Mutual Termination Agreements in Monaco: What Law No. 1.583 Changes for Employees and Employers

A Long-Awaited Framework: Why Monaco Introduced Mutual Termination

Monaco does not have a unified labour code, but rather a set of laws governing employment relationships, foremost among them Law No. 729 of March 16, 1963 on employment contracts. For decades, this law offered parties wishing to separate amicably only a theoretical option: negotiated termination, based on Article 11 of Law No. 729, which allows termination of a permanent contract without notice if agreed upon by both parties.

In practice, this route was rarely used. The reason is simple and decisive: negotiated termination did not entitle employees to unemployment benefits. However, employees working in Monaco contribute to the unemployment insurance system managed by France Travail and UNEDIC, just like their French counterparts. Without access to this protection, amicable termination remained inequitable for employees, leaving them without a financial safety net after separation.

The consequence was predictable: mutually agreed separations most often resulted in formal dismissals, particularly under Article 6 of Law No. 729, which allows a Monaco-based employer to terminate a permanent contract without stating a reason, in exchange for enhanced severance pay. However, this mechanism involved a high financial cost and did not protect against potential litigation regarding the conditions under which the dismissal was implemented.

The concept of mutual termination underwent a long period of development. Initiated during the 2018–2022 term of the National Council, it took the form of a legislative proposal adopted on November 28, 2023, and was later transformed into a government bill on May 27, 2024. A decisive amendment signed with UNEDIC on June 6, 2025, then granted access to unemployment insurance for mutual terminations concluded under Monaco law, thereby removing the main obstacle to the adoption of the framework.

The Mutual Termination Procedure Step by Step

The Preliminary Meeting: A Mandatory Requirement

A mutual termination agreement can only be concluded following one or more meetings between the parties. Failure to hold such a meeting automatically results in the nullity of the agreement. This requirement is a stricter Monaco-specific feature compared to French law, where the absence of a meeting does not automatically lead to nullity.

Assistance is allowed but strictly regulated. The employee may be assisted by a staff representative or any other employee of the company. If the employee chooses to be assisted, the employer may also be assisted—by another employee, a partner, a company executive, or, in companies with fewer than 50 employees, by a representative of an employers’ organization or another employer from the same sector. Lawyers are not permitted during these meetings.

Regarding notification deadlines, the employee must inform the employer of their intention to be assisted no later than two working days before the meeting. The employer, if making the same choice, has one working day. Failure to comply with these deadlines results in postponement of the meeting to a date agreed upon by both parties.

The Termination Agreement and the 7-Day Cooling-Off Period

Following the meetings, if both parties agree, they sign a written termination agreement in accordance with Ministerial Order No. 2025-715 of December 24, 2025. The agreement notably sets out the financial terms of the termination and the effective termination date, which cannot be earlier than the day after approval by the Labour Inspectorate.

From the date of signature, both parties have a seven-calendar-day cooling-off period. This period is shorter than in France, where it is set at fifteen days; it results from an amendment adopted on November 26, 2025, to preserve the flexibility and speed of the mechanism, according to rapporteur Corinne Bertani. However, the parties may agree in the contract itself to a longer cooling-off period if they wish.

Withdrawal must be made in writing, with proof of the date of dispatch or hand delivery. Employees exercising this right benefit from explicit protection: no disciplinary action or adverse measure may be taken against them in retaliation.

Approval by the Labour Inspectorate

At the end of the cooling-off period, the most diligent party submits the approval request to the Labour Inspectorate, either by hand delivery with receipt, by registered letter with acknowledgment of receipt, or via an online service.

The Labour Inspectorate has fifteen working days to verify the agreement’s compliance, including legal requirements and the free consent of the parties. If no refusal is issued within this period, the agreement is deemed implicitly approved. In case of refusal, the parties may initiate a new procedure.

Any dispute relating to a mutual termination must be brought before the competent court within six months from the date of approval or refusal.

Sources: Law No. 1.583 of December 2, 2025, Articles 2–7; Ministerial Order No. 2025-715 of December 24, 2025; Monaco Hebdo, report of the public session of November 26, 2025.

Unemployment Insurance: The Decisive Contribution of the UNEDIC Amendment of June 6, 2025

All private-sector employees working in Monaco contribute to the French unemployment insurance system managed by UNEDIC, with benefits paid by France Travail, regardless of whether they reside in France, Monaco, or Italy. Until the entry into force of Law No. 1.583, negotiated termination did not grant access to these benefits, which constituted the main obstacle to its practical use.

The amendment of June 6, 2025, to the unemployment insurance agreement of November 15, 2024, removed this obstacle by explicitly extending the scope of the agreement to Monaco for mutual terminations concluded in compliance with Monaco law. In practical terms, an employee whose permanent contract ends through a mutual termination in Monaco may now be eligible for unemployment benefits (allocation d’aide au retour à l’emploi), under conditions aligned with those applicable in France.

It is precisely this alignment with the French framework that guided the drafting of the Monaco system. As highlighted by Minister of Social Affairs Christophe Robino during debates at the National Council, the introduction of mutual termination in the Principality was intended to fit naturally within a framework consistent with the system applicable in France, since Monaco employees are covered by an unemployment insurance scheme linked to that of the neighboring country.

Other Changes Introduced by Law No. 1.583

Beyond the introduction of mutual termination, the law modernizes several provisions of Law No. 729 and Sovereign Ordinance No. 677 of December 2, 1959 on working time. These changes came into force on December 13, 2025, the day after publication in the Journal de Monaco, with the exception of the new regime for part-time contracts, which applies only to contracts concluded after that date.

Regarding probationary periods, the law now clarifies their starting point and strictly regulates renewal conditions. Concerning notice periods, the text adapts them to reflect the specific situations of executive employees, whose regime is now explicitly defined. For part-time contracts, the rules governing hours worked beyond the contractual duration have been clarified, while maintaining the flexibility required in sectors with variable activity. Finally, the law extends to emancipated minors—other than through marriage—the capacity to enter into employment contracts independently, in line with foreign legal frameworks recognized in the Principality.

Sources: Law No. 1.583 of December 2, 2025, Articles 10 to 15; Sovereign Ordinance No. 677 of December 2, 1959 on working time.