In short:
- Severance pay in France is due to an employee on a permanent contract dismissed for personal or economic reasons or for unfitness, if they have at least 8 months of uninterrupted service. It is not due in case of serious or gross misconduct.
- The statutory minimum is 1/4 of a month’s salary per year of service up to 10 years, then 1/3 of a month per year beyond.
- The reference salary is the more favourable gross average of the last 12 months or the last 3 months before the dismissal.
- The part corresponding to statutory or collective-agreement severance pay is exempt from income tax. A collective agreement or the contract may provide a higher amount, which then applies.
Severance pay (indemnité de licenciement) compensates an employee on a permanent contract (CDI) for the loss of their job. Its minimum amount is set by the French Labour Code and is calculated from two elements: length of service and the reference salary. The rules below come from the Service-Public guide on severance pay, checked on 5 June 2026, and its guide on calculating length of service, checked on 24 July 2026.
Who is entitled to severance pay in France?
Severance pay is paid by the employer to an employee on a permanent contract who is dismissed. It can come from three sources: the law (statutory severance pay), a collective agreement or the employment contract.
Dismissal grounds concerned
| Situation | Severance pay |
|---|---|
| Dismissal for personal reasons | Due |
| Dismissal for economic reasons | Due |
| Dismissal for unfitness | Due |
| Closure or dissolution of the company | Due, except closure due to force majeure |
| Death of the employee after notification of the dismissal | Paid to the heirs |
| Dismissal for serious or gross misconduct | Not due, unless a collective agreement, contract or company practice is more favourable |
Simple misconduct, unlike serious misconduct, therefore does not prevent severance pay.
The 8-month service condition
To receive statutory severance pay, the employee must have at least 8 months of uninterrupted service with the same employer. This condition is assessed on the date the dismissal letter is sent.
A collective agreement, the employment contract or company practice may set a shorter minimum. Ending a trial period in France follows its own rules, with a notice period that depends on how long the employee has been in the job.
Calculating statutory severance pay
The minimum amount depends on length of service. It is calculated on gross salary.
| Length of service | Minimum amount per year of service |
|---|---|
| Up to 10 years | 1/4 of a month’s salary |
| Beyond 10 years | 1/3 of a month’s salary for each year after the tenth |
To calculate the amount, length of service is counted up to the actual end of the contract, i.e. the end of the notice period. An incomplete year counts pro rata for the number of full months.
Service-Public gives two examples for a reference salary of €1,500:
- 3 years and 6 months of service: (1,500 × 1/4 × 3) + (1,500 × 1/4 × 6/12) = €1,312.50.
- 12 years and 9 months of service: (1,500 × 1/4 × 10) + (1,500 × 1/3 × 2) + (1,500 × 1/3 × 9/12) = €5,125.
Minimum amounts for a reference salary of €2,000
The table below applies the statutory formula to a gross reference salary of €2,000. It gives the statutory minimum, before any more favourable collective-agreement provision.
| Length of service | Calculation | Minimum severance pay |
|---|---|---|
| 8 months | 2,000 × 1/4 × 8/12 | €333.33 |
| 1 year | 2,000 × 1/4 × 1 | €500 |
| 5 years | 2,000 × 1/4 × 5 | €2,500 |
| 10 years | 2,000 × 1/4 × 10 | €5,000 |
| 15 years | (2,000 × 1/4 × 10) + (2,000 × 1/3 × 5) | €8,333.33 |
| 20 years | (2,000 × 1/4 × 10) + (2,000 × 1/3 × 10) | €11,666.67 |
The switch from 1/4 to 1/3 of a month beyond 10 years explains why the amount rises faster for long-serving employees.
Part-time work
If the employee has alternated between full-time and part-time work, severance pay is calculated in proportion to each period. In the Service-Public example, an employee worked 3 years full time then 2 years half time, with a half-time salary of €1,000 (€2,000 full time): (2,000 × 1/4 × 3) + (1,000 × 1/4 × 2) = €2,000.
This rule does not apply to an employee hired full time and dismissed during part-time parental leave: severance pay is then calculated on the full-time pay.
The reference salary: 12 months or 3 months
The salary used is called the reference salary. The more favourable of two gross monthly averages applies:
- The last 12 months before the dismissal.
- The last 3 months before the dismissal. In that case, an annual or one-off bonus is only taken into account pro rata: 1/12 of its amount is added to each of the 3 months.
Example applying this rule: an employee earned an average of €2,100 gross per month over 12 months, and €2,250 over the last 3 months excluding bonus. An annual bonus of €1,200 paid during those 3 months adds €100 (1,200 / 12) to each of them. The 3-month average reaches €2,350: this is the one used.
If the employee was on sick leave or on therapeutic part-time work during the last months, the reference salary is that of the 12 or 3 months before the leave. How sick leave in France and its allowances work is explained in a dedicated article.
