Financial Dismissal: Definitions, Procedures and Compensations

What is a dismissal for financial reasons?

Unlike dismissals for personal reasons, financial dismissals are associated with factors that are independent of the employee himself. This is due to a change or deletion of a job, or a change in a significant element of an employment contract rejected by an employee. This could be due to the following reasons:

  • Financial difficulties (such as lower levels of orders or sales); these reductions can be applied to the number of employees in a company from a quarter with less than 11 employees to a quarter with more than 300 employees. Keep in mind that you need to observe over a period of time that changes accordingly.
  • Technical changes (robotization, arrival of new software, etc.).
  • Reorganization of the company to remain competitive.
  • Suspension of company activities (except due to employer’s negligence).

What are the obligations of the employer?

In that article L2233-4, Labor Law provides two safeguards for financial dismissal.

Obligation to contain

Before initiating a dismissal procedure for financial reasons, the employer should provide additional training to the employees involved so that they can move on to another position.

Reclassification obligation

The employer must also endeavor to reclassify the employee to be dismissed into another position or another company within the group. This new position must be in the same category with the same level of reward that the position occupied. If the employee agrees, it can be in a lower wage and lower grade position. The new job can be full-time, fixed-term, full-time or part-time, with the consent of the employee.

What are the steps to follow?

Required information and consultation

Before implementing a collective dismissal for financial reasons, the employer should consult with the Social and Environmental Commission and notify Dreets of possible actions according to different methods depending on the number of employees involved.

  • If an employer leaves less than 10 employees in 30 days, the CSE must be informed of the reasons for the dismissal, the number of employees involved, the positions involved, the dismissal criteria, and the provisional schedule. CSE has a month to give an opinion. The employer must then notify Dreets in writing of the number of employees dismissed within eight days of sending the dismissal letter to the employee.
  • If the dismissal involves more than 10 employees in 30 days, the contract of the company, group, or branch may set the notification method to the CSE. The employer must provide the CSE with the same information as above. However, for companies with less than 50 employees, two meetings with the CSE should be held up to 14 days apart. If there are more than 50 employees, the two meetings should be at least 15 days apart and the CSE will have 2-4 months to give an opinion, depending on the number of redundant employees. takes. Regardless of size, the company should notify Dreets of redundant projects by registered mail the day after the first meeting with the CSE.

Preliminary interview

The employer summons the relevant employee prior to the dismissal to the interview by sending registered mail or handing it to the receipt at least 5 days before the interview date.

The invitation should include the following elements:

  • Purpose of the meeting;
  • The date and place of the interview.
  • Employees may benefit from support from selected persons belonging to the company, or from outside advisors if there is no staff representative.
  • Contact details for the City Hall and Labor Inspectors are where to get the department list of employee advisors.
    The purpose of the interview is to inform the employee of the reasons for the dismissal for financial reasons and the conditions for granting a professional security contract or relocation leave (for companies with 1,000 or more collaborators). am.

Pink slip

Dismissal letters should be sent within different time periods depending on the number of people redundant within the company.

  • For individual dismissals, a minimum of 7 business days (15 days for executives) from the date of the preliminary interview.
  • At least 7 business days from the date of the individual interview for the 2-9 employees who were dismissed.
  • Dismissal Project information to Dreets 10 to 49 dismissals in a minimum of 30 days.
  • The 50 redundant employees will send a dismissal letter to the employee if the employment protection plan is validated after notification or approval by Dreets.

The dismissal letter may benefit from an employer-induced financial reason, professional security contract or reclassification leave (only for companies with more than 1,000 employees), and one year of reemployment from the date. Must include the potential to benefit from the termination of the employment contract.

Notice of dismissal and contract termination

After notification of dismissal, the employment contract will continue until the end of the notification period. Two exceptions justify the lack of notification.

  • If the employer exempts an employee
  • If an employee accepts a professional security contract, reclassification contract, or mobility leave

At the end of the employment contract, the employer gives the employee a Paul Employer certificate, a work certificate, an account balance, and internal participation, profit sharing, documents related to the employee savings plan, and all saved amounts. And a summary statement of transferable securities.

Reemployment priority

Employees subject to the redundancy procedure will prioritize rehiring at the company, if desired, if they have a qualified position. Employees will benefit from this re-employment priority for one year from the end of the employment contract.

What are the mechanisms for avoiding layoffs?

What kind of compensation is there for the redundant ones?

Legal compensation for financial dismissal comes from employees who have a seniority system of at least eight months within the company and are hired on a permanent contract that is subject to the dismissal procedure. This is calculated according to the employee’s seniority system and reference salary.

  • If an employee has been in the company for less than 10 years, his compensation cannot be less than 1/4 of the monthly salary per year.
  • If he has an annual salary of 10 years or more, the compensation should be equal to 1/4 month salary for at least the first 10 years and 1/3 month salary for the next year. Must be.
    Other indemnities that may be paid to an employee in the event of a dismissal for financial reasons are:
  • Compensation for paid leave (if applicable).
  • Indemnity instead of notification (if applicable).
  • Monetary consideration in the event of a non-competition clause.
  • Damage if an employee is subject to abusive or irregular dismissal.
Dismissal: What causes can be considered realistic and serious?

When is the dismissal invalid, unjust or irregular?

Dismissal is considered invalid if:

  • Employment protection plans validated by Dreets will be revoked by the judge.
  • Without Dreets validation or approval of PSE.
  • If there is any infringement, discrimination, or harassment of an employee’s fundamental freedoms.
  • If the dismissal occurs after the employee has been accused of a crime or misdemeanor.
  • If you are dismissed in violation of the rules for the protection of employees, pregnant women, employees on childbirth / adoption leave, or employees who are victims of occupational accidents or illnesses.

In such cases, the employee can ask to return to the company. If not, he will receive compensation.

Dismissal may be considered unjustified if the financial reason caused by the employer is invalidated by the judge. Employees can be reintegrated into the company if the following conditions are met:

  • At least two years of seniority.
  • The company has at least 11 employees.
  • Neither the employer nor the employee opposes returning to work.

Finally, if the procedure is not followed, the dismissal is said to be irregular. However, this failure is not sufficient to cancel the dismissal and approve the employee’s reinstatement to the company.