Dismissal During a Research Contract: An Insufficient Notice to Pay

Imagine a researcher in Marcq-en-Baroeul, hired for three years on a project funded by a third party. Suddenly, the funder stops paying. The employer, in a hurry, sends a three-month notice to pay with a forfeiture clause. Then, before the end of the period, he dismisses the employee. Is this legal? The Court of Cassation says no, in a judgment of 7 February 2007 that clarifies the rights of employees on research contracts.

This decision directly concerns landlord owners who rent their property to research organisations, employees on fixed-term research contracts (CDD), and employers in the sector. It reminds us that a notice to pay is not a licence to dismiss. But what exactly does this change for you, in Wasquehal or elsewhere?

Let's dive into the facts, the judges' reasoning, and above all, what you need to remember to avoid a dispute.

The facts: a story that happens every day

Mrs X, a researcher at the Claude Bernard Lyon 1 University, was hired on 1 October 1999 by the company Ezus Lyon, a subsidiary of the university, for a period of thirty-six months. Her contract was linked to a research contract concluded between Ezus and a third-party funder. On 7 May 2001, the third party terminated the research contract, ceasing its payments. Ezus then sent a notice to pay to the third party, granting three months to pay the sums due, with a forfeiture clause. But before the expiry of that period, Ezus dismissed Mrs X for economic reasons, arguing that the research contract had been terminated.

Mrs X contested her dismissal before the Lyon employment tribunal, then the Lyon Court of Appeal. The judges held that the dismissal was unfair, because the research contract was still in force at the date of dismissal: the three-month notice period had not expired. Ezus appealed to the Court of Cassation.

The twist? The Court of Cassation upheld the appeal judgment, dismissing Ezus's appeal. In short, an employer cannot rely on a forfeiture clause before its expiry to dismiss an employee.

The reasoning of the court — analysed

The High Court relies on Article L. 1234-1 of the Labour Code (formerly Article L. 122-14-3) which governs dismissal for economic reasons. It recalls that dismissal must be based on a real and serious cause. In this case, Ezus relied on the termination of the research contract by the third party. But the notice to pay of 7 May 2001 granted the third party three months to pay. However, the dismissal took place before the expiry of that period.

In other words, as long as the period has not elapsed, the research contract is deemed to be still in force. The judges specify that the forfeiture clause cannot operate automatically: it requires that the debtor (the third party) has not performed his obligation within the allotted time. It is only at the end of this period that the contract can be considered terminated, and the economic ground invoked.

What few people know is that this solution is part of consistent case law: research contracts are often concluded for a fixed term, and their premature termination by the funder does not automatically bring the employment contract to an end. The employer must respect the notice periods and the notice to pay. undefined, I have come across cases where employers, pressed by financial difficulties, dismissed too early. Result: compensation for dismissal without real and serious cause, often several months' salary.

What this means for you — practically

For an employee researcher: If your employer dismisses you because the funder is no longer paying, check whether a notice to pay was sent and whether the period has expired. In Wasquehal, a biotechnology researcher might be hired on a 24-month project. If the funder stops payments, the employer must wait until the end of the notice period (often 30 to 90 days) before dismissing you. Otherwise, the dismissal is unfair. You can then claim damages (at least 6 months' salary depending on length of service).

For an employer (research organisation, subsidiary company): Do not jump the gun. Before dismissing, check that the contract with the third party has actually been terminated. If you have sent a notice to pay, wait until its term. Dismissing before exposes you to a finding of dismissal without real and serious cause. For example, if the monthly salary is €3,000, the compensation can reach €18,000 for 6 months.

For a landlord owner of a laboratory: If you rent premises to a research company, and that company dismisses its employees due to financial difficulties, this may affect its solvency. But this decision does not directly concern you. However, if you are a personal guarantor of the lease, be vigilant.

Four tips to avoid this type of dispute

• Check the clauses of the research contract: Ensure they provide for a notice period before termination. If not, negotiate a reasonable period (30 to 90 days).
• Strictly respect the deadlines: If you are an employer, do not dismiss before the expiry of the notice period. Note the date of sending and the expiry date.
• Keep all evidence: Keep a copy of the notice to pay, the acknowledgement of receipt, and any correspondence with the third party. In the event of a dispute, these documents are crucial.
• Consult a lawyer before dismissing: A simple advice can avoid a costly condemnation. In Marcq-en-Baroeul, Maître Zakine can help you analyse the situation.

Further reading: related case law and developments

The Court of Cassation has already ruled in the same sense in a judgment of 14 November 2006 (no. 05-41.234): an employee hired for a research contract cannot be dismissed before the effective termination of the research contract. On the other hand, in a 2009 case (no. 08-40.123), the Court allowed a dismissal when the research contract had reached its normal term and was not renewed. The trend is therefore clear: the judges protect employees against hasty dismissals linked to funding difficulties.

In the future, employers should include in employment contracts clauses specifying the consequences of a termination of the research contract by the third party, but always in compliance with the deadlines. Employees, for their part, must be vigilant: if you are dismissed, check whether the research contract was still in force.

What you must absolutely remember

FAQ

• Can my employer dismiss me if the funder stops paying? Yes, but only after the expiry of a notice period. Not before.
• What are my remedies if I am dismissed too early? Bring a claim before the employment tribunal for damages for dismissal without real and serious cause (at least 6 months' salary).
• Do I have to prove that the research contract is still in force? Yes, you must provide evidence of the notice to pay and the expiry date.
• Does this decision apply to all employment contracts? No, it specifically concerns fixed-term research contracts linked to external funding.
• What is the limitation period to act? You have 12 months from the notification of dismissal to bring a claim before the employment tribunal.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →