France's employment system is built on a clear hierarchy: the CDI (contrat à durée indéterminée) is the standard, and the CDD (contrat à durée déterminée) is the exception. For a French employer, this distinction is second nature. For a foreign company hiring in France for the first time, the same distinction is often a source of costly mistakes.
Choosing the wrong contract type is not merely an administrative error. A CDD used outside its permitted grounds can be requalified as a permanent CDI by an employment tribunal, with backdated seniority, back pay obligations, and the full procedural weight of a dismissal. Understanding the two contract types, their structure, their limits, and the legal logic behind them, is therefore a prerequisite before any hiring decision in France.
This guide explains the key differences between employment contract types in France, the circumstances in which each is appropriate, and what foreign employers specifically need to know before they sign anything.
What Are CDD and CDI Contracts?
French labour law (Code du travail) defines two main categories of employment contract. Both cover employed workers; the fundamental difference lies in duration and the conditions under which they can be used.
CDI (contrat à durée indéterminée): the permanent contract
The CDI is the default form of employment in France. It has no predetermined end date and continues until one of the parties terminates it through a legally defined process, resignation, dismissal, or mutual termination (rupture conventionnelle).
For a full-time CDI, a verbal agreement is technically sufficient under French law, but a written contract is strongly recommended in practice. Any CDI must be accompanied by a written statement of employment terms under the law of 9 March 2023, in force since November 2023, an obligation that applies regardless of whether a formal written contract is signed.
A trial period (période d'essai) may be included: 2 months for workers, 3 months for technicians and supervisors, 4 months for executives. These durations can be extended under the applicable sector collective agreement.
CDD (contrat à durée déterminée): the fixed-term contract
The CDD is always established in writing. The contract must be signed by the employee within 2 working days of their start date, failure to respect this deadline can itself lead to requalification as a CDI.
A CDD has a maximum duration of 18 months, including renewals. It can be renewed up to twice, within that overall limit. At the end of the agreed term, the contract ends automatically, no dismissal notice, no procedure. However, the employer owes an end-of-contract bonus (indemnité de précarité) equal to 10% of the employee's total gross remuneration over the contract period.
Key Differences at a Glance
When Can You Use a CDD in France?
This is where French labour law is most frequently misunderstood by foreign employers. A CDD is not simply a shorter contract, it is a contract reserved for specific, legally defined situations. Using it outside those situations exposes the employer to serious risk.
Permitted grounds for a fixed-term contract
French law allows a CDD in the following circumstances:
- Replacing an absent employee, the most common ground. Covers sick leave, maternity leave (congé maternité), parental leave, or a reduction to part-time hours. The replacement contract must name the absent employee.
- Temporary increase in activity (accroissement temporaire d'activité), a genuine, time-limited surge in the company's workload. A US tech company opening a France office may need a project coordinator for 9 months to support a product launch, this is a typical example of a valid CDD use case.
- Seasonal employment (emploi saisonnier), roles tied to a predictable seasonal cycle (tourism, agriculture, hospitality).
- Project-based contracts for executives and engineers, a specific CDD type (CDD à objet défini) lasting 18 to 36 months, available for senior roles on a defined project.
- Replacing the business owner in certain specific circumstances.
- Sectors where open-ended contracts are not customary (contrat d'usage), the audiovisual, events, and entertainment industries are the principal examples.
What you cannot use a CDD for
The law is equally explicit about prohibited uses:
- Filling a role that is genuinely permanent in nature, even temporarily.
- Replacing an employee who has gone on strike.
- Performing work classified as hazardous under the applicable regulations.
If a CDD is used outside its permitted grounds, the employee may apply to an employment tribunal (conseil de prud'hommes) for requalification (requalification) as a CDI. If the tribunal upholds the claim, the employer faces backdated CDI obligations from the original start date, plus compensation. This is not a theoretical risk, it is a common source of litigation in French employment law.
Advantages and Disadvantages for the Employer
Both contract types have a role in a well-managed workforce strategy. The right choice depends on the nature of the role, the level of regulatory risk the employer is willing to accept, and the longer-term relationship they wish to build with the employee.
CDD: pros and cons
Advantages:
- Flexibility for genuinely temporary needs, the contract ends automatically without a dismissal procedure.
- Lower cost of separation in the short term, no severance pay, no notice period to manage.
