Conventional termination of employment, trial period, notice period, and other updates to labour law: Bill no. 1108 passed

Government Bill no. 1108 instituting the conventional termination ("rupture conventionnelle") of the employment contract and amending certain provisions of Law no. 729 of 16 March 1963 on employment contracts, as amended, and Ordinance-Law no. 677 of 2 December 1959 on working hours, as amended, submitted to the Parliament (Conseil National) on 30 April 2025, stems from parliamentary draft law no. 259 adopted by the Parliament on 28 November 2023.

It was tabled on 15 May 2025 and referred to the Committee on Social Interests and Miscellaneous Affairs (CISAD), and voted on 26 November 2025.

A ministerial order will supplement the law.

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SUMMARY

The law (L.) passed:

→ establishes the conventional termination of permanent employment contracts (CDI) (Articles 1 to 9 L.):

• Employees in Monaco who lose their jobs as a result of a conventional termination of their employment contract as defined by Monegasque law are entitled to return-to-work assistance benefits ("allocation d'aide au retour à l'emploi") paid by the French organisation UNEDIC (Addendum of 6 June 2025 extending the territorial scope of the agreement of 15 November 2024 on unemployment insurance to the territory of Monaco).
• Because of this coverage, Monegasque law guarantees consistency with the neighbouring country's conventional termination system (set out in Articles L1237-11 to L1237-16 of the French Labour Code resulting from Law No. 2008-596 of 25 June 2008 on the modernisation of the labour market), "while ensuring compliance with Monegasque specificities"(Report on Bill No. 1108).
• Entry into force: within three months of the publication of the law in the Journal de Monaco; the provisions of the law relating to conventional termination are applicable to current employment contracts as well as to contracts concluded after this date of entry into force.

→ updates a number of rules (Arts. 10 to 15 L.) in order to "secure the relationship between employer and employee" and "provide a more effective framework for the arrival of employees in a company" (Explanatory memorandum to Bill no. 1108), in particular:

• extension to emancipated minors, for reasons other than marriage, of the possibility of entering into an employment contract in Monaco without the assistance of their legal representative (Art. 10 L.);
• abolition of the exemption from stamp duty and registration fees for employment contracts for manual workers and domestic staff (Art. 10 L.);
• clarification of the arrangements for the trial period ("période d'essai"), which may be renewed once (Art. 11 L.);
• new provision on the termination of the employment contract without notice or severance pay (Art. 12 L.);
• additions relating to the notice period ("délai de préavis" or "délai-congé"), simplified (Arts. 13 and 14 L.);
• new provision on part-time work: employees working less than 19 hours and 30 minutes per week, with the exception of jobs with variable working hours defined by ministerial order (Art. 15 L.).
• Entry into force: the provisions amending Law No. 729 (Arts. 10 to 14 L.) are immediately applicable (from the day after the publication of the Law in the Journal de Monaco); the provisions amending Ordinance-Law No. 677 (Art. 15 L.) are applicable only to employment contracts concluded after this date of entry into force. The CISAD has specified that "In practice, with regard to current contracts, employers will have the option of applying this new regime".

• Note: CISAD had considered reintroducing into Bill No. 1108 the presumption of resignation in the event of voluntary abandonment of post by an employee, as provided for in Draft Law No. 259, but did not maintain its amendment, as the Government deemed it "inappropriate in view of established Monegasque case law, which considers that abandonment of post, constituting serious misconduct, may lead to dismissal without notice and without payment of compensation by the employer. Consequently, this termination does not entail any particular financial cost for the employer. Furthermore, the Government considers that this method of termination is, at present, well established in practice and does not give rise to litigation or legal uncertainty." (Report on Bill No. 1108).

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IN DETAIL

• Establishment of conventional termination of employment contracts (permanent contracts "CDI" only) (Chapter I of the Law)

Unlike Draft law No. 259, which provided for the inclusion of conventional termination of employment contracts in Law No. 729 of 16 March 1963 on employment contracts, the law passed (L.) incorporated it into its Chapter I.

¤ Distinction between negotiated termination and conventional termination:

The Explanatory Memorandum to Bill no. 1108 points out that "The conventional termination of an employment contract differs from the negotiated termination, also known as amicable termination, of an employment contract, which is already recognised by the courts on the basis of the second paragraph of Article 11 of Law no. 729 of 16 March 1963 on employment contracts, as amended, which provides that “the termination of a contract [of indefinite duration] may take place without notice if it results from the agreement of the parties”.

Negotiated termination is rare in practice in Monaco "due to the lack of procedural guarantees and coverage of return-to-work assistance allowances for this type of termination" (Report on Bill No. 1108).

Unlike negotiated termination (rare in practice), conventional termination of a permanent employment contract (CDI) "is the result of a rapid, organised and controlled process [approval by the labour inspector], which helps to safeguard the interests of the parties": freedom of consent for the parties, "fair and satisfactory compensation". It entitles the employee to return-to-work assistance.

