The re-qualification of the fixed-term employment contract as permanent employment contract in France
Sep 12, 2017
The fixed-term contract is defined in article L 1245-1 of the Labor Code.
Article L1242-2 of the Labor Code stipulates that a fixed-term contract can only be used when the company has to face a temporary increase in activity, has an employee temporarily absent or for the performance of a specific task.
Mistakes to avoid:
Employers must be vigilant because there are many reasons leading to the requalification of a fixed-term contract, the case law is extensive and the judges are increasingly demanding. Companies are not always aware of the regulation and are only sheltered because of the ignorance of the legislation by the employees.
One of the most frequent mistakes is making successive fixed-term contracts in order to fill a permanent position. Another is when the procedural rules regarding the contract have not been complied with, particularly when the employment contract is oral and there is no written statement dealing with all the terms of the contract. The procedural rules are also in breach in case of a late submission of the contract to the employee or late signing after the employee has already started working which can also be regarded as an absence of a written agreement. Even if the irregularities are rectified at a later date, the re-classification of the contract and the payment of compensation may be requested. A ruling by the Court of Cassation dated 29 June 2011 No. 10-12884 is clear on this point.
The drafting of the fixed-term contract must be precise so that there is no ambiguity in accordance with article L1242-12 of the Labor Code, failing which it will be deemed to be a contract for an indefinite period.
Duration and renewal of the fixed-term contract:
Article L1242-8 of the Labor Code specifies that, except for a few cases, the duration of a fixed-term contract cannot exceed 18 months, including renewals. Renewals must be approved by amendments made before the end of the fixed-term contract if no conditions have been stipulated in the original contract.
If these rules are hindered, the fixed-term contract will have to be requalified as a permanent contract.
The requalification procedure:
The competent court is the industrial tribunal (Conseil de Prud’hommes) and the process must be initiated by the employee to assert his rights and claim compensation in the event of a refusal by the employer to reclassify the contract as a permanent contract. There is an exception, however, which allows the union to request a re-qualification under certain situations with the employee’s consent.
However, it is necessary to be careful not to exceed the limitation period which is five years from the signature of the fixed-term contract.
The process is fast because the court has a one month’s deadline from the referral to analyze whether the fixed-term contract fulfills the legal regulations.
Determination of allowances:
Three types of compensation can be obtained when a fixed-term contract is re-qualified as a permanent contract by a judge.
– The re-qualification allowance defined in article L1245-2 of the Labor Code must not be less than one month’s salary and is calculated on the basis of the average salary received by the employee.
– The precariousness allowance is retained by the employee. This allowance, designed to compensate for the unstable nature of employment, has to be paid to the employee at the end of a fixed-term contract. Despite the re-classification, the employee is not required to reimburse it.
– The salary recall is not normally applied for periods between each fixed-term contract unless the employee was supposed to be available for his employer.
Sometimes it may be more advantageous for the employee to receive compensation for abusive termination of a long-term contract, rather than obtaining a re-qualification allowance and receiving a severance payment. The first option of pursuing wrongful termination is being calculated over the total duration of the contract and therefore it is generally more favorable to the employee.
Some employers might terminate the permanent contract immediately after the re-qualification of the fixed-term contract, in which case the termination can be regarded as a retaliation following requalification. This may lead to the nullity of the dismissal and possible remedies include damages and reinstatement of position because it would be considered an infringement of the rights and freedoms of the employee in accordance with Article L1121-1 of the Labor Code.
It is, therefore, necessary to be very vigilant when it comes to establishing a fixed-term contract as this may prove to be less advantageous than expected.
On the other hand, this type of contract handled with caution can be really useful for both contracting parties.