- An employee on a CDD can only terminate early in limited circumstances (written offer of a permanent CDI elsewhere, mutual agreement, or force majeure), which limits unexpected departures during critical project phases.
- Can serve as an extended assessment period before offering a CDI.
Disadvantages:
- The end-of-contract bonus (indemnité de précarité), 10% of total gross pay, adds a cost that is often underestimated when comparing CDD against CDI.
- High turnover if CDD contracts are chained: repeated recruitment, onboarding, and training costs accumulate.
- Strict permitted grounds, any ambiguity in the justification creates requalification risk.
- CDD contracts cannot be used to cover a permanent structural need, regardless of how they are labelled.
CDI: pros and cons
Advantages:
- Attracts a broader and stronger pool of candidates. For a foreign national joining a French subsidiary, the difference between a CDD and a CDI directly affects their ability to secure housing or a bank loan in France, CDI holders are significantly preferred.
- Builds employee loyalty and reduces the recruitment cost cycle.
- Longer trial period gives the employer more structured time to assess fit before committing.
Disadvantages:
- Dismissal is strictly regulated under French labour law. Termination requires a valid ground (economic, personal, or serious misconduct), a formal procedure, notice periods, and, in some cases, severance pay.
- A mutual termination (rupture conventionnelle) requires agreement from both parties and approval from the labour authority (DREETS), it cannot be imposed unilaterally.
- Employee resignation is possible at any time with the applicable notice period, which can leave the employer exposed during critical periods.
Transitioning from CDD to CDI
A CDD does not always have to end with separation. There are two main routes by which a fixed-term contract converts to a permanent one.
Employer initiative: At the end of a CDD, the employer may offer the employee a CDI. The terms are negotiated between the parties. If the CDI is offered on conditions equivalent to the preceding CDD, the employee's refusal does not entitle them to the end-of-contract bonus (indemnité de précarité).
Employee initiative, requalification: If the employer used a CDD outside its permitted grounds, or failed to meet the mandatory contract formalities (missing written contract, failure to sign within 2 working days, invalid grounds stated in the contract), the employee may apply to the tribunal for requalification as a CDI. If the tribunal upholds the claim and the employer then dismisses the employee, the dismissal is deemed to lack valid grounds, triggering financial consequences.
A critical rule: if a CDD converts to a CDI without any interruption, the employee retains full seniority from the start of the fixed-term contract. This affects severance calculations, notice period length, and various entitlements linked to seniority.
Practical Guidance for Foreign Companies Hiring in France
The guidance above applies equally to French and foreign employers. But foreign companies face an additional layer of complexity that domestic employers rarely encounter, and that none of the standard French HR guides address.
The CDI as default: what foreign employers need to understand
French labour law strongly favours the CDI as the norm. When in doubt, the law assumes a CDI was intended. A CDD used without a clearly documented legitimate ground is not simply a modifiable arrangement, it is a liability from day one.
Since November 2023, employers must provide written employment information to all employees, even where no formal written CDI contract is signed. This obligation applies equally to foreign companies employing staff in France, regardless of where the employer's legal entity is based.
For companies that are less familiar with French labour law contracts, the instinct to use a CDD as a cautious "trial" contract can backfire significantly. A CDI with a well-structured trial period (période d'essai) is often the safer and more transparent route.
Collective agreements: the hidden variable
Many of the rules described in this guide are defaults. The applicable sector collective agreement (convention collective) can modify them, sometimes substantially. Trial period durations, the maximum length of a CDD, renewal limits, the rate of the end-of-contract bonus: all of these can differ depending on the sector.
Foreign companies hiring in France must identify the relevant collective agreement for their sector before drafting any contract. This is not optional, it is a mandatory step in French HR compliance. The applicable collective agreement for your sector may set different rules from the statutory defaults described here; always verify before signing.
When an outsourced payroll provider simplifies the choice
For companies building a team in France, the CDD vs CDI decision is not made in isolation. Working with a local payroll and HR partner means contract drafting, legal compliance, payroll obligations, and the application of the correct collective agreement are all handled by specialists from day one.
If you are navigating your first hire in France or managing ongoing payroll for a French team, understanding employment contracts in France is the starting point. For companies considering their options before establishing a legal presence, our guide to making your first hire in France covers the full decision framework.
