The contractual termination indemnity cannot be less than the conventional redundancy indemnity, when the latter is more favourable than the legal indemnity.
In a decision of 5 May 2021 (n°19-24.650), the Cour de cassation specifies that this rule applies regardless of whether the conventional redundancy allowance is limited to certain cases of dismissal only.
As a reminder, in the context of a contractual termination, the employer must pay the employee a contractual termination indemnity.
This contractual termination indemnity cannot be less than the amount of the statutory or contractual indemnity to which the employee is entitled in the event of dismissal.
In the above-mentioned case, the Court of Cassation was called upon to determine the applicable rule for determining the amount of the contractual termination indemnity in the event that :
- the collective agreement provides for two separate redundancy payments,
- or when the contractual provisions refer to the legal indemnity.
In the case submitted to the Cour de cassation, the applicable collective agreement provides for the payment of a conventional redundancy allowance in two specific cases only: when the employee is dismissed for inadequacy resulting from professional incapacity and when the employee is dismissed for serious economic difficulties that jeopardise the company's survival.
However, the applicable collective agreement does not provide for any specific indemnity for other cases of dismissal on personal grounds and refers in these cases to the legal redundancy indemnity.
The employer had therefore considered that in the event of a contractual termination with an employee, the amount of the termination indemnity should be equal to the amount of the legal dismissal indemnity.
The Cour de cassation considered that in this case, the floor of the contractual termination indemnity must be indexed to the most favorable clause of the collective agreement.
A case that has not yet been raised before the High Court will have to be decided in the following years: when a collective agreement provides for two separate severance payments, more favorable than the statutory payment. In this respect, DGT Instruction No. 2009-25 of 8 December 2009 suggests that only the lower of the two should be used as a floor...
It is important to properly negotiate a conventional termination.
Maître BRUIN's law firm assists you in the process of a contractual termination, in order to negotiate the amount of the contractual termination indemnity and to ensure that the legal formalities are respected.