Considered as a modality of termination of the employment agreement, the contractual termination entered into force in France in 2008. Despite its many conditions, it also offers each party specific advantages. What is the employer’s interest in this mutual agreement to terminate the employment contract? Here are the main advantages of a conventional termination after the recruitment follow-up.
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The conventional termination: a separation without litigation
The contractual termination of the employment contract is advantageous for both the worker and the employer who organizes a recruitment follow-up. Apart from the simple procedure it offers, it contributes to the improvement of the company’s internal image.
Cleaning up the company’s image
For the employer, the contractual termination makes it possible to terminate the contract without any legal action. Such a separation method also helps the employer to clean up the image of their company on a platform of trust of employee reviews available.
Indeed, when the separation between the two contracting parties is made amicably, no party outside the contract will be informed. The image of the company will then be better seen and appreciated when the employer opts for an amicable separation after the recruitment follow-up. It is therefore profitable for the employer to let go of a conventional termination because the worker will no longer be able to denigrate the establishment outside.
The simplicity of the procedure
The main contractual termination interest for the employer lies in the negotiation and especially in the prior agreement of its fulfillment. Even after the end of the contract, the parties remain on good terms without any balance of power and dispute. This is a very simple, fast, and administratively accepted procedure. Negotiation is indeed the most crucial step that must be respected in an employer’s contractual termination.
Free negotiation
Unlike other forms of termination of an employment contract, conventional termination offers total simplicity during its negotiation and conclusion. Indeed, contractual termination is an operation freely negotiated between the two parties during several interviews. The parties therefore negotiate clauses of the term of their contract with confidence and without external assistance. However, the latter must comply with some legal requirements.
The legal conditions to be respected
Indeed, the law does not require any conditions regarding the initiation, date, and place of the various interviews. The legislative provisions therefore offer complete freedom to the parties in determining the clauses governing the contractual termination. Moreover, with this form of termination, it will be easy to use it to know what recourse for a promise of employment not kept or an abusive termination on the part of the employer.
However, as proof, the employer can send a written letter to his worker to limit any disagreements after the decision to terminate the agreement. They are also required to inform their employee by any means (convocation, SMS, call, email …) a few days before the meeting.
The freedom granted to the parties for a contractual termination
In the name of the freedom offered by the law, the parties agree to determine the terms of the termination. These include, among other things, the amount of compensation to be paid, the day of termination, etc. The parties can then choose to terminate the employment contract instantly.
At the same time, they may decide to continue the collaboration for months, the time the employee can apply for further recruitment follow-up. It should be noted that in the absence of an interview between the two parties, the contractual termination interest for the employer is null and void. Because of the freedom offered to the parties, it is often rare to attend industrial tribunals or disputes after such a breakup.
The conventional termination: a real guarantee of security for the employer
The law offers real freedom to the parties during a conventional termination, but this does not prevent the intervention of the authorities for greater security.
Intervention by the administrative authorities
It is true that the conventional break plays a relevant role in the importance of the internal image of the company and requires little formalism. However, it must be validated by the administration or by the labor inspectorate. Indeed, after the withdrawal period has elapsed, the employer must send the competent authority a letter requesting approval. In this letter must be mentioned the terms of the contractual termination and certain essential information.
It should also be recalled that the competent authority has a period of 15 working days from receipt of the request to make known its decision. During this period, it may ensure that the freedom of consent of each of the parties is effectively respected. Similarly, this time is more than sufficient to verify compliance with all the conditions indicated in the Labour Code. These conditions include:
- Compliance with the rules related to the assistance of the parties;
- The amount of the indemnity;
- The right of withdrawal;
- etc.
When certification is not granted after 15 days, it is deemed acquired and the employer will speak of “tacit” certification.
The role of the administrative authority
In addition, the role of the competent authority remains crucial during an employer’s contractual termination. This authority will therefore be able to guarantee later in the event of a dispute that it is not a case of unfair dismissal. The employer will no longer be obliged to pay a few months after the termination of damages, sometimes leading to the ruin of the company.
The act of validation by the labor inspector is real proof for the employer. Using this fairly simple lever to push workers to terminate their employment contracts is of great interest to any employer.
