How to Conduct an Economic Dismissal in France (Licenciement Économique)

Of all the routes to terminating a French employment contract, the licenciement économique (economic dismissal) is the most procedurally demanding. Designed to protect employees from arbitrary downsizing, it requires the employer to evidence a real economic cause, to follow a strict procedural sequence, and to make alternatives available before any dismissal can take effect. This guide walks through the procedure step by step under the Code du travail.

Step 1. Identify the Legal Basis

Under Code du travail L.1233-3, an economic dismissal is one made by the employer for one or more reasons not related to the employee’s person, resulting from one of:

• Economic difficulties — defined by reference to indicators (drop in turnover, operating losses, deterioration of cash flow).
• Technological changes — automation, digital transformation displacing roles.
• Reorganisation necessary to safeguard competitiveness — substantial restructuring needed for the long-term viability of the business.
• Cessation of activity — partial or total closure of the business.

Without one of these grounds, an “economic” dismissal is invalid. The economic basis must be objectively evidenced — internal management conclusions are not enough.

Source — Code du travail L.1233-3: https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000033019998

Step 2. The “Quantitative Threshold” for Economic Difficulties

For “economic difficulties” specifically, Code du travail L.1233-3 since 2016 sets quantitative thresholds. Economic difficulties are presumed to exist where the company shows:

• A drop in orders or turnover for at least:
  • 1 quarter for companies with fewer than 11 employees.
  • 2 consecutive quarters for companies with 11–49 employees.
  • 3 consecutive quarters for companies with 50–299 employees.
  • 4 consecutive quarters for companies with 300+ employees.

Or operating losses (résultat d’exploitation) negative.

Or a substantial deterioration of cash flow (capacité d’autofinancement).

For other grounds (technological change, competitiveness, cessation), no quantitative threshold applies, but the burden of proof on the employer is high.

Step 3. Search for Reclassement (Reassignment)

Before any dismissal, the employer must:

• Search for reclassement opportunities within the company and group (Code du travail L.1233-4).
• The search must be personalised, written, and documented.
• Reclassement positions must be at the same or similar grade where possible — only where impossible, at a lower grade with employee consent.
• The search must extend to all entities of the group that have an employment-relationship reality with the dismissing employer (sous-traitance, common management).

Employees who refuse a reclassement offer in good faith retain the right to dismissal protections.

A failure to search adequately makes the dismissal “without real and serious cause” (sans cause réelle et sérieuse), exposing the employer to compensation under Code du travail L.1235-3.

Step 4. Determine the Procedure — Individual or Collective?

The collective procedure adds:

• Information and consultation of the CSE (Comité Social et Économique).
• A PSE (Plan de Sauvegarde de l’Emploi) if the company has 50+ employees and dismisses 10+ in 30 days.
• A DREETS validation of the PSE.
• Mandatory minimum content of the PSE (reclassement, training, alternative employment search).

Step 5. The Individual Procedure (1-9 Dismissals)

For 1–9 dismissals in 30 days, the procedure is:

The lettre de licenciement must:

• State the economic ground.
• State the search for reclassement and its result.
• Inform of the CSP (Contrat de Sécurisation Professionnelle) if the employee qualifies (companies < 1,000 employees).
• Inform of the right to ask for clarification within 15 days.

Step 6. The CSP — A Mandatory Offer

For employers with fewer than 1,000 employees, the Contrat de Sécurisation Professionnelle (CSP) must be offered to each employee subject to economic dismissal. The CSP:

• Provides 12 months of enhanced unemployment benefits (75% of last salary for those with > 12 months service).
• Provides retraining support.
• Is funded by an employer contribution equivalent to the notice period the employee would otherwise have served.

The employee has 21 days from the proposal to accept or refuse the CSP. Acceptance triggers:

• Termination at the date of acceptance (no notice period).
• Specific severance calculation.

Source — Service-public.fr — CSP: https://www.service-public.fr/particuliers/vosdroits/F1009

Step 7. The Collective Procedure (10+ Dismissals)

For 10+ dismissals in 30 days at companies with fewer than 50 employees:

• Information and consultation of the CSE.
• Two CSE meetings, with full documentation provided.
• DREETS notification (informational only).
• Individual letters of dismissal.

For 10+ dismissals in 30 days at companies with 50+ employees:

• Two-meeting CSE consultation.
• PSE (Plan de Sauvegarde de l’Emploi) developed by employer in consultation with CSE.
• DREETS validation of the PSE — the DREETS reviews compliance and adequacy.
• Once validated, individual dismissals can be notified.

