Forthcoming bill on conventional termination of the employment contract, presumption of resignation in the event of voluntary abandonment of position and other modifications of Law no.729

Draft law no. 259 amending certain provisions of Law no. 729 of 16 March 1963 on employment contracts, as amended, and instituting the conventional termination of employment contracts (of parliamentary origin) was tabled in the Public Session of the Parliament (Conseil National) and referred to the Committee (Social Interests and Miscellaneous Affairs) on 31 July 2023. It was voted on 28 November 2023.

In order to become law, Parliamentary Draft Law 259 will have to be transformed into a government bill. The National Council communicated Bill no. 259 to the Government on 5 December 2023, which had 6 months, i.e. until 1st June 2024, to decide whether to interrupt the legislative procedure or to transform the parliamentary Bill into a governmental Bill. (Article 67 of the Constitution).

On 27 May 2024, the Government announced its decision to transform the parliamentary draft law (with possible amendments) into a government bill. The Government has a period of 1 year from the aforementioned 6-month period ending on 1st June 2024, i.e. until 1st June 2025, to submit the bill to the Parliament (Source : Legimonaco, "Actualités juridiques", Focus, 31 May 2024).

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SUMMARY OF DRAFT LAW no. 259

The purpose of Draft Law no. 259 is:

— to introduce the mechanism of conventional termination ("rupture conventionnelle") of the permanent employment contract ("contrat à durée déterminée" - "CDI") into Law no. 729 of 16 March 1963 on employment contracts,

— to establish a presumption of resignation in the event of voluntary abandonment of position by an employee, in Law No. 729.

— to modernise certain provisions/fill legal gaps in Law no. 729 (conditions of validity of the employment contract, termination of the employment contract without notice or compensation, renewal of the probationary period, period of leave for employees with more than 2 years' seniority occupying a position of responsibility and responsible for implementing the general policy laid down by Management).

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IN DETAIL

The "rupture conventionnelle", which is regulated by the neighbouring country (articles L1237-11 to L1237-16 of the French Labour Code resulting from Law no. 2008-596 of 25 June 2008 on the modernisation of the labour market), is the result of an agreement signed by the employer and the employee enabling them to agree together on the conditions for terminating the permanent employment contract (CDI) between them. As the Explanatory Memorandum points out, the number of individual contractual terminations approved in France is increasing, for all age groups. See here the French statistics (unprotected employees in the private sector in mainland France).

The Monegasque courts accept amicable (negotiated) termination of employment contracts, but this is rarely used because it is not governed by law, which means that there are no procedural guarantees, no minimum compensation and no entitlement to unemployment benefit.

The introduction of the conventional termination of the employment contract in Monegasque law would therefore enable "employees who so wish to leave the company following a rapid procedure, while guaranteeing them compensation", "to avoid numerous disputes, unlike, for example, the termination of employment contracts due to redundancy or resignation", and is in line with the broader objective of "encouraging professional mobility" (Explanatory Memorandum, pp. 1-2).

The Commission on Social Interests and Miscellaneous Affairs (CISAD) added to the initial system the presumption of resignation of the employee in the event of voluntary abandonment of position, here again following the French example (Article L. 1237-1-1 of the Labor Code resulting from Law No. 2022-1598 of 21 December 2022 relating to emergency measures relating to the functioning of the labor market with a view to full employment - Article 4; Art. R. 1237-13 of the Labor Code resulting from Decree no. 2023-275 of 17 April 2023 on the implementation of the presumption of resignation in the event of voluntary abandonment of position by the employee).

Voluntary abandonment of position is until now, "in most cases, sanctioned by the employer through the implementation of a dismissal procedure. Thus, the Commission intended to establish a system capable of offering an alternative to local employers."

Amendment of the existing provisions of Law no. 729

→ Specify that any change to an essential element of the employment contract (e.g. working hours, pay) is subject to a rider (avenant) drawn up in the same form as the contract. This obligation would not add any additional formality for employment contracts agreed orally: the rider could be agreed orally. (new paragraph 2, art. 2 Law no. 729)

→ Specify that the validity of the employment contract is conditional (new last paragraph, art. 2):

• depending on the case, obtaining the authorisation (employee of foreign nationality) or fulfilling the declaration formalities (employee of Monegasque nationality) by the employer provided for by article 4 of Law no. 629 of 17 July 1957 regulating the conditions of employment,
• and obtaining a work permit for the future employee.

→ Specify the rules governing renewal of the trial period (new paragraphs 2, 3 and 4, art. 4):

• The trial period may be renewed once, at the employer's initiative and with the employee's agreement. The renewal period may be longer than the period initially set, but in no case may the duration of the trial period and its renewal exceed 3 months.
• Before the initial trial period expires, the employer must inform the employee in writing of its intention to renew the trial period, the duration of the renewal and the conditions under which it will be carried out.
• The employee is obliged, within the same timeframe and in the same form, to indicate his agreement or refusal. In the event of refusal, the employer may terminate the employment contract without compensation or notice period.

→ Specify that the employment contract is terminated, without notice or termination compensation, if the work permit is withdrawn during its execution (new Art. 5-1).

→ Specify that the 1-month period of leave (délai-congé) provided for employees whose length of service with the same employer exceeds 6 uninterrupted months applies "regardless of the duties held by the employee" (paragraph 2, art. 7).

