A technology company headquartered in the Netherlands established a French subsidiary – a société par actions simplifiée (SAS, a simplified joint-stock company under French corporate legislation) – to manage its European sales operations. Within eighteen months, a senior commercial director raised a formal claim alleging wrongful dismissal, unpaid variable compensation, and breach of the applicable convention collective (collective agreement) governing the sector. The parent company had no prior experience with French employment litigation. Its internal legal team faced an unfamiliar procedural system, strict statutory deadlines, and the real risk of a costly judgment if the case was mishandled from the outset.
Employment disputes in France are resolved primarily before the Conseil de prud'hommes (Labour Court), a specialist tribunal with mandatory conciliation procedures before any hearing on the merits. The claimant had a statutory window to file. Under French employment legislation, the applicable limitation period for wrongful dismissal claims is shorter than many international employers expect. Failing to respond correctly – and within time – can result in a default judgment or the loss of key procedural defences.
This case study outlines the legal strategy adopted, the complications encountered at each milestone, and three transferable lessons for international businesses facing employment claims in France.
Client profile and the legal challenge
The client was a mid-sized technology group with operations across six EU member states. Its French entity, organised as an SAS under French corporate legislation and registered under the Code de commerce (French commercial code), employed fewer than fifty people. The dismissed director had been employed under a senior-executive employment contract referencing both the individual agreement and the sector-level collective agreement.
The claim had three components. First, the director alleged that the dismissal was without genuine and serious cause – the standard required under French employment legislation for any termination. Second, he argued that the employer had failed to follow the mandatory dismissal notice and pre-dismissal interview procedure. Third, he claimed unpaid bonuses constituted remuneration protected under the employment contract and the collective agreement, not discretionary payments that the employer could withhold.
The parent company's initial instinct was to treat the matter as a straightforward contract dispute. That approach would have been a serious miscalculation. French employment legislation imposes substantive obligations on employers that do not exist in many common law systems. The burden of proving a genuine and serious cause for dismissal rests entirely on the employer. This reversed burden surprised the client's in-house counsel, who were accustomed to systems where the employee bears the primary evidential burden.
For businesses operating across multiple European jurisdictions, our employment law services in France address precisely this gap between expectation and local legal reality.
Legal strategy and key milestones
The first task was a rapid audit of the dismissal procedure. Under French employment legislation, every dismissal must follow a precise sequence: a written convocation to a pre-dismissal interview. A waiting period, the interview itself. Additionally, then a written notice of dismissal setting out the specific grounds. Any procedural defect – even a minor one in the convocation letter – entitles the employee to additional compensation, separate from any substantive claim for wrongful dismissal.
The audit revealed that the dismissal notice had referenced general performance concerns without specifying concrete, verifiable facts. French courts – and ultimately the Cour de cassation (Supreme Court for private law matters) in its established line of decisions – require that dismissal letters state real and precise grounds. Vague or generic language is routinely treated as insufficient. This meant the procedural exposure was significant before the substantive bonus dispute was even considered.
The strategy therefore had two parallel tracks. On the procedural side, counsel prepared a detailed response acknowledging the technical deficiency in the dismissal letter while arguing that the underlying grounds were substantively valid. The objective was to limit the procedural compensation award rather than contest its existence. On the substantive side, the bonus dispute required a careful reading of both the individual employment contract and the applicable collective agreement. Variable pay structured as conditional on performance targets may be treated as salary under French employment legislation if the conditions are not clearly drafted. The collective agreement added a further layer: it imposed minimum notice obligations on top of those in the individual contract.
The conciliation phase before the Labour Court produced no agreement. The claimant's demands exceeded what the employer's exposure analysis supported. The matter proceeded to a hearing on the merits. The employer instructed a huissier de justice (a court-appointed process server and enforcement officer) to formally serve key documentary evidence and to obtain certified copies of internal communications relevant to the performance review process.
The hearing took place approximately fourteen months after the original claim was filed. The court issued its judgment several weeks later. For related corporate-structure considerations that arise when French entities face employment litigation, see our corporate law services in France.
Complications and outcome
Three complications arose during the proceedings that were not anticipated at the outset.
The first concerned social security contributions. The employer had paid certain benefits to the director outside the standard payroll structure. French social security legislation treats a wide range of payments as subject to mandatory social contributions. When this issue surfaced during disclosure, it created a secondary exposure to potential recoupment claims by the social security administration, separate from the employment dispute itself.
The second complication involved the collective agreement's scope. The employer had applied the collective agreement for the technology sector. The employee argued that, given the company's actual commercial activities, a different and more favourable collective agreement applied. The Labour Court accepted this argument in part. It applied the more favourable provisions to calculate the minimum dismissal notice entitlement. This increased the compensation calculation beyond the employer's initial estimate.
The third complication was procedural. The employee filed a supplementary claim mid-proceedings alleging moral harassment. This claim was ultimately dismissed on the merits. However, it extended the proceedings and required the employer to produce additional documentation relating to the director's working conditions over a two-year period.
The case resolved within the category of partial employer success: the court found that the dismissal was substantively justified. genuine and serious cause was established. but awarded procedural compensation for the defective dismissal letter and additional sums under the collective agreement's notice provisions. The harassment claim was rejected in full. The outcome avoided the highest-risk exposure, which would have arisen from a finding that the dismissal lacked genuine and serious cause entirely.
To explore how Ferraz & Whitmore can assist your business in structuring a defensible response to employment claims in France, contact us at info@ferrazwhitmore.com.
Three transferable lessons
Lesson 1: The dismissal letter is not a formality. Under French employment legislation, the written grounds stated in the dismissal notice define the scope of the employer's defence. Courts will not consider grounds that were not stated in the letter, even if those grounds were communicated verbally or documented elsewhere. International employers accustomed to at-will termination or abbreviated notice requirements must treat the drafting of the dismissal letter as a high-stakes legal document – not an administrative step.
Lesson 2: Identify the applicable collective agreement before, not after, the dispute arises. The collective agreement in force determines minimum notice periods, redundancy compensation multiples, and additional procedural obligations. A French SAS or SARL (a limited liability company under French corporate legislation) operating in a specialised sector may be subject to a collective agreement whose scope is defined by the company's predominant activity. not its registered corporate purpose. A mismatch between the two can expose the employer to claims it did not anticipate.
Lesson 3: Parallel regulatory exposure requires early identification. Employment disputes in France frequently carry secondary exposure under social security legislation, tax legislation, or health and safety rules. The strategy developed in response to a Labour Court claim must account for these adjacent risks from the outset. Addressing them as afterthoughts, once proceedings are already underway, significantly limits the options available. Comparable lessons emerge from employment disputes in other civil law jurisdictions, as illustrated in our case study on employment disputes in Portugal.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our employment law practice supports international companies managing workforce matters in France and across Europe – from dismissal procedures and collective agreement compliance to Labour Court litigation and cross-border restructuring. The firm combines Portuguese civil law expertise with English common law tradition, giving clients a dual perspective when navigating continental European employment systems. Our attorneys have advised entities ranging from SAS and SARL structures to listed groups on termination strategy, employment contract drafting, and dispute resolution before French labour courts. Engaging a lawyer in France with genuine cross-border experience means avoiding the procedural and substantive errors that drive the most costly outcomes. As an international law firm in France and across the EU, Ferraz & Whitmore provides results-oriented counsel built on direct experience in civil law employment systems. Contact us at info@ferrazwhitmore.com to discuss your situation.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.