¤ The provisions relating to contractual termination are a matter of public policy. Any contractual stipulation to the contrary shall be deemed null and void (Art. 9 L.):

→ The conventional termination of employment by mutual agreement between the employee and the employer (it cannot be imposed by either party on pain of nullity or reclassification), excluding dismissal or resignation, must be the subject of a written agreement setting out the terms of the termination. The written agreement shall be drawn up in accordance with the terms and conditions laid down by ministerial order. It cannot be prohibited by collective agreement. (Art. 1, 3 L.)

• Note: The Government has indicated that a model termination agreement will be appended to the ministerial order.

→ The conventional termination must be preceded by one or more preliminary interviews, during which the employee may be assisted by a staff representative or any other employee of the company. If the employee is assisted, the employer may also be assisted by a person of their choice from among the other employees, partners or managers of the company or, in companies with fewer than 50 employees, by a person belonging to their employers' trade union organisation or by another employer in the same sector. The parties must inform each other in writing (electronic or otherwise) of the identity of the person who will assist them (no later than two working days before the interview in the case of the employee, and one working day before the interview in the case of the employer; failing which the interview shall be postponed to a date and time agreed by the parties) (Art. 2 L.).

• Note: CISAD has reinstated the possibility for employers to be assisted by one of their managers or partners, "given Monaco's economic fabric, which consists mainly of small businesses". CISAD has also removed the penalty of "nullity of any termination agreement concluded when the parties were not assisted by duly authorised persons" even though "the punishable act did not necessarily demonstrate a defect in consent." It based its decision on "the legislation of the neighbouring country [which] does not provide for such a penalty and [...] its case law specifies that the nullity of the agreement is not automatic. It is only incurred if the employee demonstrates that the failure to provide information on the possibility of obtaining assistance or the over-representation of the employer had the effect of exerting coercion or pressure on him, vitiating his consent." (Report on Bill No. 1108)

→ The effective date of termination of the employment contract is set by mutual agreement between the parties, although this date cannot be set before the day after the agreement has been approved by the Labour Inspectorate. (art. 3 L.).

→ The amount of the termination indemnity is set by mutual agreement between the parties, subject to the following rules (art. 4 L.):

1. Employees with less than 2 years' seniority: the amount of the indemnity may not be less than 1/4 month's salary per year of seniority. In the event of an incomplete year, the indemnity is calculated in proportion to the number of full months. The Explanatory Memorandum of Bill n° 1108 includes the calculation formulas.
2. Employees with at least 2 years' seniority: the amount of the indemnity may not be less than the amount of the dismissal indemnity set in application of the provisions of article 1 of Law no. 845.

Where a Monegasque collective agreement or internal regulations grant, in the event of termination of the employment contract at the sole initiative of the employer, compensation more favourable to the employee than that provided for in points 1) and 2), it shall not apply in the event of termination by mutual agreement.

Only suspensions considered to be actual working time shall be taken into account for the purposes of calculating length of service.

The employer is required to pay the employee the full termination compensation within one month of the date of termination of the employment contract.

→ The parties have a withdrawal period of 7 calendar days from the date of signing the agreement, although a longer period may be specified in the agreement. The party wishing to exercise its right of withdrawal must inform the other party by letter sent by any means that provides proof of the date of dispatch or hand delivery against receipt. No disciplinary action may be taken, nor may any measure be taken that would adversely affect the employee's career for exercising their right of withdrawal (if this were the case, such disciplinary action or measure could be challenged under ordinary law) (Art. 5 L.).

• Note : CISAD has removed the nullity of the disciplinary sanction imposed or any other measure taken in breach of the above provisions, originally provided for, on the grounds of "significant litigation risk for the employer (...) in the event of a challenge to the dismissal [after withdrawal], given the difficulties in proving that the dismissal was not linked to the employee's withdrawal, the employer would be exposed to the risk of having to reinstate the employee until the end of the legal proceedings". The CISAD also considered the nullity inappropriate in view of the right to unilaterally terminate the employment contract (Article 6 of Law No. 729 of 16 March 1963, as amended) and the fact that "nullity is generally only accepted in rare situations of particular gravity and social unacceptability, such as in cases of harassment or failure to comply with the dismissal procedure in cases of pregnancy or maternity".

→ Approval procedure ("homologation") by the labour inspector, which begins at the end of the withdrawal period. The terms of application are set by ministerial order(art. 6 L):

• The labour inspector has 15 working days from receipt of the request for approval (sent by the most diligent party) to verify the legal compliance of the information contained in the termination agreement.
• This period is suspended from the date of the labour inspector's request in the event of a request for the disclosure of documents and interviews with the parties, together or separately, or a request to the parties to amend the termination agreement (correction of any information that does not comply with the law, or completion of missing information). The interview with the parties is mandatory when the employee is protected under Law No. 459 of 19 July 1947 amending the status of staff representatives, Law No. 957 of 18 July 1974 on the exercise of trade union rights in companies, or Law No. 1.457 of 12 December 2017 on harassment and violence at work.
• The absence of a response from the labour inspectorate at the end of the deadline shall be deemed to constitute approval (in this case, the issuance of a certificate of implicit approval may be requested in writing), except where the contractual termination concerns a protected employee as referred to above, in which case the absence of a response shall be deemed to constitute a refusal of approval.

