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Does a retiring employee have a right to severance pay?
Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)
Written agreement negotiated between trade union representatives of employees and employers' groups. It complements and adapts labor legislation in a given sector of activity, often more favorably for employees.
Do you decide to retire or do you automatically retire as an employer? You can receive a retirement allowance if you meet certain conditions. We present you with the information you need to know.
What applies to you ?
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Application for retirement
You are entitled to a retirement allowance if you decide to leave your company to retire and if you at least 10 years' service in the company.
Retirement pay is commonly referred to as severance pay retirement grant.
Please note
When you apply to retire, you must respect a notice of the same duration as the notice in the event of dismissal.
The amount of your retirement allowance may not be less than the following statutory amount, depending on your seniority in the company:
Employee's seniority | Amount of compensation |
|---|---|
10 years minimum and under 15 years | 1/2 months salary |
15 years minimum and under 20 years | 1 month salary |
20 years minimum and under 30 years | 1 and a half months salary |
At least 30 years | 2 months salary |
The salary used to calculate your allowance is, depending on what is most advantageous to you:
- Let's say the 12the of your gross remuneration for the last 12 months before your retirement
- That's one-third of your gross earnings over the last three months. In this case, any premium or other element of annual or exceptional salary paid during these 3 months shall be recalculated over 3 months. For example, if you received an annual bonus of €550, it shall be taken into account up to €137.50 (550 / 12 x 3).
A company or establishment agreement or agreement or convention or a collective agreement may provide for more favorable amounts.
If you worked full-time and part-time in the same company, the allowance is calculated in proportion to the length of time you worked full-time and part-time.
Example :
You have worked in your company for 11 years, including 9 years full-time and 2 years part-time.
The most advantageous gross salary to calculate your severance is €1,200 part-time, either €2,400 full-time.
Your severance pay will be calculated on the basis of the following salary: (2 400 x 9 / 11) + (1 200 x 2 / 11) = 2 181.82 and will therefore be equal to €1,090.91 (2,181.82 / 2).
Voluntary Retirement Allowance is submitted contributions (from Social Security, to CSG: titleContent and CRDS: titleContent) unless you decide to retire as part of a employment protection plan (ESP).
It is taxable on income.
In addition to your voluntary retirement allowance, you can receive the following amounts (if you meet the conditions to receive it):
- Compensatory leave with pay
- Compensation for notice
- Financial compensation provided for in the event of non-compete clause
Retirement on a voluntary basis
If your employer decides to hire you to retire automatically, you are entitled to a retirement allowance.
Please note
You are also entitled to a notice of the same duration as the notice in the event of dismissal.
The amount of your retirement allowance may not be less than the following statutory amount, depending on your seniority in the company:
- ¼ months of salary per year of seniority for the first 10 years
- ∙ months of salary per year of seniority from 11e year
The salary used to calculate the allowance, called reference salary, is, depending on what is most advantageous to you:
- This is the monthly average of your salaries for the last 12 months before the day the letter of retirement is sent
- That's one-third of your salaries in the last three months. In this case, any premium or other element of annual or exceptional salary paid during these 3 months shall be recalculated over 3 months. For example, if you received an annual bonus of €550, it shall be taken into account up to €137.50 (550 / 12 x 3).
A collective agreement may provide for more favorable amounts.
Your seniority is calculated until the effective termination date of your employment contract, i.e until the end of the notice periodeven if it is not accomplished.
If your seniority includes an incomplete year, the allowance is calculated in proportion to the number of complete months.
Example :
For a seniority of 12 years and 9 months and a reference salary of €2,200, the minimum allowance shall be: [(2 200 x 1/4) x 10] + [(2 200 x 1/3) x 2 ] + [(2 200 x 1/3) x (9/12)] = €7,516.67.
If you worked full-time and part-time in the same company, the allowance is calculated in proportion to the length of time you worked full-time and part-time.
Example :
You worked 5 years in your company including 3 years full time, then 2 years part time.
Your reference salary is €1,500 part-time, either €3,000 full-time.
The amount of your allowance is calculated as follows: (3000 x 1/4 x 3) + (1500 x 1/4 x 2) = €3,000.
Social contributions
Depending on the amount, your retirement allowance is submitted contributions (from Social Security, to CSG: titleContent and CRDS: titleContent):
- If it is less than €463,680, it shall be exempt from social security contributions on the part of its amount which is less than €92,736
- If it is greater than €463,680, it shall be subject in full to social security contributions
- The share of your compensation less than €92,736 is exempt from CSG and CRDS
- The portion of your allowance that is greater than €92,736 is fully subject to CSG and CRDS (without allowance of 1.75%)
Income taxation
Your retirement allowance is partly exempt from income tax.
The portion of your tax-exempt allowance is based on what is most advantageous to you one of the following 3 amounts:
- Minimum legal amount or amount provided for in the collective agreement or agreement
- Or twice the amount of gross annual remuneration you received in the year before your retirement, up to €219,960
- Or 50% of the amount of your compensation up to €219,960 for allowances received in 2020
In addition to your retirement allowance, you can receive the following amounts (if you meet the conditions to receive it):
- Compensatory leave with pay
- Compensation for notice
- Financial compensation provided for in the event of non-compete clause
Who can help me?
Find who can answer your questions in your region
For further information
Telephone administrative information - Allo Public Service
The informants who answer you belong to the ministry responsible for labor.
Cost: free service
Attention: the service does not respond questions relating to unemployment compensation and representations to Pôle emploi, civil servants or public service contractors, the amount or payment of social, wage or employer contributions.
The service is available at the following times:
- Monday: 8.30am to 5.30pm
- Tuesday: 8:30 to 12:15
- Wednesday: 8:30 to 12:15
- Thursday: 8.30am to 5.30pm
- Friday: 1 p.m. to 4:15 p.m
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- Mardi : de 08h30 à 12h15
- Mercredi : de 08h30 à 12h15
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- Vendredi : de 13h00 à 16h15
Articles L1237-6 and L1237-7: Retirement by the employer
Retirement at the initiative of the employee
Retirement allowance (retirement at the initiative of the employee)
Urssaf Caisse nationale (formerly Acoss)
Urssaf Caisse nationale (formerly Acoss)
Ministry of Finance