The legal battle between Raymond Domenech and his former employer, the Fédération française de football (FFF), was resolved on Thursday after almost a year of wrangling.
Noel le Graët, president of the FFF, confirmed that Domenech would receive a payment of €975,000 for unfair dismissal. Domenech had initially hoped to get €2.9 million.
59-year old Domenech managed the team for six years. His high point was in 2006 when he took France to the finals in the World Cup in Germany where les Bleus, as they are known in France, lost to Italy.
The most notorious chapter in his stewardship was in 2010 when the French team descended into chaos during the World Cup in South Africa.
After a 0-0 draw with Uruguay, star player Zinedine Zidane said Domenech had lost control of the team.
A series of incidents followed, including an expletive-laden tirade by Nicolas Anelka during half-time of the next match against Mexico. This led to the striker being sent home the next day causing further disputes between players and coaching staff and culminating in a boycott on training by the team.
The team eventually finished bottom of their group after losing 2-1 to South Africa and returned home in disgrace.
"The Domenech matter is closed," said Le Graët to AFP. "This is an excellent decision for the FFF and I'm very happy with the agreement. This draws a line under an issue that could have gone on for two or three more years."