Absence of notice for a contractual termination
Without any reason other than the common will of each of the parties to terminate the contract, the contractual termination may occur at any time. Thus, even when the company is not experiencing any financial difficulties, the employer may decide to let go of some of its workers. Not very complex and without conflict, this form of rupture is very important in the stakes of good HR communication and for the improvement of the company’s recruitment follow-up.
It should be noted, however, that the employer’s decision may not be preceded by notice. According to the relevant legislation, “No notice is provided for in the context of the contractual termination of the employment contract of indefinite duration, this term being reserved for dismissal and resignation”.
In this regard, it should be noted that this is a real advantage for the employer. They will no longer be obliged to pay additional compensation during the notice period. The parties may extend the end of the contract, but this is not a notice period. On the other hand, they can also terminate the contract instantly.
Conventional termination: a better method to reduce the company’s workforce
Conventional termination is one of the best alternatives to reduce the number of employees, especially when the company is experiencing financial difficulties. At the same time, it makes it possible to regularize the financial situation without tarnishing the company’s reputation.
A palliative to avoid dismissal
When the company opts to dismiss its employees, it must pay very high damages.
On the other hand, in the case of a contractual termination, it will only pay compensation of an amount negotiable between the parties. Compared to dismissal, this amount will not lead to the ruin of the company.
This mode of termination of the contract therefore allows you to make enough profits and to separate yourself as quickly as possible from the employees without any difficulty. The company will therefore be able to recruit the same employees during a recruitment follow-up as soon as their situation is restored.
By terminating the employment contract conventionally, the company could use the wages paid to these workers to restore its situation. Similarly, during the contractual termination, no mention is made of the worker’s documents. The latter will then be able to work in other companies without difficulty.
An alternative to hide the company’s financial difficulties
In addition, the procedure implemented here is very flexible and you are no longer obliged to specify a real and serious reason to justify your decision. Thus, the reputation of the company will no longer be tarnished. Otherwise, people outside the company will no longer be informed of the state of its financial situation. Indeed, when the financial situation of the company is known to all, creditors are quickly alerted and translate the entity into insolvency proceedings. You can therefore take advantage of this workforce reduction to regularize the internal situation of the company. It must be said that termination of the agreement for the employer is very beneficial for the growth of the company.
Contractual termination for employers: an economical solution
In comparison with dismissal (unfair or not), the contractual termination for the employer is very advantageous, especially in terms of compensation. Thus, apart from the fact that employees contribute to improving the image of the company, they receive a termination indemnity favorable to the company.
Under the legal provisions, the employer must pay their employee in the event of a contractual termination interest for the employer: the wages, paid leave, and bonuses remaining due. In addition, the employee will receive severance pay, the amount of which must at least be equal to the contractual severance pay provided for in the collective texts. It should be recalled that the parties can negotiate the said amount, unlike dismissal where the employee proposes before the courts an exorbitant amount.
FAQs
1. What are the main advantages of contractual termination for employers?
Contractual termination offers several benefits for employers, including:
- Avoiding Litigation: Ensures a peaceful separation without legal disputes, improving the company’s internal image.
- Simplified Process: Involves straightforward negotiation and mutual agreement, reducing administrative complexity.
- Cost-Effective: Employers only need to pay negotiated severance, avoiding high damages associated with dismissals.
- Maintaining Reputation: Prevents public disclosure of conflicts or financial difficulties, preserving the company’s image.
2. How does contractual termination support company image management?
Contractual termination helps maintain and even enhance a company’s image:
- Amicable Separation: Promotes a positive perception of the company, as no external parties are involved in disputes.
- Improved Employee Reviews: Workers are less likely to leave negative feedback, bolstering the company’s reputation on employee review platforms.
- Seamless Workforce Adjustments: Allows reductions in staff without publicizing financial struggles, avoiding reputational damage.
3. What is the role of administrative authorities in contractual termination?
Administrative authorities play a vital role in ensuring the legality and fairness of contractual terminations:
- Validation Process: Authorities review and approve the agreement, ensuring compliance with labor laws.
- Freedom of Consent: They verify that both parties freely agreed to the terms without coercion.
- Dispute Prevention: By validating the agreement, authorities provide legal protection against future claims of unfair dismissal.
