You run a French company from London, New York, Dubai or Singapore. Your first hire in France was enthusiastic at the start, but the relationship has worn out. Performance is uneven, trust is fading, and neither side wants a long conflict. Your employee suggests parting by mutual agreement. You wonder whether a short email and a handshake payment are enough, how much you must pay, how long approval takes, and whether you can handle everything without flying to Paris. This guide answers those questions for a foreign founder or foreign parent company with a French subsidiary or branch.
In France, the agreed route has a specific name: rupture conventionnelle, the mutual termination of a permanent employment contract. It is neither a dismissal nor a resignation. It rests on a written agreement signed by both sides, followed by a withdrawal period and an approval called homologation by the administration. When the steps are followed, the employee receives at least a statutory minimum payment, unemployment rights with France Travail, the French unemployment agency, and you receive a clean break with limited litigation risk. When the steps are skipped or rushed, the agreement is void and the break is reclassified as a dismissal without real and serious cause, with back pay and damages. For a non-resident employer, the trap is practical: distance makes you want to shorten meetings, sign by email, file early, or pay a round sum. Each shortcut has a legal price.
This article explains every French acronym in plain English, cites the Labour Code and two published decisions of the Cour de cassation, the French Supreme Court for civil and labour matters, and gives foreign directors a remote-proof method. It follows the general roadmap for setting up a company in France as a foreign founder, from bank account and Kbis company registration certificate to VAT and first hire, then focuses on the separation itself, its cost, its approval, and its closing documents.
I. How do you agree a valid mutual termination when you manage from abroad?
A. How do you organise the meeting, assistance and written agreement from abroad?
French law starts from consent. Article L1237-11 of the Labour Code states: “L’employeur et le salarié peuvent convenir en commun des conditions de la rupture du contrat de travail qui les lie.” In English: the employer and the employee may jointly agree the conditions for ending their employment contract. The same article adds that the mutual termination, which excludes dismissal or resignation, cannot be imposed by either side and results from an agreement signed by both parties to the contract. The official text is published here: Article L1237-11, Labour Code, mutual termination principle.
For a foreign founder, the first consequence is that pressure destroys the file. If you announce that the employee must sign or be dismissed, if you present a pre-filled form with no discussion, or if you use a performance improvement plan as a threat while negotiating, the employee can later argue that consent was vitiated by violence, fraud or mistake. The Cour de cassation applies ordinary contract law to this point. A tense context alone does not prove a defect, but documented threats, lies about rights, or abuse of a language barrier do. Distance increases this risk when all exchanges are in English while the employee is a French speaker, or when time-zone pressure leads to late-night calls. Keep negotiation and decision clearly separate, allow reflection time, and keep written traces of each proposal.
The second consequence is procedural: you must hold at least one meeting. Article L1237-12 requires that the parties agree the principle of a mutual termination during one or more meetings in which the employee may be assisted, either by a person of his choice belonging to the staff of the company, whether a union office holder, a staff representative or any other employee, or, where there is no staff representative body, by an outside staff adviser chosen from a list drawn up by the administration. The official text is here: Article L1237-12, Labour Code, prior meetings and assistance. During the meeting or meetings, the employer may also be assisted when the employee uses that right, after informing the other side in advance.
In a company with one employee and a director abroad, this often puzzles foreign readers. There is no staff representative, so the employee may come with an outside conseiller du salarié, a registered employee adviser. You cannot refuse that adviser. You can attend by video link if travel is impossible, but you must be able to prove the meeting actually took place: calendar invitation, connection log, notes signed or confirmed by email, and consistency between the date stated on the official form and the real discussion date. Backdating is a classic ground for refusal of approval. The DREETS, the Regional Directorate for Economy, Employment, Labour and Solidarity, the regional labour authority that approves the agreement, compares dates across the form, the withdrawal letters and the filing receipt. If the meeting date is after the signature date, or if the same date is recycled for a second agreement after a refusal, expect questions.
You as employer may be assisted as well, but only if the employee is assisted, and after notice. In practice, a foreign director joins with a French-speaking representative or counsel, informs the employee beforehand, and records who attended. Do not send an uninformed intermediary with full powers but no understanding of the file. The DREETS checks freedom of consent, not your travel diary, but a coherent remote process helps: a first video meeting to explain the principle and the right to be assisted, a written summary in clear English and French, a second meeting to fix the payment and the departure date, then signature of the official Cerfa form in two originals.
