Hiring the first employee is a major operational step for a foreign founder. It is also the moment when an apparently flexible recruitment decision can create a substantial French employment-law liability. A contrat à durée déterminée (CDD) is a fixed-term employment contract. It is not a general-purpose trial arrangement, a way to postpone a permanent hiring decision, or a cancellation option if the business plan changes. Once the employee has started, the end date and the legal reason for the CDD matter.

The practical question is therefore twofold. Was the CDD lawful when it was signed, and does the proposed early termination fall within one of the limited grounds allowed by the French Labour Code? The answer is particularly important where the first employee works in a role that may continue as part of the company’s ordinary activity. A foreign shareholder, parent company or remote founder does not remove the French company’s obligations as employer.

This article explains the decision process for an English-speaking founder: how to test the temporary reason, what the written contract and payroll file must show, which termination routes are available, how notice works, and how to estimate the financial exposure of an unlawful break. The legal references and official sources were checked on 27 August 2026. They are general information, not a substitute for reviewing the contract, collective agreement, evidence and payroll records in the specific case.

I. Can a French company use and end a CDD for its first employee?

A. What legal grounds make a first CDD valid?

The first question is not whether a new company feels uncertain about its future. Every start-up has uncertainty. The question is whether the employee is being recruited for a legally recognised temporary need. Article L. 1242-1 of the French Labour Code states that a CDD, whatever its stated reason, “ne peut avoir ni pour objet ni pour effet de pourvoir durablement un emploi lié à l’activité normale et permanente de l’entreprise”. In English, the contract cannot be used to fill a position that is in substance a lasting part of the company’s normal and permanent business. The rule applies to a new French subsidiary just as it applies to an established employer.

Article L. 1242-2 is the starting point for the permitted grounds. It says that a CDD may be concluded only “pour l’exécution d’une tâche précise et temporaire”, meaning for a precise and temporary task, and then lists statutory situations. The most useful grounds for a first hire are usually a genuine temporary increase in activity, the replacement of an absent employee, seasonal work, or a defined project where the statutory conditions and any applicable collective-agreement rules are met. The wording in the contract must match the evidence in the business file.

A temporary increase in activity can sometimes support a first CDD. For example, a foreign software company may have signed a fixed-duration implementation contract with a French customer and need a project coordinator only for that implementation. A company importing products may have an objectively documented, exceptional launch period. A replacement CDD may be appropriate when the new employee temporarily replaces someone whose employment contract is suspended, or while a person recruited on a permanent contract is waiting to take up the role. Those examples depend on facts; a label copied into a template is not enough.

By contrast, “we are testing the French market”, “we do not know whether sales will last”, “the founder wants flexibility”, or “we want to see whether this person fits” are not, by themselves, CDD grounds. They describe commercial uncertainty or an assessment of the person, not a temporary task. If the role is sales, operations, administration, engineering or customer support that the company expects to need continuously, the safer structure is generally a contrat à durée indéterminée (CDI), meaning a permanent employment contract, with a properly drafted probationary period where appropriate.

The probationary period is different from the term of a CDD. It allows both sides to assess the relationship at the beginning of the contract, but it does not make the whole fixed-term contract freely cancellable. The current Service Public guidance on probationary periods explains that a CDD probationary period is optional and must be provided for in the contract. For a CDD of up to six months, the statutory maximum is calculated at one day per week, subject to a maximum of two weeks. For a CDD longer than six months, the maximum is one day per week, subject to a maximum of one month. A CDD probationary period cannot be renewed.

That distinction changes the answer to a common first-founder scenario. Suppose a French company hires a first employee on a six-month CDD and discovers after three weeks that the work is not a good fit. If the probationary period was validly agreed and has not expired, a termination under the probationary-period rules may be possible, subject to the required notice period and the prohibition on abusive or discriminatory motives. If the probationary period has expired, the employer cannot simply call the same decision a “trial failure”. It must identify a lawful early-termination ground or keep the contract running until its term.

