The impact of the Orders MACRON since the 27th of September 2017 in Monaco: the increase of the dismissal indemnities

French President MACRON Orders, signed on September 22, 2017 and entered into force on September 23rd, 2017 after publication in the Official Journal in France, were established in order to secure the work relations, to reduce labor market rigidities and to grant more flexibility to companies.

They have been structured under four axes:

- Strengthening collective negotiation;
- New organisation of social and economic dialogue in companies, and valorisation of labour union responsibilities; 
- Predictability of work relations’ preservation;
- Personal account of painfulness prevention.

Although adopted in the France which is a foreign jurisdiction for Monaco, these Orders will have a significant and direct influence in the Principality.

In particular, the amount of the dismissal indemnity due in Monaco pursuant to article 1 of law n°845 of 27th of June 1968 mirror the French dismissal indemnities, for any employee having a seniority of at least two years, being dismissed for any other reason than for a gross misconduct.

Therefore, any variation of the amount of the legal French dismissal indemnity will ineluctably impact the amount of the dismissal indemnity paid in Monaco pursuant to article 1 of law n°845 of 27th of June 1968.

The decree n°2017-1398 of September 25th, 2017 has raised the amount of the legal dismissal indemnities for any termination of the employment contract pronounced since the 27TH of September 2017. 

As such, this indemnity is raised from one fifth of the monthly gross salary per year of seniority, to a quarter of the monthly gross salary per year of seniority, for the first ten years, that means an increase of 25%.

The compensation of the subsequent years to the 10th year is maintained to one third of the wage by year of seniority (formerly 1/5th+ 2/5th month salary by year of seniority).

In correlation, the delta between:

- the dismissal indemnity allocated for dismissal without stated reason (pursuant to article 6 of law n°729), or payable for a dismissal found without a valid reason by the judge, and

- the dismissal indemnity pursuant to article 1 of law n°845 of 27th of June 1968 paid for any personal or economical dismissal (with stated reason) to the exclusion of gross misconduct’s dismissal,

will be reduced, which may in turn trigger some reassessment of the dismissal scenarios’ opportunities.

However, this increase does not impact the valuation of dismissal indemnities set by collective bargaining agreements which would be more favourable than the legal regime.

It is essential for Monaco companies to grasp these changes in order to evaluate consequences on potential dismissals, in particular where the collective bargaining agreement indemnity may not be in line with the newly established amounts anymore, and to evaluate the costs/risk balance for each dismissal scenario.

The labor law team of CMS Pasquier Ciulla & Marquet is available for any further information you may need on the subject.

By Sophie Marquet and Léa Barkate

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