Bill No. 1108, submitted by the Monaco Government on April 30th, 2025, introduces a new method for the termination of permanent employment contracts in Monaco.

This text represents a significant change in Monegasque labour law, introducing a method of amicable separation between employee and employer.

Termination by mutual agreement between employee and employer. Initiative belonging to both employer and employee. Cannot be imposed by either party. Freedom of consent strictly protected. Significant latitude for negotiating on the terms and conditions of contract termination, within the limits of the procedural rules laid down.

Calculation of statutory minimum entitlement: Less than 2 years’ seniority corresponds to one quarter of a month’s salary per year of seniority. After 2 years of seniority, compensation must be at least equal to the severance pay so called “indemnité de congédiement”.

There is a withdrawal period of 15 calendar days for both parties. Approval by the labour inspectorate must be granted within 15 working days. If there is no answer, the agreement is deemed approved. However, for protected employees, if there is no answer, it is deemed refused.

Once approved, the law will come into force subject to an agreement with France, to enable employees working in Monaco to entitle from unemployment benefits in their country of residence, in the event of recourse to the Monegasque system of mutual termination agreement of employment contracts.

There are advantages for the employer to remedy to the mutual termination rather than the dismissal provided for by article 6 of law No.729. There is a very limited risk of litigation. Severance pay may be lower. There is the possibility to resolve a deadlock situation when recourse to article 6 is restricted – either by custom or agreement or when the employee benefits from specific protection.