The fixed-term contract with a defined purpose, or the advantage of flexibility

Are you an employer and want to use fixed-term contracts to fill certain temporary positions but you do not know what type of contract to use?

Is your company’s business related to carrying out projects or assignments of a certain duration, but you consider that the fixed-term contract for a temporary increase in activity is not fully adapted to the variations of your business? You want to consider your other options.

Have you ever considered using a fixed-term contract (CDD) "with a defined purpose"?

The fixed-term contract with a defined purpose is in fact a contract which may have certain advantages in comparison with a "conventional" fixed-term contract, subject to compliance with certain mandatory conditions.

Explanations.

1. Reminder of the characteristics of the "conventional" fixed-term contract

As a reminder, the "conventional" fixed-term contract, i.e. the one provided for in Articles L. 1241-1 to L. 1242-17 of the French Labour Code, is a contract that allows the employer to fill positions temporarily for a certain number of reasons, listed exhaustively.

For situations other than the need to replace an absent employee, the use of this type of contract is considered valid in the following cases in particular:

  • Temporary increase in the usual activity of the company (1242-2 2° of the French Labour Code),
  • The performance of an occasional, precisely defined and temporary task that is not part of the normal activity of the company (1251-5 and L. 1251-6 of the French Labour Code),

These reasons for use are adapted to variations in a company's activity.

However, this range of reasons has a drawback that must not be overlooked and can sometimes be very restrictive: these reasons for using a CDD can only be applied in the context of a fixed-term contract with a specified end.

Thus, the sine qua non condition for the validity of such contracts is that the start and end date of the contract must be known to the Parties and stated when the contract is concluded.

The penalty for non-compliance with such a condition is the reclassification of the fixed-term contract as a permanent contract in the event of litigation.

Moreover, the "conventional" fixed-term contract can only be subject to:

Finally, a waiting period (or a period of delay) must also be respected between the conclusion of two successive contracts, the length of which varies according to the term of the initial contract and the assumptions considered (whether or not it’s the same employee, whether or not it’s the same position).

All these conditions do not make it possible to individually adjust the term provided for in the contract, nor to adapt the duration of the contract according to the needs of the company.

This system may therefore lack flexibility.

2. The more flexible system of the fixed-term contract with a defined purpose

Yet little known and little used in practice, the fixed-term contract with a defined purpose is more flexible and deserves to be better understood by employers.

Like any legal system, it has both advantages and disadvantages.

Variable term, the advantage of the fixed-term contract with a defined purpose

Prévu à l'article L. 1242-2 6° du Code du travail, le CDD à objet défini peut être conclu pour une durée comprise entre 18 mois et 36 mois.

Provided for in Article L. 1242-2 6° of the French Labour Code, the fixed-term contract with a defined purpose may be concluded for a term of between 18 months and 36 months.

This leaves the employer room for manoeuvre to adapt the duration of the employment contract to the assignment.

This type of contract, which makes it possible to provide for contracts adapted to the term of the assignment planned, may therefore be appropriate for the business of a company which operates structurally with a system of temporary but relatively long assignments.

Note, however, the demanding formalism of the French Labour Code

This great flexibility must not make the employer forget that this type of contract remains exceptional in nature and that a number of mandatory conditions must be met for the fixed-term contract with a defined purpose to be valid.

  • Firstly, the possibility of using this type of contract must be provided for by an extended industry collective agreement or, failing that, a company agreement 1242-2 6° of the French Labour Code.

    In the absence of an industry agreement that is applicable to the company, the latter must thus negotiate itself with its trade unions, or directly with employees, a collective agreement that opens up this possibility. In this respect, it should be noted that the collective agreement may never open up the possibility of concluding a fixed-term contract for defined purposes for situations of a temporary increase in activity, which can hinder some companies in their desire to set up this type of system.
  • Secondly, it should be noted that assignment that may correspond to a "defined purpose" are not clearly defined by the regulations, so that the utmost care must be taken in drafting the collective agreement and in particular in defining the assignments that may fall within this framework.

    In practice, it should be noted that this type of contract is most often used in project creation / construction situations (in particular in the fields of information technology or construction/civil engineering, for example) since the obvious temporary nature of the IT/works projects makes it easier to bring the assignments into line with the legislation.
  • Thirdly, this type of contract can only be concluded with engineers and executives, which necessarily limits the categories of employees who can benefit from it.
  • Fourthly, although this type of fixed-term contract makes it possible to provide for longer assignments than the conventional fixed-term contract, it remains subject to the provisions of ordinary law on the period of delay/waiting period, and it is not renewable (it therefore limits the term of the contract to 36 months).
  • Finally, if the project is abandoned or ends early, the employment contract must be continued for a minimum period of 18 months, which can seem very long.

These legal requirements may of course limit the interest that this type of contract offers for the employer.

However, these conditions are already well known since they are similar to those of a conventional fixed-term contract, which must also be analysed with regard to the flexibility that can be provided by the conclusion of this type of contract. 

For certain activities or sectors that lend themselves to it, such a system can thus make it possible to find a little more flexibility than with the conventional fixed-term contract system.

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