An employee with less than 12 months of service compares the average of all months worked with that of the last 3 months, and uses the more favourable one.
Periods that count towards length of service
Not all absences are treated the same way when calculating length of service. The dedicated Service-Public guide distinguishes three cases.
| Taken into account | Examples of periods |
|---|---|
| In full | Maternity, paternity or adoption leave, workplace accident, occupational disease, paid leave, fixed-term contracts immediately followed by a permanent contract (service from the first fixed-term contract), notice not worked at the employer’s request |
| Partly | Full-time parental leave (half), temporary assignment before hiring (3 months maximum), non-continuous contracts (from the last contract) |
| Not at all | Non-occupational illness, commuting accident, short-time work, unpaid leave, sabbatical, strike, suspension, notice not worked at the employee’s request |
Paid leave in France therefore counts towards length of service, unlike sick leave for a non-occupational illness. A collective agreement may provide more favourable rules.
Statutory, collective-agreement or contractual severance pay
The statutory minimum is only a floor. A collective agreement, the employment contract or company practice may provide a more favourable formula. In that case, the employee receives the higher amount: the two are not added together.
Severance pay can, however, be combined with other payments:
- pay in lieu of notice;
- pay in lieu of untaken paid leave;
- compensation for irregular, unfair or void dismissal;
- compensation awarded by a judge when a fixed-term contract is reclassified as permanent;
- financial compensation for a non-compete clause;
- the lump sum of 6 months’ salary for undeclared work.
Statutory severance pay is also the benchmark for a mutual termination, whose payment cannot be lower, as explained in the comparison of mutual termination or resignation in France.
Tax and social contributions on severance pay
Income tax
Outside a job protection plan (PSE), severance pay is partly exempt from income tax. The amount corresponding to statutory or collective-agreement severance pay is fully exempt.
If the employee receives more, the exemption is limited to the more favourable of two amounts: twice the gross pay of the year before the dismissal, or half of the severance pay received. The ceiling is €282,600 for payments received in 2025 and €288,360 for payments made in 2026.
Social contributions, CSG and CRDS
| Deduction | Rule stated by Service-Public (guide checked on 5 June 2026) |
|---|---|
| Social contributions | Exemption of the tax-free part, up to €96,120 |
| CSG and CRDS | Exemption up to the lower of the statutory or collective-agreement severance pay and the part exempt from contributions |
| Severance pay above €480,600 | Fully subject to contributions, CSG and CRDS |
These ceilings change from one year to the next, as the difference between 2025 and 2026 for income tax shows: the official guide applies at the time of payment.
Legal references
| Subject | Text |
|---|---|
| Eligibility | Labour Code, articles L1234-9 to L1234-11 |
| Calculation | Labour Code, articles R1234-1 to R1234-5 |
| Full-time and part-time periods | Labour Code, article L3123-5 |
| Time limit to challenge the termination | Labour Code, article L1471-1 |
| Exemption from contributions | Social Security Code, article L242-1 |
| Exemption from income tax | General Tax Code, articles 79 to 81 quater |
Service-Public also provides an official simulator of the minimum severance pay, available from its guide.
Frequently asked questions
How is severance pay calculated in France?
Statutory severance pay (indemnité légale de licenciement) is at least 1/4 of a month’s salary per year of service up to 10 years, then 1/3 of a month’s salary per year beyond 10 years. The salary used is the gross reference salary, i.e. the more favourable monthly average of the last 12 months or the last 3 months. Incomplete years count pro rata for full months. With a reference salary of €2,000 and 5 years of service, the minimum severance pay is €2,500.
How long must an employee have worked to receive severance pay?
An employee on a permanent contract (CDI) must have at least 8 months of uninterrupted service with the same employer. This condition is assessed on the date the dismissal letter is sent. A collective agreement, the employment contract or company practice may provide for a shorter period.
Does an employee dismissed for serious misconduct receive severance pay?
No. In case of dismissal for serious or gross misconduct (faute grave or faute lourde), severance pay is not paid, unless a collective agreement, the employment contract or company practice provides for it.
Is severance pay taxable in France?
The amount corresponding to the statutory or collective-agreement severance pay is fully exempt from income tax, outside a job protection plan (PSE). Above that, the exemption is limited to the more favourable of two amounts: twice the gross pay of the previous year or half of the severance pay, up to €288,360 for payments made in 2026.
Sources
- Service-Public, Indemnité de licenciement du salarié en CDI (severance pay for employees on a permanent contract), guide checked on 5 June 2026, consulted on 27 October 2026.
- Service-Public, Comment calculer l’ancienneté du salarié pour le montant de l’indemnité de licenciement ? (how to calculate length of service for severance pay), guide checked on 24 July 2026, consulted on 27 October 2026.