The temporary reason must also remain real during performance. A contract signed for a customer project that has actually ended may require a review, but the end of the commercial relationship does not automatically authorise the employer to end the employee’s CDD. The company must still analyse Article L. 1243-1 and the other statutory routes. A loss of revenue, a delayed funding round, a parent company’s change of strategy, a founder’s departure or a decision to outsource the role can create strong financial pressure without becoming a permitted CDD termination ground.

Before signing, the founder should write a short internal memo answering four questions: what temporary event or task requires the hire; why the task is not the company’s permanent need; what objective evidence exists today; and what fact will mark the end of the assignment. The memo should not contradict the CDD. A contract that says “temporary increase in activity” while the budget, job description and customer plan describe an indefinite head of operations role creates avoidable evidence against the employer.

Duration must be handled with the same discipline. A CDD may have a precise term or, in specified situations, a minimum duration linked to an event. The founder should not insert an open-ended end date merely because the project is difficult to predict. Renewal must be checked against the Labour Code and the relevant collective agreement before the original term expires. A renewal document signed after the deadline, or continued work without a clear legal basis, can change the risk profile even when the initial recruitment was justified.

The correct question for a foreign-owned company is therefore not “Can we use a CDD for our first employee?” It is “What precise temporary need can we prove, and is the contract drafted around that need?” The first employee’s status as the first hire does not create an exception. In practice, a CDD is strongest where the task, dates, evidence and end event can be explained to a labour judge without relying on the company’s general start-up uncertainty.

B. What must the foreign founder put in the written contract and payroll file?

The written contract is the centre of the risk analysis. Article L. 1242-12 requires that “Le contrat de travail à durée déterminée est établi par écrit et comporte la définition précise de son motif.” The same provision lists important particulars, including the term or minimum duration, the position and tasks, the applicable collective agreement, any probationary period, remuneration and complementary pension arrangements. A generic English offer letter followed by an informal French payroll registration is not a substitute for a compliant CDD.

For a first French employee, the contract should identify the French employing entity by its exact legal name, registered address and registration details, then identify the employee and the position. It should state the statutory CDD ground in specific factual terms. “Temporary increase” should be connected to a described project, order, launch, customer deliverable or measurable workload. “Replacement” should identify the replaced employee and the reason for the absence. If the contract concerns a project with an objective end event, that event should be described so that the parties can later determine whether it has occurred.

The document should also state the start date, the end date or legally permitted minimum duration, working time, place or places of work, salary and variable components, paid leave arrangements, the applicable collective agreement, and the procedure for any renewal. A job title alone is not enough. The task description should be consistent with the actual work. If the employee is hired as a temporary project manager but spends most of the time performing the company’s permanent sales administration, that mismatch can undermine the stated reason.

Article L. 1242-13 gives a precise transmission deadline: the contract must be sent to the employee “au plus tard, dans les deux jours ouvrables suivant l’embauche”. The signed version, transmission evidence and any amendments should be stored in the employer’s personnel file. For an international group, the parent company’s document-management system should preserve the French contract, the signature trail and the French entity’s instructions. A later translation can help the founder understand the contract; it should not make the legally relevant record uncertain.

Check the applicable collective agreement before the employee starts. The agreement may affect the classification, minimum remuneration, working time, probationary terms, renewal conditions, paid leave, notice practices and sector-specific benefits. The collective agreement is not selected merely because the parent company uses it abroad. It is linked to the French employer’s principal activity and the actual employment context. A payroll provider can help identify the likely agreement, but the employer remains responsible for checking the result.

The operational filing sequence matters as much as the contract. The employer must complete the déclaration préalable à l’embauche (DPAE), the pre-hire declaration, before the employee starts work or before the probationary period begins. The Urssaf DPAE guidance states that the declaration can be made no earlier than eight days before the hiring date and must be sent before the start. URSSAF refers to the French bodies responsible for collecting social-security contributions. A foreign founder should obtain access to the relevant employer account early instead of waiting for the first payroll deadline.

