixed-term contract workers in France the entitled right to severance payment once their contract has ended. The bonus (indemnité de précarité) applies to all temporary workers, including those on fixed-term contracts, known locally as ‘contrat de travail à durée déterminée’ (CDD). French courts have consistently supported the payment of such a premium due to the insecure nature of such contracts.  

CDD contracts can end under three circumstances; the fixed-term ends without renewal, the contract is converted to a permanent position, or early termination. CDD contracts can only be terminated early by mutual agreement by both the employee and the employer, or if the employee secures permanent work elsewhere, following serious misconduct, as a result of force majeure, or should the employee become incapacitated.

The employee is entitled to a severance payment when their CDD comes to an end and they have not been offered a CDI; ‘le contrat de travailà durée indéterminée’, or CDI, is an indefinite duration contract which is still considered as the norm in the French Labour Code..

Employees with a CDD contract are not entitled to the severance payment under the following circumstances;

  • Following the refusal of a CDI or similar job with an equivalent salary
  • Following the early termination of the contract by the employee
  • In case of force majeure, or serious or gross misconduct by the employee

The severance payment should be equal to at least 10% of the total gross salary paid during a year. This figure can be reduced to 6% if a collective agreement is in place or an industry-wide agreement. In such cases, the employee must be offered preferential access to training programmes in lieu of the additional 4%. The payment should also be made to the employee at the same time as their last monthly pay. If the CDD is extended, the payment is made at the end of the second fixed term contract.

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