→ Add a new category of leave for employees with more than 2 uninterrupted years of service who occupy a position of responsibility in which they are responsible for implementing the general policy laid down by Management (new c), art. 7). At the employer's discretion:

• either a period of 3 months' leave,
• or a period of leave of 1.5 months and a special allowance (minimum amount and calculation methods determined by ministerial decree - can be cumulated with dismissal or redundancy allowances).

→ Add the possibility of notifying the notice period by hand-delivered letter against a receipt (the date of hand-delivery setting the starting point for the notice period), in order to lighten the existing formalities (registered letter with acknowledgement of receipt) (art. 9).

The insertion of the presumption of resignation in the event of voluntary abandonment of position by the employee in Law No. 729

→ The employee who voluntarily abandons his position and does not return to work after having been notified to justify his absence and to return to his position, by registered letter or by letter delivered by hand against discharge, within the time limit set by the employer, which cannot be less than 15 days, is presumed to have resigned at the expiration of this period (art. 5-2). To benefit from the presumption, the employer must characterize the voluntary nature of the job abandonment. Abandonment of a position which "could be justified by a legitimate reason, such as medical reasons, the refusal by the employee of a unilateral modification of his/her employment contract, a preventive measure against a situation proven harassment or violence at work or the exercise of the right to strike". The CISAD Report also specifies that "In accordance with article 1199 of the Civil Code", the presumption exempts the employer from having to provide proof of the reality of the employee's intention to resign in order to draw the legal consequences.".

→ The return to work by the employee before the end of the deadline set by the employer does not prevent the implementation of disciplinary procedures and the imposition of disciplinary sanctions due to the employee's absence.

→ The presumption is simple, that is to say it could be overturned in the event of litigation initiated by the employee. The employee could challenge the termination of his employment contract on the basis of this presumption by applying to the Labor Court (Tribunal du travail). The case would be brought before the President of the Court so that he orders any necessary precautionary measures and refers the case to a hearing of the Bureau de Jugement which would rule on the nature of the rupture and the associated consequences.

The inclusion of conventional termination of employment contracts (permanent contracts only: "CDI") in Law no. 729

→ Contractual termination by mutual agreement between the employee and the employer (it may not be imposed by either of the parties, failing which it will be null and void or requalified), excluding dismissal or resignation, must be the subject of an agreement concluded in writing setting out the terms and conditions of the termination. It may not be prohibited by collective agreement. Any clause to the contrary is deemed null and unwritten (art. 14-1).

→ The contractual termination must be preceded by one or more preliminary interviews, during which the employee may be assisted by a staff representative or, failing this, by any other employee of the company. If the employee is assisted, the employer may also be assisted by a person of his choice from among the other employees or managers of the company. At the end of the interviews, the parties must be in a position to give their free and informed consent to the agreement. (art. 14-2).

→ The agreement must define, in particular, the amount of the termination indemnity, set by mutual agreement between the parties, with, where applicable, minimum amounts to be respected (art. 14-3):

• Employees with less than 2 years' seniority: free determination.
• Employees with at least 2 years' seniority: the amount of compensation cannot be less than half of the severance compensation set pursuant to the provisions of Article 1 of Law No. 845.
• Regardless of the employee's length of service, if a collective or individual agreement grants a more favourable indemnity in the event of termination of the employment contract at the employer's initiative than in the above situations: the amount of the compensation cannot be less than the amount of compensation to which s/he would have been entitled under the agreement.

→ The parties to the termination agreement have a withdrawal period of 15 calendar days from the date of signature, unless the agreement provides for a longer period. No disciplinary sanction may be incurred, nor any measure having the effect of adversely affecting the career development of the employee for having made use of his right to withdraw (if this were the case, the said sanction or measure would be null and void) (art. 14-4).

→ List of mandatory information in the termination agreement, on pain of nullity (art. 14-5):

• Precise identity and contact details of the parties;
• Date on which the employee was hired;
• Amount of gross salary received during the 3 or 12 months preceding signature of the agreement;
• Amount of the contractual termination indemnity;
• Amount of the dismissal indemnity provided for in Article 1 of Law no. 845;
• Duration of the withdrawal period;
  
• Date of signature of the termination agreement, starting point of the withdrawal period;
• Effective date of termination of the employment contract (set by mutual agreement between the parties, but not before the day following approval of the agreement by the Labour Inspectorate).

→ Approval procedure by the labour inspector, which begins at the end of the withdrawal period. The labour inspector has 15 working days to check that the information contained in the termination agreement complies with the law and that the consent of either party has not been vitiated. This period is suspended in the event of a request for the communication of documents and a hearing of the parties, together or separately (art. 14-6).

The hearing of the parties would be obligatory:

• for any employee who, at the time of the conclusion of the agreement, benefits under legislative or regulatory provisions from a particular protection measure in terms of disciplinary sanctions or dismissal, in particular due to their state of pregnancy, their mandate as staff or union representative or their functions as referent in matters of harassment;
• for any employee whose employment contract is suspended, at the time of conclusion of the agreement,

  due to a medically certified illness or accident.

→ Appeal procedures (art. 14-7):

• Refusal of homologation is an administrative decision that may be appealed to the Supreme Court.
• Any dispute arising in connection with the formation or performance of the termination agreement must be brought before the Labour Court within 6 months of the dispute arising.

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