Each month, the payroll file should support the déclaration sociale nominative (DSN), the standard electronic social declaration that carries salary and social-security information to the French authorities. The employer should reconcile the CDD dates, salary, paid leave and end date with the payroll records. Income-tax withholding is also reported through the DSN in the ordinary case. The official impots.gouv.fr guidance on withholding at source explains the monthly reporting mechanism and flags specific issues for foreign employers. A payroll error does not necessarily make a CDD invalid, but it can make an already disputed termination harder to defend.

The company’s corporate identity should also be ready before the hire. The Registre national des entreprises (RNE) is the National Register of Enterprises. The National Institute of Industrial Property, known by its French initials INPI, operates the online single window for business formalities and the RNE. The INPI explanation of the single window and RNE confirms that business formalities are centralised there. A Kbis is the commercial registry extract traditionally used to evidence a company’s registration. It is useful for onboarding banks and providers, but receiving a Kbis does not replace the DPAE, payroll or employment-contract steps.

Use a pre-start checklist that can be reviewed by the founder, the French accountant and the employment lawyer:

Question	Evidence to retain	Why it matters
What is temporary?	Customer order, project plan, replacement record or workload evidence	Supports the statutory CDD ground
When does it end?	Precise term or objective end event	Prevents an indefinite need being disguised as a CDD
What will the employee actually do?	Job description, reporting line and task schedule	Tests the contract against day-to-day reality
Was the contract delivered on time?	Signed contract and transmission record	Protects against formal defects and disputes
Were payroll steps completed?	DPAE receipt, payroll setup and DSN records	Reduces administrative and social-security exposure

Keep a calendar alert well before the term ends. The alert should trigger a decision between lawful expiry, a properly documented renewal if available, or a CDI offer. It should not be used to invent a last-minute termination ground. If the business may need the person permanently, offering a CDI before the CDD expires can be cleaner than repeatedly extending a temporary arrangement. If the employee accepts a CDI, record the date and the effect on the CDD and payroll documents.

Finally, make the decision with the French entity, not only the overseas founder. The local director or authorised representative should understand who can sign the contract, who can issue instructions, who controls payroll and who will preserve evidence. The company’s internal delegation should be clear. A foreign parent’s email saying “stop the contract today” is not a legal analysis and may become evidence that the decision was commercial rather than grounded in one of the statutory exceptions.

II. What happens when the first CDD must end before its term?

A. Which early-termination grounds, notices and documents apply?

After the probationary period, the employer does not have a general right to give notice and walk away from a CDD. Article L. 1243-1 provides that, unless the parties agree, the contract cannot be broken before its term except in cases of serious misconduct, force majeure or incapacity established by the occupational physician. The official text uses the words “ne peut être rompu avant l’échéance du terme qu’en cas de faute grave, de force majeure ou d’inaptitude constatée par le médecin du travail”. The list is narrow. A founder should identify the route before announcing the decision.

The first route is a genuine mutual agreement between employer and employee. The parties can agree to end the CDD early, record the agreed date and settle the final payroll and documents. The agreement should be voluntary, written and sufficiently clear about the end date, salary through that date, paid leave, any agreed payment and the return of company property. Do not describe the document as a standard CDI termination arrangement. The legal analysis is specific to an agreement ending a CDD, and the employee should have enough information to understand the consequences.

The second route is serious misconduct, or faute grave. The employer must be able to show facts that make continued employment impossible under the applicable disciplinary rules. Poor commercial results, a personality mismatch, a founder’s frustration or a single ordinary performance concern should not be relabelled as serious misconduct. Preserve contemporaneous evidence, respect the disciplinary procedure, allow the employee to respond and make the decision through the French employer. A rushed message from a foreign parent can compromise the chronology.

The third route is force majeure. It is not a general synonym for financial difficulty. The event must be analysed narrowly and against the facts. A loss-making first year, a failed funding round, the cancellation of one customer contract or a decision by the parent company to change markets will normally call for a separate review rather than an automatic force-majeure conclusion. If the founder believes this exception applies, the company should document the external event, its effects, why performance is impossible and the advice obtained before termination.