The written agreement must define the conditions of the break, including the amount of the specific mutual-termination payment and the date of termination. Article L1237-13 provides that the agreement fixes the date of termination, which cannot occur before the day after approval, and that each party has fifteen calendar days from signature to withdraw in writing by any means proving receipt by the other side. The official text is here: Article L1237-13, Labour Code, payment, end date and withdrawal period. The article states: “Elle fixe la date de rupture du contrat de travail, qui ne peut intervenir avant le lendemain du jour de l’homologation.” In English: it fixes the date of termination, which cannot occur before the day after approval.
From abroad, organise withdrawal practically. Fifteen calendar days means weekends and holidays count. A letter sent by email with acknowledged receipt, by registered letter with acknowledgment, or by hand delivery against receipt works if you can prove the date of receipt. Agree in advance which address and which email each side will monitor during those fifteen days. If you are in a different time zone, do not assume a message sent at 11 p.m. Paris time on day fifteen is on time without proof of receipt. Keep both originals, keep proof of dispatch and receipt, and do not file for approval before the period expires. Filing early is void, as the case law below shows.
Certain employees cannot use the ordinary route. Employees with protected status listed in Articles L2411-1 and L2411-2, such as pregnant employees in some periods, staff representatives, union delegates, or employees holding specific mandates, need authorisation from the labour inspector rather than simple approval, and the contract can only end on the day after authorisation. The rule is in Article L1237-15: Article L1237-15, Labour Code, protected employees and labour inspector authorisation. Before any discussion, check whether your first hire has become a protected employee by standing for election, reporting harassment, or declaring pregnancy. If so, stop the ordinary timetable and seek specific advice, because the procedure, the authority and the deadline change.
Collective schemes are also excluded. Article L1237-16 states that the section on individual mutual termination does not apply to breaks resulting from certain collective agreements, job protection plans, or collective mutual termination agreements: Article L1237-16, Labour Code, exclusions for collective schemes. A foreign group that wants several departures in France cannot multiply individual agreements to avoid collective dismissal rules. With one employee the point rarely arises, but with two or three hires it matters.
B. How do you calculate the minimum payment your employee cannot waive?
The payment has a legal floor. Article L1237-13 states that the specific mutual-termination payment cannot be lower than the statutory dismissal payment provided in Article L1234-9. Article L1234-9 gives the right to a dismissal payment to an employee on a CDI, a contrat à durée indéterminée or permanent contract, dismissed with eight months of uninterrupted service with the same employer, except for serious misconduct, with calculation methods set by regulation. The official texts are here: Article L1234-9, Labour Code, right to dismissal payment and Article R1234-1, Labour Code, calculation per year of service.
The regulation sets the minimum at one quarter of a month of salary per year of service for years up to ten years, and one third of a month of salary per year of service for years from ten years onward. The official scale is here: Article R1234-2, Labour Code, minimum scale per year of service. For incomplete years, the payment is calculated in proportion to full months. The reference salary is generally the average of the last twelve months, or the last three months if more favourable with pro-rating of bonuses, and the applicable collective agreement, the convention collective, may impose a higher conventional minimum. The DREETS refuses approval if the stated amount is below the legal or conventional minimum, as happened in the 2018 case discussed below where a first agreement with 2,980 euros was refused because it was below the conventional minimum.
Take a concrete foreign-founder example. You hired a Paris-based office manager on a CDI on 1 March 2024 with a gross monthly average of 3,200 euros. You sign a mutual termination on 15 October 2026. Seniority is about two years and seven months. The statutory minimum is roughly 2.5 years times one quarter of 3,200 euros, which is 2.5 times 800 euros, or 2,000 euros, adjusted for full months and more favourable collective agreement. If your sector agreement grants one third of a month per year from year one, the minimum rises. If the employee has only five months of service, no statutory minimum applies under Article L1234-9, but the DREETS still checks that consent was free and that the amount is not derisory, and any agreed amount above zero is allowed. Always attach the pay slips, the seniority calculation and the collective agreement reference to the file before signing, so the figure on the Cerfa form matches the supporting documents.
