Mutual termination agreement in labor law
(Rupture conventionnelle)

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.

Entrée en vigueur

La nouvelle loi est désormais publiée au Journal de Monaco et inclut le dispositif de la rupture conventionnelle. Certaines de ses dispositions entreront en vigueur une fois que le régime monégasque sera assimilé à celui de la France pour l’assurance chômage, ce qui facilitera la coordination entre les deux systèmes. D’autres mesures (notamment concernant les contrats temps partiel) auront une mise en application progressive pour laisser le temps aux entreprises de s’y adapter.