→ Appeals (Art. 7)

• Approval cannot be the subject of a dispute separate from that relating to the termination agreement. Any dispute concerning the termination agreement, the homologation or the refusal of homologation falls within the jurisdiction of the Labour Court (Tribunal du travail), to the exclusion of any other contentious or administrative appeal.
• The legal action must be brought within six months of the date of approval or refusal of approval of the termination agreement, failing which it shall be inadmissible.

→ Criminal provisions (Art. 8): list of offences punishable by a fine ranging from €1,000 to €2,250 (use of contractual termination, conditions or terms inserted through fraud, violence, coercion or threat; offences relating to the payment of severance pay); in the event of a repeat offence (where, in the 12 months prior to the offence being prosecuted, the person has already been convicted of the same offence): double the fine provided for.

• Amendment to Law no. 729 of 16 March 1963 on employment contracts, as amended

→ Extension to emancipated minors for reasons other than marriage of the possibility of entering into an employment contract in Monaco without the assistance of their legal representative (Art. 2 L. 729). This amendment takes into account "foreign legislation [which] allows for the emancipation of minors for reasons other" than marriage. "This is the case in French law, where a judge may emancipate a minor if there are “justifiable grounds”. Article 13 of the Code of Private International Law provides that "Judgments rendered by foreign courts and which have become final shall be recognised automatically in the Principality if there are no grounds for refusal within the meaning of Article 15" (Explanatory memorandum to Bill No. 1108).

→ Removal of the exemption from stamp duty and registration fees for employment contracts for manual workers and domestic staff, in that it "creates a breach of equality between employees depending on the trade concerned" (Explanatory memorandum to Bill 1108) (Art. 2 L. 729).

→ It is specified that "The validity of the employment contract is conditional, depending on the case, on obtaining authorisation or completing the declaration formalities provided for in Article 4 of Law No. 629 of 17 July 1957 regulating the conditions of employment and dismissal in the Principality, as amended, and on the future employee obtaining a work permit." The aim here is to "establish a link" between the provisions of Law No. 729 and those of Law No. 629, which make the exercise of private employment in Monaco subject to these formalities (Art. 2 L. 729).

→ Framing of the trial period: start date ("begins at the start of the performance of the work"); possibility of renewing the trial period once, the terms of which are detailed. (Art. 4 L. 729)

→ It is specified that the employment contract shall terminate, without notice or severance pay, in the event of revocation of the work permit during its term, or refusal to issue a work permit following a new application submitted for that purpose (new Art. 5-1 L. 729).

→ Changes to the length of the notice period ("délai de préavis" or "délai congé") (Art. 7 L. 729):

• a) for employees who have been with the same employer for more than 6 uninterrupted months, it is specified that the right to 1 month's leave applies "regardless of the duties performed by the employee";
• b) for employees who have been with the same employer for more than 2 uninterrupted years, the length of the notice period would be 2 months (elimination of the possibility of choosing, as an alternative, a notice period of 1 month as well as a special indemnity that can be cumulated with the indemnities for dismissal or redundancy established by law or, where applicable, with those awarded under the employment contract, internal regulations, collective labour agreements or customary practice, "motivated by the fact that the choice of special compensation is almost never implemented because it is inconsistent with the traditional calculation of notice based on salary");
• c) for employees occupying managerial posts ("cadre") with more than 2 uninterrupted years of service with the same employer: a 3-month notice period "in accordance with current practice as confirmed by case law". A manager with less than 2 years' seniority falls within the scope of letter a).

→ Possibility of notifying the notice period by hand-delivered letter against receipt (the date of personal delivery determining the start of the notice period), in order to lighten the existing formalities (registered letter with acknowledgement of receipt) (Art. 9 L. 729).

• Amendment to Ordinance-Law no. 677 of 2 December 1959 on working hours, as amended

→ Part-time work: remuneration for hours worked in excess of the duration specified in the contract when the employee is employed for less than 19 hours and 30 minutes per week, with the exception of jobs with variable working hours defined by ministerial order. The Government has indicated to the CISAD that these jobs "would include temporary workers, event security guards, event hosts, chauffeurs, hotel staff, tour guides and stadium stewards" (new Art. 1-1 OL 677).

• Note: CISAD has removed the provision in Bill No. 1108 that required a written employment contract to be concluded for a period shorter than the legal working week of 39 hours or the period considered equivalent by a collective labour agreement or, failing that, by a company agreement. This deletion is motivated by "the absence of any mandatory provisions, in particular with regard to the distribution of hours worked (...), especially since the employee's working hours are indicated in their work permit." It specifies that "The parties will of course be free to conclude a written contract if they so wish."

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