Which kind of contract?

Which kind of contract?

PERMANENT OR FIXED TERM CONTRACT

Ok you are hiring but with what tools?

Indeed, under french law, you have some alternatives.

First, you need to think about what you are looking for : someone for a short term mission or for a long term contractual relationship.

This decision depends on the context of your hiring and your perspective, but should also take into account the rules applicable to each kind of contract.

We will review the two most common and used kind :

  • on one hand, the permanent contract,
  • and, on the other hand, the fixed-term contract.

The Permanent Contract

AKA THE STANDARD CONTRACT

It is the easiest and more common contract. It is, by default, the one you choose if you are hiring someone that you need for your business. Indeed, more precisely under French Law, you have to choose this kind of contract if you do not have a reason (see below) to hire with another kind of contract.

The permanent contract will attract people who would want to commit themselves into their job and who are seeking for some stability. Indeed, after the trial period, the permanent contract seems to be a more secure situation for the employee.

MAIN CLAUSES

The usual clause are :

  • Title and description of the position
  • Applicable national collective agreement
  • Place of work and in some case, a mobility clause
  • Working time
  • Remuneration
  • Social Protection (private health insurance and disability/death insurance)

FOCUS ON THE TRIAL PERIOD

With a permanent contract the trial period is longer than any other contract.

Consequently, you could make a mistake and hire the wrong employee but could easily terminate this contract during the trial period whithout to give any reason and with the proper procedure.

TERMINATION

After the trial period, the employer can dismiss the employee but should have a real cause to do so and follow a specific procedure. The dismissal could be for personal reasons or for economic reasons.

The employee could also end the contract by giving his/her resignation or asking for retirement.

In all cases, a notice period will be applicable except if the Parties agree otherwise.

Since the law n°2008-596 of June 25, 2008, an amicable termination agreement can be reached between the employer and the employee.


The Fixed-term Contract

AKA THE EXCEPTION THAT NEEDS A GOOD REASON

It is a good option if :

  • You wish to replace an employee on sick leave or an maternity leave,
  • You have an exceptionnal increase of business, but you are not sure that it will last,
  • You work with the season.

Indeed, a fixed-term contract can only be concluded for the performance of a specific and temporary task, and only in specifics cases .

The purpose or effect of a fixed-term contract should not be to permanently fill a job related to the normal and permanent activity of the company employing it. This last point is very important because it is the subject of many disputes between employees and employer concerning the reclassification of a fixed-term contract as a permanent contract.

MAIN CLAUSES

  • Title and description of the position
  • Applicable national collective agreement
  • Reason/motivation for choosing a fixed-term contract
  • Place of work and in some case, a mobility clause
  • Working time
  • Remuneration
  • Social Protection (private health insurance and disability/death insurance)

FOCUS ON THE TRIAL PERIOD

The trial period is proportionate to the duration of the fixed-term contract.

The duration of the trial period is calculated at the rate of one day by week of the fixed-term contract.

For the fixed-term contract of 6 months or less duration, the trial period can not go above 15 days. For the fixed-term contract of more than 6 months duration, the trial period is one month.

TERMINATION

Outside the trial period, the fixed-term contract may be terminated before the end of the term only in the following cases:

  • Written agreement between the employer and the employee,
  • Request from the employee who justifies being hired on a permanent contract,
  • Serious misconduct,
  • Force majeure,
  • Unfitness noted by the occupational physician.

How to choose?

Often it seems safer to hire on a fixed-term contract rather than a permanent contract. However, depending on the context, this may be a mistake.

Thus, as we have seen, fixed-term contracts can only be used in limited cases. Failure to comply with these cases of recourse, the fixed-term contract presents a litigation risk.

In addition, and even if it seems counter-intuitive, your relationship with your employee will be more flexible with a permanent contract than with a fixed-term contract.

Indeed, with a permanent contract the trial period is longer than with a fixed-term contract, so you have the time to evaluate the employee's skills and, if necessary, to break off the trial period.

Finally, it is always possible to break a permanent contract after the trial period with a real and serious cause, whereas in the case of a long-term fixed-term contract (for example 12 months or 18 months), the trial period will only be one month, and once the trial period is over, the contract must be honored until its term (except in very limited cases of termination as seen above).

In conclusion, it is therefore very important to check the appropriateness of using a fixed-term contract before recruiting under this type of contract.

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