Rupture conventionnelle dans le droit du travail
Monaco: towards the introduction of contractual termination in labor law
The Principality of Monaco recently took an important step toward modernizing its labor laws with the adoption of a bill establishing the mutual termination agreement of employment contracts. This bill (which became Law No. 1.583 of December 2, 2025) was adopted by the National Council after several months of review and discussion between the Government and Monegasque parliamentarians.
Until now, this mechanism did not exist in Monaco, unlike in France, where contractual termination has been part of the Labor Code since 2008.
What is a mutual termination agreement?
A mutual termination agreement is a way to end an open-ended employment contract (permanent contract) by mutual consent between the employer and the employee. It differs from dismissal (a unilateral decision by the employer) and resignation (initiated by the employee) because it is based on an agreement between both parties.
To be valid, this termination must:
- be formalized through a written agreement signed by both parties;
- include clear statements regarding the conditions of termination;
- be concluded without pressure, meaning that neither the employer nor the employee may impose it on the other.
Objectives of the Monegasque bill
The text aims to:
- introduce this new method of terminating an employment contract into Monegasque law;
- offer an alternative to dismissal or resignation, encouraging mutually agreed separations;
- modernize and clarify several provisions of the Labour Code, in particular those relating to:
- termination conditions during the probationary period,
- the length of the notice period,
- the rules governing part-time employment contracts.
An important aspect of the Monegasque bill is the intention to adapt the mechanism to the local legal environment, while taking into account the link between the Monegasque unemployment insurance scheme and the French system, in order to ensure that employees can benefit from unemployment benefits following a mutual termination agreement.
Entry into Force
The new law has now been published in the Journal de Monaco and includes provisions for mutually agreed termination. Some of its provisions will take effect once Monaco’s unemployment insurance system is aligned with France’s, which will facilitate coordination between the two systems. Other measures (particularly those concerning part-time contracts) will be implemented gradually to give businesses time to adapt.
