Calculating statutory severance pay in France (2026)

Quick answer. Statutory severance pay is calculated on the basis of one quarter of a month's salary per year of seniority for the first ten years, then one third of a month per year beyond ten years (article R1234-2 of the Labour Code). The reference salary used is the more favourable of the average of the last twelve months and one third of the last three months. The payment is exempt from income tax for its legal or contractual portion, and exempt from social contributions up to twice the annual social security ceiling, i.e. 96,120 euros in 2026.

Calculating severance pay is not a mere payroll formality: it is an obligation where an error is costly (a claim before the labour court, an URSSAF reassessment). Here is the full method, with a worked example and the social and tax regime applicable in 2026.

Article L1234-9 grants statutory severance to an employee who:

• holds an open-ended contract;
• is dismissed for a reason other than gross or wilful misconduct;
• has at least eight months of uninterrupted seniority with the same employer, at the date the dismissal is notified.

Gross or wilful misconduct deprives the employee of severance pay (see dismissal for gross misconduct). Conversely, dismissal for unfitness of occupational origin gives rise to a special payment, at least equal to twice the statutory amount.

Article R1234-2 sets the minimum amount:

Incomplete years are counted pro rata to the number of months (one month of service equals 1/12 of a year). Seniority is assessed at the contract's end date, notice included — even where the employee is waived from serving notice (see the dismissal notice period).

The reference salary (article R1234-4) is, on the formula more favourable to the employee, the higher of:

1. the monthly average of the last twelve months before the dismissal (or of all months if seniority is under twelve months);
2. one third of the last three months. In that case, annual or exceptional bonuses paid over the period are counted only on a pro rata basis (3/12).

Gross pay is used: base salary, bonuses, benefits in kind, commissions. Expense reimbursements and, in principle, the paid-leave allowance are excluded.

Take an employee dismissed for personal reasons (not gross misconduct), with 12 years of seniority and a reference salary of 2,500 euros gross.

• For the first 10 years: 10 × 1/4 = 2.5 months.
• For the 2 years beyond 10 years: 2 × 1/3 = 0.667 months.
• Total: 3.167 months.
• Statutory severance: 3.167 × 2,500 = 7,916.67 euros.

If the collective agreement provides a more favourable calculation (a higher rate per year, shorter minimum seniority, a floor), the contractual severance applies. You must therefore always compare the legal result with the contractual result and keep the more favourable one.

Severance pay benefits from a favourable social regime, but subject to ceilings. In 2026, the annual social security ceiling (PASS) is 48,060 euros.

The portion exempt from contributions is so within the double limit of 2 PASS and the income-tax-exempt portion. CSG and CRDS are due on the fraction exceeding the legal or contractual amount, and at least on the portion subject to contributions; the fraction matching the legal or contractual severance is exempt. Note: mutual termination follows a separate social regime, with a specific employer contribution — that is a different topic (see mutual termination pay).

For income tax (article 80 duodecies of the Tax Code):

• the portion matching the legal or contractual severance is fully exempt, with no ceiling;
• the supra-legal portion (paid above the legal or contractual minimum) is exempt up to the higher of twice the gross annual pay of the previous calendar year and 50% of the total amount, all capped at six times the PASS, i.e. 288,360 euros in 2026;
• the fraction exceeding these limits is taxable.

Not to be confused with compensatory notice pay and the compensatory paid-leave allowance, which are fully subject to contributions and tax (see calculating paid leave).

Take an employee with 5 years of seniority and a reference salary of 2,200 euros.

• 5 × 1/4 = 1.25 months.
• Statutory severance: 1.25 × 2,200 = 2,750 euros.

Progression is not linear: the one-third rate applies only to years beyond the tenth, which rewards long service. For a year started but not completed, you pro-rate by the number of months: an employee with 5 years and 6 months is entitled to 5.5 × 1/4 = 1.375 months.

Severance pay is owed, other than for gross misconduct, in any valid dismissal. It does not merge with the damages owed where a dismissal is held to lack real and serious cause: the latter fall under the so-called Macron scale (article L1235-3), a floor and a ceiling expressed in months of salary and rising with seniority, which only the labour court can award. A single dismissal may therefore, in litigation, give rise both to severance pay (automatic) and to compensation for lack of real and serious cause (if the judge rejects the grounds).

For accounting purposes, severance pay is a staff cost. Where the procedure is under way and the outflow of resources is probable at the year-end, it must be provisioned, to attach the charge to the financial year that gave rise to it. In a redundancy plan or collective termination, the provisioning stake becomes significant and is worth anticipating with your chartered accountant, together with payroll and termination management.

• Forgetting to include notice in seniority when the employee is waived from serving it.
• Using net rather than gross pay as the reference salary.
• Ignoring the contractual severance when it is more favourable than the statutory amount.
• Confusing the severance regime with that of a mutual termination.
• Failing to pro-rate annual bonuses in the "one third of three months" formula.