France - New rules around amicable termination of employment contracts

Published

May 02 2023

Written By

Associate
France

As an associate in our HR Services Group in Paris, I advise, assist and support clients in all their labour and employment law issues.

Nathalie Devernay

Partner
France

I am a partner in our international HR Services Group, which I co-head, based in France. I advise our multinational corporate clients on French employment law matters.

Practices

Regions

Western Europe

Countries

France

As per the amended Social Security Financing Act for 2023, the social security taxes applicable to mutual termination severance will be modified.

Elimination of the 20% employer contribution called “forfait social”
Implementation of a new 30% tax called "contribution on the compensation paid in case of mutual termination agreement and retirement”, of the part not subject to social security contributions (so instead of 20%, companies will pay 30% of employer's contributions on the mutual termination severance from now on)

Please note that when the employee who signs a mutual termination is entitled to a retirement pension from a legally compulsory scheme, the tax and social contributions rules remain unchanged (i.e. the indemnity is subject to full income tax and contributions from the first euro in this case).