What is a dismissal for economic reasons?
Verified 22 May 2026 - Public Service / Directorate of Legal and Administrative Information (Prime Minister), Ministry of Labor
An economic dismissal is a dismissal made by an employer for one or more reasons not related to the employee's person.
It is the consequence of a deleting or job transformation or a modification, refused by the employee, of an essential element of the employment contract. These elements are evaluated at the company level. They are in particular resulting from the following economic causes:
- Economic difficulties
- Technological changes
- Reorganization of the company necessary to safeguard its competitiveness
- Cessation of the company.
Please note
Economic difficulties, technological changes or the need to safeguard the competitiveness of the company are assessed at company level. If it belongs to a group, these causes are assessed at the level of the sector of activity common to the company and to the other companies of the group located in France.
There is an economic difficulty when the company undergoes a significant change of at least one following economic indicator:
- Decrease in orders or turnover
- Operating losses or a deterioration in cash or gross operating surplus
- Any other evidence capable of justifying economic difficulties.
A significant decrease in orders or turnover is when, compared to the same period of the previous year, it reaches a certain duration. This period varies according to the size of the company and is assessed by rolling quarter.
Staff of the company | Duration of the decrease in orders or turnover constituting a significant decrease |
|---|---|
Less than 11 employees | 1 quarter |
At least 11 employees and less than 50 employees | 2 consecutive quarters |
At least 50 employees and less than 300 employees | 3 consecutive quarters |
At least 300 employees | 4 consecutive quarters |
The introduction of a new technology may justify economic redundancy.
Example :
The adoption of a method of manufacturing by digital printing replacing a screen printing method.
The reorganization of the company may justify an economic dismissal if it is necessary to safeguard its competitiveness.
Safeguarding the competitiveness of the company must make it possible to anticipate economic difficulties by taking measures to avoid greater redundancies.
Example :
The reorganization justified by a significant loss of customers and market.
The cessation of the company's activity may justify an economic dismissal.
Please note
The cessation of the company's activity due to the employer's fault cannot justify an economic dismissal. For example, the cessation of activity of a company following a misappropriation of funds from the company to pay off a personal debt.
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