The fourth route concerns incapacity or inaptitude established by the occupational physician. A manager or founder cannot declare the employee medically incapable by email. The occupational-health process, examination, opinion and any required search for an alternative position must be handled through the prescribed procedure. The employee’s health information must be treated confidentially. The termination letter should follow the legally correct sequence and be checked against the applicable collective agreement.

A fifth situation operates for the employee rather than the employer. Article L. 1243-2 allows the employee to end the CDD early when they can prove that they have obtained a CDI. The provision refers to the employee who “justifie de la conclusion d’un contrat à durée indéterminée”. The employee normally gives a notice period calculated at one day per week, with a maximum of two weeks, unless the parties agree otherwise. The employer should request proof of the CDI and record the notice calculation; it cannot invoke this rule to end the employee’s contract itself.

Article L. 1243-3 completes the symmetry by stating that an employee who leaves early outside the authorised cases “ouvre droit pour l’employeur à des dommages et intérêts correspondant au préjudice subi”. This is not a licence to retain wages or impose an arbitrary penalty. The employer must establish the actual loss and follow the appropriate process. A foreign founder should obtain advice before threatening the employee, especially where the employee is moving to a CDI or claims a serious employer breach.

The probationary period has its own notice rules. The Service Public CDD guidance states that the employer must give a notice period before the employee leaves. The minimum is generally 24 hours where presence is under eight days, 48 hours where presence is at least eight days but less than one month, two weeks after one month and up to three months, and one month after three months. The notice cannot extend the probationary period. If the employer does not respect it, an indemnity may be due. These are probationary-period rules, not a general notice entitlement during the rest of the CDD.

Consequently, the expression “notice period” needs precision. For a lawful employer termination after the probationary period, there is no ordinary CDD notice period comparable to a CDI resignation notice. There are procedures and timing requirements tied to the ground: disciplinary steps for serious misconduct, medical steps for incapacity, proof and calculation when the employee has a CDI, or a negotiated date for mutual agreement. A contract clause saying “either party may terminate with 30 days’ notice” cannot override the statutory framework.

For each proposed termination, prepare a short decision file before communicating:

Proposed route	Core question	Documents to prepare
Mutual agreement	Has the employee freely agreed to a clear end date?	Signed agreement, payroll calculation and final documents
Serious misconduct	Are the facts sufficiently serious and proven?	Evidence, invitation, employee response and reasoned decision
Force majeure	Is performance genuinely prevented by an exceptional event?	Evidence of the event, impact analysis and legal review
Occupational incapacity	Has the occupational physician’s process been completed?	Medical opinion handled confidentially and required employer records
Employee CDI	Has the employee supplied reliable proof?	CDI offer or contract and notice calculation
End of probation	Was the probationary clause valid, current and non-abusive?	Contract clause, dates, notice evidence and final payroll

In every route, send a clear written communication through the French employer, retain proof of delivery and coordinate the final payroll. The employee should receive the appropriate end-of-contract documents, including the work certificate, the unemployment-insurance certificate for France Travail and the final settlement receipt. The official Service Public page on the end of a CDD identifies these documents and explains the consequences of an early break. A foreign group should not assume that its home-country termination letter covers the French requirements.

If the CDD reaches its agreed term, the analysis is different from an early termination. The company should stop work on the correct date, calculate salary and paid leave, determine whether the end-of-contract indemnity applies, and decide whether any new work will be performed under a CDI or another lawful contract. Allowing the employee to continue working while the founder decides what to do can create a new dispute about the continuation and qualification of the relationship.

B. What compensation and litigation risks arise from an unlawful break?

The main financial rule is severe and easy to underestimate. Article L. 1243-4 provides that an employer’s unauthorised early termination gives the employee damages “d’un montant au moins égal aux rémunérations qu’il aurait perçues jusqu’au terme du contrat”. The minimum calculation is linked to the pay the employee would have received through the agreed end date. It is not limited to the amount of notice that the founder wishes to give. The statutory wording also preserves the question of the end-of-contract indemnity under Article L. 1243-8.

