A dismissed executive has two routes for asserting their rights: settlement negotiations or litigation before the labor court. Each follows its own logic and relies on specific levers.
Contrary to popular belief, the two routes are not mutually exclusive. The most effective strategy often combines both within a controlled timetable.
Route 1: settlement negotiations
This is the fastest and often the most financially satisfying route, provided the company agrees to enter into discussions, which is most often the case with executives.
Settlement negotiations rest on a simple principle: the executive waives any legal action in return for a settlement payment that comes on top of the statutory severance pay due on termination of the contract. The amount is set by reference to several benchmarks:
- The theoretical cap under the statutory compensation scale for unfair dismissal (the "Macron scale")
- Known precedents within the company or the sector
- The evidentiary strength of the grievances the executive can raise
- The reputational risk for the company in the event of public litigation
- The timetable each party wishes to follow
When to favor a settlement
Settlement negotiations are particularly well suited to the following situations:
- The dismissal is open to challenge but not manifestly irregular
- The relationship with the employer remains constructive enough for dialogue
- The executive needs a quick resolution in order to move on to a new position
- Confidentiality is a priority (sensitive sector, high-profile role, reputation)
- The management package raises issues that call for a global agreement
A well-negotiated settlement often achieves a high percentage of what a successful lawsuit would have yielded, without two to four years of uncertainty and the publicity of a hearing. At certain levels of responsibility, and depending on the actual exposure, it can represent amounts higher than what the executive would have obtained before the labor court.
Route 2: labor court proceedings
Proceedings on the merits before the labor court generally take 12 to 24 months at first instance, with a potential further 12 to 36 months on appeal (currently 3 to 4 years before the Paris Court of Appeal). For an executive, this route is justified in several scenarios:
- Refusal or failure of prior negotiations with the company
- Additional negotiating leverage to put pressure on the company
- Disputes over the management package exceeding the possible settlement budget
- Obtaining evidence needed to build the case
The combined strategy: usually the most effective
Most cases are resolved through a combination of both routes. A classic scenario:
- Phase 1: opening of amicable settlement negotiations
- Phase 2 (in parallel or in the event of failure): filing a claim with the labor court to create new leverage
- Phase 3: resumption of settlement discussions in parallel with the proceedings
- Phase 4 (if no agreement is reached): pleading and judicial resolution of the case
A significant share of executive cases can be resolved amicably without having to see litigation through to the end.
Decisive selection criteria
The choice of strategy depends on several personal and factual variables. It also depends on the parties involved and on the ability of the employee's counsel to anticipate the opposing party's behavior and adapt the strategy accordingly to optimize the negotiation.
Tolerance for delay
An executive who needs to close within three months cannot afford full litigation. Conversely, an executive who has planned ahead and can wait 18 months has broader negotiating leverage.
Reputational exposure
In certain sectors (finance, consulting, large listed companies), labor court disputes are particularly sensitive. Reaching a settlement with a confidentiality clause then becomes a strategic priority, especially for senior executives.
The strength of the case
A strong case opens up every option, whereas a weak one makes negotiation the preferred route. A preliminary legal assessment is essential to calibrate the strategy properly.
Legal support: an accelerator of resolution
A senior executive facing their former employer alone is generally at a disadvantage. Information asymmetry, command of procedure, and the ability to stay the course make all the difference.
Specialized counsel provides an objective view of the strengths of the case and the negotiating levers. Counsel also makes it possible to build a strategy tailored to the facts, the parties, and the stakes involved, drawing on the ability to anticipate the opposing party's behavior and adjust accordingly.
