Final Settlement Pay: Line-by-Line Calculation and Receipt

Quick answer. The final settlement gathers every sum owed to the employee at termination: last salary, paid-leave compensation, severance indemnities and prorated bonuses. The signed receipt becomes binding on the employer six months after signature, but only for the sums it lists (article L1234-20 of the French Labour Code).

At every end of contract, one question keeps surfacing in the files we handle: how much must be paid, and on what basis? A mis-calculated final settlement is expensive. Too low, it exposes the employer to a claim before the labour court; too high, it drains cash without any return. The point is not simply to pay, but to pay the right amount, at the right time, with a receipt that genuinely protects the company.

This piece sets out the item-by-item calculation method, the precise legal value of the receipt, and the window during which the employee can still contest it.

The final settlement inventories the sums paid to the employee at termination, whatever the cause. Article L1234-20 of the French Labour Code provides that it is drawn up by the employer and that the employee signs a receipt for it. It is owed for every contract: permanent, fixed-term, end of trial period, resignation, dismissal or mutual termination.

In practice the document gathers several lines. Each follows its own calculation rules, which is why errors are common when payroll is processed manually.

• Salary for the last month worked, prorated over days present.
• Paid-leave compensation indemnity for accrued, untaken leave.
• Notice-period indemnity where the notice is not worked.
• Statutory or contractual severance, or the mutual-termination indemnity.
• Bonuses and the 13th-month payment prorated to the departure date.
• Any accrued, untaken RTT days under the company agreement.

Sums unknown at the termination date, such as profit-sharing not yet finalised, need not appear on the receipt. They remain owed and are settled later. To distinguish this receipt from the other documents, see our article on the end-of-contract documents to hand over, which covers the work certificate and the France Travail statement.

The method has six steps. We apply it systematically in our payroll and HR administration engagements, with a cross-check of each line before the final payslip is issued.

1. Rebuild the last salary. Calculate gross pay up to the last day present, prorated over days worked, including overtime and variable pay.
2. Add the paid-leave compensation indemnity. Value accrued, untaken leave under the one-tenth rule or salary maintenance (article L3141-24), keeping the formula more favourable to the employee.
3. Include severance amounts. Add statutory severance (article R1234-2) or the mutual-termination indemnity, and the notice indemnity where notice is not worked (article L1234-5).
4. Prorate bonuses and the 13th month. Determine the share accrued to the departure date under the applicable collective agreement.
5. Deduct advances. Subtract draws, advances, RTT taken early and unreturned equipment, within legal limits.
6. Issue the receipt. Draft the final-settlement receipt in duplicate, with the breakdown of sums, and make it available to the employee.

A method tip: isolate the leave-indemnity calculation, as it triggers most disputes. The one-tenth versus salary-maintenance comparison must be done line by line. We detail this mechanism in our guide on calculating paid leave.

Each item answers to a specific text. The table below recaps the calculation base to apply.

The paid-leave indemnity deserves special attention. The one-tenth rule equals 10% of the total gross pay received over the reference period. Salary maintenance values the leave days as if they had been worked. The employer must keep whichever method yields the higher amount for the employee. On variable payslips, this gap sometimes runs into hundreds of euros, which is why it pays to read a payslip carefully before locking the settlement.

For the mutual-termination indemnity, the floor follows the statutory severance, but the collective agreement may provide more. On this point, see our analysis of the mutual-termination indemnity.

The final-settlement receipt is not a mere formality. Signed by the employee, it can be denounced within six months of signature. After that, it becomes binding on the employer, but only for the sums it expressly mentions (article L1234-20).

This nuance is decisive. A binding receipt closes only the sums listed. A forgotten bonus, an unpaid overtime hour or a missing line remains claimable, even after six months. The table below compares the situations.

The denunciation must be made by reasoned registered letter, or by referral to the labour court, within the six-month window. If the employee refuses to sign, the employer still cannot withhold payment: the sums remain owed. An unsigned receipt simply loses its binding effect.

Several configurations change the calculation or the timing.

• Serious or gross misconduct. Notice and its indemnity are not owed, but the leave indemnity remains acquired. Our article on dismissal for serious misconduct details the impact on the settlement.
• Death of the employee. The settlement is paid to the heirs; the leave indemnity is owed.
• Fixed-term contract reaching term. The end-of-contract premium is added, unless a legal exclusion applies.
• Day-count arrangements. The last-month and leave-indemnity calculations follow specific annual-count rules.
• Multi-employer or intermittent staff. Reference periods are rebuilt contract by contract.

Each termination also triggers a social declaration. The payroll end-of-contract signal conditions the employee's rights, as we explain in our article on the event-based end-of-contract DSN.

In the payroll reviews we run, the same errors recur. Fixing them upstream prevents almost all disputes.

The underestimated risk. Many employers believe a signed receipt closes every debate. It does not: it covers only the listed sums. A settlement that omits a variable bonus leaves the door open to a claim, within the three-year limitation for wages (article L3245-1). The more detailed the receipt, the stronger the protection.

What the labour court looks at. In a dispute, the judge checks the sincerity of the breakdown, the leave-indemnity method and the consistency between the receipt, the final payslip and the social declaration. Any gap between these documents weakens the employer's position.

We recommend tooling this step with the Silae payroll software, which secures the automatic leave-indemnity calculation and receipt generation. Automation does not replace control, but it eliminates the most costly data-entry errors.

In our practice, the final settlement is one of the trickiest payroll acts, precisely because it looks simple. Recently, the head of a construction SME approached us after a site manager left: the initial settlement, prepared in-house, had applied the one-tenth rule to paid leave when salary maintenance was clearly more favourable for an employee on heavy bonuses. The gap ran to several hundred euros, and the already-signed receipt did not cover the error. We recalculated the leave indemnity, issued a top-up and secured a detailed corrective receipt.

Our reading is straightforward: the value of a final settlement rests less on the amount than on traceability. A generic receipt, with no line detail, offers only theoretical protection. A comprehensive receipt, consistent with the final payslip and the social declaration, genuinely closes the matter after six months. That rigour, rooted in our professional duties as chartered accountants registered with the Ordre, is what separates an endured settlement from a controlled one.

The recurring trade-off concerns notice: should it be worked or paid? Releasing the employee costs the notice amount but speeds up the exit and limits tension. Having the notice worked preserves cash, at the risk of a strained climate. The right choice depends on context, role and collective agreement. For sensitive situations, we work this trade-off through our offer to secure the procedure on the legal side.

Hayot Expertise tip. Always issue the receipt in duplicate, line by line, with the six-month notice. Keep proof that it was made available. Before signature, check the consistency between the settlement, the final payslip and the DSN. This discipline turns a latent labour-court risk into a controlled formality.