Increase of the Legal Termination Indemnity

Labour Law
Labour Law

The new labor law change things slowly but steadily. One these changes is the increase of the termination indemnity.

Previously

In the previous labor law, the termination indemnity was calculated for terminated employees of at least 1 year of seniority.

The indemnity was worth 1/5 of the average monthly salary.

For employees with at least 10 years of seniority, the indemnity was increased of 2/15 of the average monthly salary per year of seniority over 10 years.

The average monthly salary was the best of the average salary over 12 months or over 3 months.

The termination indemnity is not to be paid in case of a termination for grave misconduct.


Example

An employee of 25 years of seniority was paid an indemnity of:

[25*(1/5)] + [15*(2/15)] = 7 times the average monthly salary.


With the new law

For all termination signed after the 26th of September 2017 the termination indemnity is calculated for terminated employees of at least 8 months of seniority.

The indemnity is worth 1/4 of the average monthly salary for the first 10 years of seniority. And 1/3 of the average monthly salary for the rest of the seniority.

The average monthly salary is the best of the average salary over 12 months or ,if the employee has less than 12 months of seniority, the average monthly salary over all the months previous to the termination, or over 3 months.

The termination indemnity is not to be paid in case of a termination for grave misconduct.


Example

An employee of 25 years of seniority was paid an indemnity of:

[10*(1/4)] + [15*(1/3)] = 7,5 times the average monthly salary.


French Payroll advises

There are 2 things to keep in mind:

  1. The collective bargaining agreement termination indemnity can exceed even the new legal. Have a look at your CBA before calculating your termination indemnity.
  2. Other indemnities such as retirement indemnities and mutual agreement indemnities are linked to the legal termination indemnity. Therefore, their calculation method evolves the same way.

 

French Payroll Expert


Source: https://www.service-public.fr/particuliers/vosdroits/F987