Negotiation above the minimum is normal. Employees often ask for two or three months per year, citing loss of stability, difficulty finding a new job, or pending probation of a replacement. Employers often offer more to secure a quick, dispute-free exit without a dismissal procedure. There is no legal ceiling. What matters is to state the gross amount clearly, to distinguish it from accrued holiday pay, notice compensation where relevant, and pro-rata bonus, and to understand the tax and social treatment. The mutual-termination payment benefits from a partial exemption regime for income tax and social charges within limits, but the exempt portion depends on seniority, on whether the employee can claim a pension, and on amounts exceeding thresholds that trigger full social charges and the forfait social, the flat employer charge on certain payments. Do not promise a net amount in an email from abroad without checking the gross-to-net conversion with payroll. A promise of 10,000 euros net that costs 14,000 euros gross creates a dispute that no approval cures.
Foreign directors sometimes ask whether untaken holiday, overtime, or a thirteenth month can be folded into the lump sum. They cannot. Paid holiday not taken at the end date is compensated separately as indemnité compensatrice de congés payés, overtime hours recorded under the 35-hour week rules are paid separately, and bonuses due under contract or collective agreement remain due. Your payroll provider will need the exact end date, the holiday balance, the overtime counter, and any variable pay rules to produce a compliant payslip. The annual discipline of approving accounts, holding meetings and filing on time, described in the guide to the annual legal calendar of a French company managed from abroad, has an employment equivalent: monthly DSN, the déclaration sociale nominative or monthly electronic payroll and social declaration, must reflect the final payments correctly, or URSSAF, the French social security collection agency, and France Travail will ask questions later.
Finally, check the source of the minimum. If your company applies Syntec, Commerce de détail, Hôtellerie-Cafés-Restaurants, or another sector agreement, the conventional dismissal payment often exceeds the statutory scale after two years, or applies from day one. State the agreement name and its IDCC number on the form. If you apply no agreement because you think a foreign contract governs, French labour law still treats the work performed in France as subject to French mandatory rules for minimum payment, working time and termination. Choosing a foreign governing law in the contract does not remove the DREETS check.
II. How do you get the agreement approved and close the file without a labour court case?
A. How do you obtain approval from the DREETS and manage withdrawal, refusal and deadlines?
Approval is what makes the agreement valid. Article L1237-14 provides that after the withdrawal period, the more diligent party sends a request for approval to the administrative authority with a copy of the agreement, that the authority has fifteen working days from receipt to check compliance and freedom of consent, and that silence after that period means approval is deemed granted. The article adds: “La validité de la convention est subordonnée à son homologation.” In English: the validity of the agreement is subject to its approval. The official text is here: Article L1237-14, Labour Code, approval request and fifteen working days. The competent authority is the DREETS of the place where the employer is established, under Article R1237-3: Article R1237-3, Labour Code, competent DREETS for approval. For a Paris-registered SAS, société par actions simplifiée or simplified joint-stock company, or SARL, société à responsabilité limitée or limited liability company, that is the Paris DREETS. For a branch, it is the DREETS of the branch address.
In practice the filing is now online through the TéléRC portal, which generates an acknowledgment of receipt with date and time. From abroad, appoint one person to file and monitor the portal daily. The fifteen working-day period runs from receipt, Sundays and public holidays excluded, and the administration can ask for clarification, which does not suspend the period but often leads to a refusal if the answer arrives late. Common reasons for refusal include a payment below the legal or conventional minimum, inconsistent dates, a missing signature, a meeting date identical to the signature date with no real discussion, or signs of pressure. A refusal is reasoned and notified. It does not end the contract. The employee remains employed and paid until a new valid agreement is approved or another lawful route is used.
The most dangerous timing error is filing before the withdrawal period ends. The Cour de cassation held on 13 June 2018, appeal No. 16-24.830, published in the Bulletin: “il résulte de l’application combinée des articles L. 1237-13 et L. 1237-14 du code du travail qu’une partie à une convention de rupture ne peut valablement demander l’homologation de cette convention à l’autorité administrative avant l’expiration du délai de rétractation de quinze jours prévu par le premier de ces textes”. In English: it follows from the combined application of Articles L1237-13 and L1237-14 that a party cannot validly request approval before expiry of the fifteen-day withdrawal period. The official decision is here: Cour de cassation, Social Chamber, 13 June 2018, No. 16-24.830, early approval request invalid. In that case, the first agreement had been refused because the payment was too low, the parties signed a second agreement increasing the payment from 2,980 euros to 3,300 euros but kept the same old withdrawal expiry date before the refusal, and the Court held that the employee had to benefit from a new withdrawal period. Without it, the second agreement was void. For a foreign employer, the lesson is strict: after any refusal based on amount, sign a genuinely new agreement with a new meeting date, a new signature date, a new fifteen-day withdrawal period, and only then file.
