Conventional termination and unemployment: everything you need to know

Mutual termination: definition

The mutual termination of the employment contract is only applicable to employees with a permanent contract (CDI) in the private sector. The mutual termination is declared by mutual agreement between the employee and their employer. Legally, neither party can force the other to sign a mutual termination. To initiate a mutual termination procedure, one party informs the other of their intention through an official letter or verbally.

The advantages of mutual termination

The mutual termination presents several advantages. The procedure allows for the possibility to end an employment contract without needing to specify the unofficial reason for the termination. An employee can leave their job under good conditions, previously allowed through negotiation. They leave with dignity and peace of mind to embark on their professional project: joining a new company, undertaking a reconversion in digital, or even starting their own activity, such as being an umbrella employee, for example.

Within a mutual termination, the employee and the company agree on a date for the end of the employment. This solution allows for bypassing the notice requirements in the case of dismissal or resignation. Finally, the mutual termination helps provide financial advantages to the employee:

• Payment of a mutual termination indemnity based on seniority and salary;
• Early release of funds placed in a profit-sharing plan;
• Opening of rights to Return to Employment Assistance (ARE).

Mutual termination and Return to Employment Assistance (ARE)

The mutual termination opens the employee's rights to unemployment benefits. The bilateral agreement of the termination of the employment contract allows the employee to claim ARE, the Return to Employment Assistance. However, certain conditions apply to benefit from these unemployment benefits following a mutual termination:

• The employee is unemployed and does not engage in any independent work;
• The employee is physically able to work;
• The employee resides in metropolitan France or in an overseas department and territory.

The employee meeting these criteria must register on the France Travail website (formerly Pôle Emploi) within twelve months following the end of their employment contract. To benefit from ARE, they must be able to justify an effective working duration over a specified period, namely at least six months within the 24 months preceding the date of the mutual termination.

The calculation of the ARE amount following a mutual termination

Since October 2021, non-working days between two jobs are taken into account to determine the unemployment benefit amount for the former employee. To calculate the unemployment indemnity following a mutual termination, two data points can be considered:

• 40.4% of the gross daily reference salary (SJR) + €12.47 fixed indemnity
• or 57% of the gross daily reference salary (SJR)

France Travail retains the calculation method for the unemployment indemnity that is most favorable to the former employee. Depending on the mutual termination indemnities and the payment of your accrued vacation pay, there is a waiting period applied by France Travail before they pay you your first unemployment benefit.

The duration of payment of the Return to Employment Assistance depends on the number of days worked in the last 24 months, as an employee for one or more employers:

• Six months worked in the last 24 months: 183 calendar days of indemnity;
• 24 months worked in the last 24 months: 730 calendar days of indemnity.

What are the steps to benefit from unemployment following a mutual termination?

To benefit from their unemployment benefits, the employee enjoying a mutual termination must undertake the preparation of a file during their registration on the France Travail website or application:

• Pay slips over a specified period;
• Document confirming the mutual termination between the employee and the company;
• Final settlement and work certificate;
• France Travail certificate (formerly Pôle Emploi);
• Bank account details (RIB).

The processing time for your request is one to two weeks.