France’s economy is at the top of the charts in Europe and the fifth strongest in the entire world. With over sixty million potential consumers to reach, France is often a market that international companies want to break into. To help entrepreneurs and start-ups looking to break into France, the Law Office of S. Grynwajc, PLLC has written a mini legal guide on doing business in France. In this Blog, we’ll focus on one particular aspect of French business that all American companies hoping to hire a French employee need to understand: the contract.
Employment contracts are much more serious in France than they are in the United States. French employment law in general is much more employee-focused than in the United States, offering much more protection to employees and, in certain industry sectors, powerful unions that work directly with the companies whose workers they represent. Consequently, there is much less turnover in French business than in the United States, which is also due in part to the more rigid structure of their employee contracts.
In France, when you hire an employee you have to enter into a contract with them. There are two main types of contracts: CDI’s, which represent a continuing, indefinite working relationship, and CDD’s, which represent a fixed term for the employment. Most workers looking for a new job are hoping for a CDI.
The CDI, short for “contrat à durée indéterminée,” is the permanent employment contract. It is the default in France, meaning that an employer has to have a justifiable reason to give a new employee a CDD instead of a CDI. A CDI contract may include a trial period, however, meaning the contract can be legally terminated if the employee is not a good fit for the company during the extent of the trial period. The trial period is optional and not automatically included.
The CDD, short for “contrat à durée déterminée,” is the temporary employment contract. The CDD is much more rare than the CDI, and must be justified in order to be used. A CDD could be used for someone replacing another employee temporarily on leave, or for seasonal jobs. A CDD cannot last for more than eighteen months, and it can only be renewed twice. A short trial period is also possible (but not required or even common) with a CDD.
A major difference between American and French labor laws is an employer’s ability to fire an employee. In France, an employer cannot terminate an employee’s contract and expect them to leave the office immediately. Employers must have a legally valid reason for terminating an employee’s contract, they must give the employee a set significant amount of advance notice, typically three months, and the employee must stay with the company for the entire duration of that set period. The exact same applies to an employee resigning from a company.
As you can imagine, this can create issues in the French labor market when you have to typically wait three months to fire someone. You may immediately need additional help at your company, but you cannot replace them for that entire set time period. If an employer does choose to immediately fire an employee, they would most likely be in breach of the employment contract, and they would have the very difficult task of proving in court that they had a legally justifiable reason to do so.
Recently, however, the amount of money an employer had to pay an employee when they immediately terminate their contract and fail to justify it in court was capped at a universal set amount. This means that all employers now have a set price of what it will cost them to fire an employee without cause. It also was a rare pro-employer move in a market that is built on the tradition of always protecting the employee.
If you are an American employer hoping to hire a French employee, you have to thoroughly understand how the French employment laws work. It is a sad reality that often HR staff at American companies do not know anything about the rules that apply to CDIs or the French Labor Code when they seek to hire French employees. If you are ready to break into the French market, contact the Law Office of S. Grynwajc, PLLC today! We are licensed to practice in both the United States and France, and would be happy to assist ensure that you comply with local laws when moving ahead with your international HR strategy.