The DREETS has 21 days to validate or reject the PSE.

Step 8. The Severance Pay

Statutory severance under Code du travail L.1234-9 / R.1234-2:

• For 1–10 years’ service: 1/4 month per year of service.
• For 10+ years’ service: 1/3 month per year for the years above 10.

A “month” is the most favourable of (a) average of last 12 months, or (b) average of last 3 months (with bonuses pro-rated).

Many convention collectives provide enhanced severance above statutory — sometimes 1/2 or 2/3 month per year.

For a 10-year employee earning €40,000/year, statutory severance is approximately €10,000 (10 × 1/4 × €40,000/12 × 1.0). Convention collective may double this.

Step 9. Notice Period

The employee continues to work (or be paid) during the notice period (Code du travail L.1234-1):

• Less than 6 months service: per convention collective.
• 6 months to 2 years: 1 month.
• 2+ years: 2 months.

The convention collective often provides longer for cadres (3 months).

The employer can require the employee to leave immediately and pay an indemnité compensatrice de préavis equal to the notice salary.

Step 10. The CSE Consultation Quality

For collective procedures, the CSE consultation must be substantive, not pro forma. The CSE must receive:

• Full economic justification.
• Detailed redundancy criteria (objective, anonymised).
• The PSE in full.
• Time to formulate an opinion (usually 15 days minimum).

A CSE that has not been properly consulted can challenge the procedure and obtain suspension of dismissals.

Step 11. Common Mistakes — Gyoseishoshi View

• Insufficient economic ground. A vague “we have to reduce costs” is not an economic ground. Specific quantitative and qualitative evidence required.
• Inadequate reclassement search. A boilerplate “no positions available” letter is insufficient. Search must be specific, group-wide, and documented.
• Skipping the entretien préalable. This is mandatory; missing it makes the dismissal procedurally invalid.
• Wrong notice period. Failing to apply the convention collective notice period (often longer than statutory).
• Wrong severance calculation. Using a 12-month average without checking whether 3-month average is more favourable.
• No CSP offer. Mandatory below 1,000 employees; missing it triggers separate compensation claim.
• Failing to track the 30-day window. 9 individual dismissals in 25 days followed by a 10th two days later triggers the collective procedure retroactively.
• PSE inadequacy. A PSE without genuine reclassement, training, or alternative employment provisions can be rejected by DREETS.

Step 12. The Employee’s Rights of Challenge

The employee can challenge the dismissal before the Conseil de prud’hommes within 12 months of the dismissal. Available challenges:

• Lack of real and serious cause (sans cause réelle et sérieuse).
• Procedural irregularity.
• Discrimination.
• Failure to search for reclassement.
• Inadequate PSE (collective procedures).

If successful, the employee receives:

• Compensation under Code du travail L.1235-3 — barème Macron table; minimum and maximum based on seniority and company size. Range: 0.5 to 20 months of salary.
• Severance is also due (cumulative with above).
• For procedural-only failures, smaller penalty (1 month max).

Step 13. The Documentary Pack

A complete economic dismissal pack:

• Economic justification document.
• CSE consultation minutes (if collective).
• Reclassement search documentation.
• Convocation to entretien préalable.
• Minutes of entretien préalable.
• CSP offer document.
• Lettre de licenciement.
• DREETS notification (collective).
• PSE if applicable.
• DREETS validation decision.
• Notice period administration.
• Severance calculation and payment evidence.
• Attestation France Travail.

Step 14. The MmowW Scrib🐮 Workflow

Cell #16 (FR Employment) generates the licenciement économique pack:

• Economic justification template tailored to the L.1233-3 ground.
• Reclassement search letter and tracking.
• Convocation to entretien préalable.
• Lettre de licenciement.
• CSP offer (auto-generated for sub-1,000 employee companies).
• Severance calculation.
• Notice period administration.

The system checks the convention collective IDCC for enhanced severance and notice provisions. For 10+ dismissals, the system generates a CSE consultation guide and PSE template skeleton.

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Disclaimer

This article provides legal information, not legal advice. MmowW Scrib🐮 is a document preparation service operated by a licensed Gyoseishoshi (行政書士) office in Japan. We are not avocats, notaires, or experts-comptables.

Sources

• Code du travail L.1233-3: https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000033019998
• Code du travail L.1233-4 (reclassement): https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000033019988
• Service-public.fr — licenciement économique: https://www.service-public.fr/particuliers/vosdroits/F87
• Service-public.fr — CSP: https://www.service-public.fr/particuliers/vosdroits/F1009