Consider a six-month CDD with gross monthly pay of €3,500. If the employer ends it after two months without a lawful ground, four months remain. The wage-equivalent floor is therefore €14,000, before checking the precise dates, variable remuneration, paid leave and any other sums. If the contract would otherwise have ended without a CDI, the end-of-contract indemnity may also be due where the statutory conditions are met. The calculation is not a quote for a particular case, but it shows why a short email can create a liability larger than the payroll already paid.

Article L. 1243-8 describes the indemnity as “à titre de complément de salaire, à une indemnité de fin de contrat destinée à compenser la précarité de sa situation”. The text sets the ordinary rate at 10% of the total gross remuneration paid, subject to statutory exceptions and any applicable collective-agreement rule. Some CDD categories, continuation into a CDI, refusal of a CDI offer in certain circumstances, seasonal arrangements and other situations require a separate analysis. Payroll should calculate the actual entitlement rather than automatically adding or removing 10%.

An unlawful termination can therefore involve several layers: salary through the contractual term, the applicable end-of-contract indemnity, accrued paid leave and unpaid salary or expenses, as well as other claims supported by the facts. The employer may also face a claim for requalification of the CDD as a CDI if the contract was invalid from the beginning. Requalification changes the analysis of the termination because a decision that was presented as the end of a CDD may be treated as the termination of a permanent relationship.

The Court of Cassation’s social chamber made the early-termination point explicit in its 9 April 2026 decision, no. 25-13.589. The official decision records that, when the employer ends a CDD outside the legal grounds, “en dehors des cas prévus par la loi, le salarié a droit à des dommages-intérêts”. The full decision of the Cour de cassation, social chamber, 9 April 2026, no. 25-13.589 concerned a seasonal CDD ended after its probationary period. The court rejected the lower court’s treatment of the break as an ordinary dismissal and applied the CDD compensation rule. The practical lesson is direct: expiry of probation does not convert an employer’s unlawful CDD break into a freely managed dismissal.

That decision also matters for the first-employee scenario because founders often think in terms of ordinary dismissal. If the contract is still a CDD and the probationary period is over, the employer must start with the CDD rules. A letter that says “the role is no longer required” may prove the company’s commercial decision, but it does not itself prove serious misconduct, force majeure or occupational incapacity. The company should pause, calculate the remaining term and explore a lawful mutual agreement before sending a final termination message.

Formation defects create a separate risk. Article L. 1245-1 says, in the cases it lists, “Est réputé à durée indéterminée tout contrat de travail conclu en méconnaissance” of the relevant CDD rules. The linked Article L. 1245-1 of the Labour Code covers breaches involving the prohibited permanent need, permitted grounds and the first paragraph of Article L. 1242-12, among other provisions. A missing or imprecise reason, an impermissible purpose or certain renewal failures can support a requalification application.

Article L. 1245-2 provides a minimum requalification indemnity when the labour court grants the employee’s application: it is “ne pouvant être inférieure à un mois de salaire”. The official text of Article L. 1245-2 also gives the matter a direct hearing route. This minimum is separate from the consequences of ending the newly recognised CDI. It should be included in the risk model when the employer’s contract was weak at signature.

The Court of Cassation has repeatedly illustrated why the first draft matters. In its social-chamber decision of 1 February 2011, no. 09-67.140, the court treated the absence of required replacement details seriously: the employee’s actual occupation of the absent workers’ post “ne peut suppléer l’absence de mention de la qualification de la personne remplacée”. The official decision, Cour de cassation, social chamber, 1 February 2011, no. 09-67.140, is a useful warning for any founder using a replacement ground. Evidence that the arrangement looked like a replacement after the event cannot repair a material omission in the contract.

In a further social-chamber decision of 7 November 2006, no. 05-41.723, the court explained that the requalification indemnity “naît dès la conclusion de ce contrat en méconnaissance des exigences légales”. The official decision, Cour de cassation, social chamber, 7 November 2006, no. 05-41.723, confirms that the risk can arise at the moment of an unlawful contract, not only when the employment ends. For a foreign company, that is why the contract should be reviewed before the employee starts, when the facts can still be corrected without a termination dispute.