Count the full timetable from signature. Day zero is signature. Fifteen calendar days of withdrawal follow. Filing occurs on day sixteen at the earliest. Fifteen working days of instruction follow. The earliest lawful end date is the day after approval, express or implied. In a smooth file, signature on 1 October, end of withdrawal on 16 October, filing on 17 October, approval around 7 November, contract end on 8 November at the earliest. If you promised the employee an end date of 31 October on the form, the DREETS will refuse or require correction, because the promised date precedes the earliest possible approval. Always set the contractual end date several weeks after the likely approval, with a margin for questions. Do not let the employee start a new job on the assumption that silence means approval before you have the dated receipt and the calendar count.
Refusals need a calm response. Read the reason, correct the amount or the date, hold a new meeting if needed, sign a new form, observe a new withdrawal period, and refile. Do not refile the same form with a handwritten correction to the amount. Do not keep the old meeting date to save time. Do not ask the portal helpdesk to backdate receipt. Each of these shortcuts appears in litigation and leads to annulment. If the DREETS signals pressure or doubt about consent, pause and examine emails, messages and performance documents before refiling. A second refusal on the same facts suggests the file is not suitable for mutual termination and that another route, such as a properly run dismissal for a proven ground or a negotiated settlement after a genuine dispute, should be considered with advice.
Jurisdiction and language matter for foreign groups. The portal and the DREETS work in French. File in French, keep an English courtesy translation for the parent, and ensure the French version controls. If the director abroad signs with an electronic signature, use a qualified signature that identifies the signatory and guarantees integrity, and keep the audit trail. A typed name in a PDF without authentication is weak proof if the employee later denies signing. If a power of attorney is used, attach a dated, specific mandate authorising the representative to agree the principle, the amount and the end date, not a general company mandate.
B. How do you pay, declare and deliver the final documents, and what if the employee challenges?
Once approval is obtained, the contract ends on the agreed date, which by law is at least the day after approval. You then pay the balance, declare it, and deliver three documents. The payment includes the specific mutual-termination amount, the holiday compensation, any pro-rata bonus or overtime balance, and the last salary. The payslip must itemise each line. The DSN for the month of departure must report the end date, the nature of the termination, and the bases for CSG, CRDS and social charges. URSSAF, the agency that collects social contributions, reconciles DSN data with payments, and errors trigger automated queries. The companion guide to URSSAF audit, control and assessment for a French company run from abroad explains why payroll coherence matters beyond the employment file.
The three closing documents are the work certificate, the receipt for full settlement, and the France Travail attestation for unemployment rights. Article L1234-19 requires the employer to deliver a certificate at expiry, with content set by regulation: Article L1234-19, Labour Code, work certificate on expiry. Article L1234-20 defines the receipt for full settlement, which lists sums paid on termination and becomes conclusive for stated sums six months after signature unless challenged: Article L1234-20, Labour Code, final settlement receipt and six-month challenge period. The France Travail attestation is filed electronically and allows the employee to claim benefits after the statutory waiting period. Deliver all three on or shortly after the end date, in French, with a practical note in English explaining what each document is for. Late or missing attestation delays benefits and fuels disputes.
Tax and social treatment must be explained, not promised lightly. Within limits, the specific payment is exempt from income tax and partly exempt from social charges when the employee is not yet able to claim a statutory pension, but the portion exceeding twice the annual social security ceiling, or the statutory or conventional minimum if higher, loses exemptions, and the employer forfait social applies above thresholds. Payroll software applies the 2026 ceilings automatically, but only if the nature of the payment is coded correctly as a mutual-termination payment rather than as salary or as damages. A coding error produces a wrong net, a wrong DSN, and a correction months later. Ask payroll to simulate gross, net, and employer cost before you sign, and attach the simulation to the internal approval of the parent company.