There is also a risk in treating the end date casually. If the employee works beyond the CDD term without a clear lawful arrangement, the company can create an argument that the relationship continued as a CDI. The payroll file, work instructions, customer emails and invoices may all be used to establish what happened. The founder should not ask the employee to “help for a few days” after the term while waiting for the parent company’s approval of a new contract.

When a dispute arises, the employee may bring the matter before the conseil de prud’hommes, the French labour court. The court will examine the contract, the stated ground, the actual work, the dates, the communication, the alleged reason for termination, payroll records and the employer’s evidence. An employer that changes its explanation between an internal email, a termination letter and its court submissions creates a credibility problem. The company should preserve the original documents, avoid backdating, and avoid asking employees to recreate evidence.

The financial model should be prepared in three scenarios. Scenario one is lawful expiry: salary and paid leave are calculated to the term, the correct documents are issued, and the end-of-contract indemnity is tested. Scenario two is lawful early termination: the applicable procedure is followed, any negotiated payment is recorded, and the payroll impact is confirmed. Scenario three is disputed early termination: remaining gross pay, potential end-of-contract indemnity, requalification indemnity, paid leave, legal costs and management time are reserved. The comparison often shows that a negotiated transition or a short period of continued work is cheaper than an unsupported immediate break.

For example, if the company’s first employee is paid €4,200 gross per month and five months remain, the starting wage exposure is €21,000. A 10% end-of-contract calculation cannot be applied blindly, and it may be based on the remuneration paid under the actual arrangement rather than simply the remaining months. But if the employee also shows that the CDD was an invalid substitute for a permanent role, the employer should add the minimum requalification indemnity of one month’s salary and assess the CDI termination consequences. The calculation should be run by the French payroll provider and reviewed by counsel before action.

A foreign founder can reduce risk with a simple decision tree. First, check whether the employee is still inside a valid probationary period. If yes, verify the clause, dates, notice and motive. If no, ask whether the employee agrees in writing to an early end. If not, test serious misconduct, force majeure and occupational incapacity against the statutory facts and procedure. If none applies, do not send a unilateral termination letter: price the remaining term, consider a CDI or an agreed transition, and obtain French employment advice. If the employee is the person seeking to leave for a CDI, request proof and calculate the statutory notice.

The company should also review related documents before any final decision. If the role was posted as permanent, if the business plan assumed the employee would stay indefinitely, if the CDD has been renewed repeatedly, if the contract’s reason is generic, if the employee received the contract late, or if the employee has been performing the company’s ordinary core work, these facts may support requalification. If the termination follows a complaint, leave, health issue, family event or protected activity, separate discrimination and protection rules must be checked. No termination route should be used as a pretext.

For broader onboarding, the firm’s French company formation and employer-support page can be used as the corporate hub. A new article should also be read with the existing guidance on the cost of hiring a first employee in France, the warning about using a freelancer instead of the first employee, and the article on choosing the applicable collective agreement. Those links address connected decisions; they do not turn a CDD into a general flexibility tool.

The final practical rule is to separate three questions that are often collapsed into one: was the person hired under the right status, is there a lawful reason to end the CDD now, and what must be paid and documented at the chosen end date? The first question is tested against Articles L. 1242-1, L. 1242-2 and L. 1242-12. The second is tested against Article L. 1243-1 and the relevant exception. The third is tested against Articles L. 1243-4, L. 1243-8 and the payroll records. Keeping the questions separate prevents a commercial decision from being mistaken for a legal termination ground.

Conclusion

A French company can use a CDD for its first employee only when it can prove a precise, temporary legal need. The fact that the founder is testing the market or that the company is newly incorporated does not, by itself, justify a fixed-term contract. After the probationary period, an employer cannot end the CDD on ordinary notice because the role no longer feels right or the budget has changed. A written mutual agreement, serious misconduct, force majeure or occupational incapacity must be analysed against the statutory rules. An unsupported break can expose the company to the remaining wages, applicable end-of-contract payments and requalification claims. Before acting, preserve the evidence, calculate the exposure and have the French contract and termination route reviewed.

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