Even a clean file can be challenged. Article L1237-14 gives twelve months from approval to contest the agreement before the conseil de prud’hommes, the French labour court. The employee typically seeks annulment for defect of consent, fraud, or failure to observe the procedure, and asks for reclassification as a dismissal without real and serious cause, with back pay, holiday pay, minimum damages under the Macron scale, and reimbursement of unemployment benefits to France Travail. The employer must keep the complete file for at least that year, and longer for payroll records: invitation and proof of meetings, assistance notices, both originals, proof of withdrawal notices, filing receipt, approval or proof of implied approval, pay slips, DSN receipts, and proof of delivery of closing documents.
Two boundaries from case law help foreign directors assess risk. First, an unhappy context does not equal coercion. The Cour de cassation held on 23 January 2019, appeal No. 17-21.550: “en l’absence de vice du consentement, l’existence de faits de harcèlement moral n’affecte pas en elle-même la validité de la convention de rupture intervenue en application de l’article L. 1237-11 du code du travail”. In English: absent a defect of consent, the existence of moral harassment facts does not in itself affect the validity of a mutual termination agreement concluded under Article L1237-11. The official decision is here: Cour de cassation, Social Chamber, 23 January 2019, No. 17-21.550, harassment without defect of consent does not void agreement. In other words, an employee who claims a difficult atmosphere must still prove fraud, violence or mistake affecting consent. Conversely, if you exploit harassment to obtain a quick signature, the defect is established and annulment follows. Keep performance management and mutual termination discussions on separate tracks, with separate documents and separate meetings.
Second, a pre-existing dispute does not automatically bar mutual termination. Courts accept that parties in disagreement may still freely agree to part, provided consent is free and informed. What voids the agreement is proof that one side used the dispute to force signature, for example by threatening a dismissal for serious misconduct while hiding that the alleged facts are time-barred, or by promising unemployment rights that do not exist. From abroad, avoid ultimatums by message, avoid parallel dismissal letters, and do not invite the employee to resign to speed things up. If a dismissal procedure has already started, with a registered invitation to a preliminary meeting, starting a mutual termination in parallel creates confusion about consent and about dates. Choose one route, document the choice, and close the other in writing.
Practical remote checklist for the final week: confirm the approval date and the contractual end date match the rule of day after approval, run payroll simulation and validate employer cost with the parent, prepare the certificate, the settlement receipt and the France Travail attestation in French, organise secure handover of equipment and access rights with an inventory, revoke bank mandates and digital access on the end date, not before, and file the company registers if the departing employee held a corporate mandate. If the employee was also a director or officer, a separate corporate resignation and a filing with the guichet unique, the French online company formalities portal, and the greffe, the registry of the commercial court, are needed to update the Kbis. Employment exit and corporate exit are two files. Mixing them delays both.
Paris and Ile-de-France specifics deserve a short note when the job is based there. The competent DREETS is Paris or the relevant departmental unit, processing times lengthen in summer and December, and labour court time limits in Paris are strictly applied. If the employee works remotely from another region while the company is registered in Paris, the competent authority remains that of the employer establishment stated on the form, but practical exchanges with the employee about Pôle emploi, now France Travail, addresses and medical cover use local offices. State the place of work, the registration address, and the applicable collective agreement consistently across the employment contract, the pay slips and the termination form.
Conclusion
A mutual termination lets a foreign-run French company and its employee part without a dismissal procedure, when both sides genuinely agree. The method that survives review is steady: a real meeting with the right to be assisted, a written agreement with a lawful payment at or above the statutory and conventional minimum, fifteen calendar days of withdrawal with proof of receipt, filing with the DREETS only after that period, fifteen working days of instruction, an end date on the day after approval, then correct pay, correct DSN, and the three closing documents. The 2018 decision punishes early filing and recycled withdrawal periods, the 2019 decision reminds that only a proven defect of consent voids the agreement, and the Labour Code provisions on meetings, payment, approval and closing documents set the floor below which no consent is valid. Run that timetable from abroad with French-language filings, English explanations for the parent, and a complete file kept for twelve months, and the separation stays what it was meant to be: an agreed ending, not the start of a labour court case.