Apprenticeship: New 50% Exemption Threshold of SMIC Starting March 2025

Introduction: A Major Reform of the Apprenticeship Social Regime

The social regime governing apprenticeship has undergone a significant transformation with the introduction of a new exemption threshold for payroll contributions set at 50% of the French minimum wage (SMIC), effective on March 1, 2025. This measure, provided by the Social Security Financing Law for 2025 (LFSS 2025) and detailed by application decree, profoundly alters the calculation of the cost of apprenticeship for companies and directly affects the payslips of apprentices.

For payroll managers, human resources professionals, and financial experts, this reform necessitates an immediate update of payroll settings and a thorough understanding of the new applicable rules. This article analyzes in detail the changes made, their practical implications for payslips, and cautionary points to ensure the secure processing of apprentice remuneration.

1. Reminder of the Previous Regime: 79% Exemption of the SMIC

1.1 The Historical Principle of Salary Exemption

Prior to March 1, 2025, apprentices benefitted from a total exemption from payroll contributions, including the General Social Contribution (CSG) and the Contribution for the Repayment of the Social Debt (CRDS), on the portion of their remuneration not exceeding 79% of the gross monthly SMIC. This threshold, established by Article L. 6243-2 of the French Labour Code in its previous wording, aimed to ensure that apprentices’ net remuneration was as close as possible to their gross remuneration.

Specifically, with a gross monthly SMIC of €1,801.80 as of January 1, 2025 (based on a 35-hour workweek), the exemption threshold was set at €1,801.80 × 79% = €1,423.42. Since nearly all apprentices received remuneration below this threshold, the exemption covered the entirety of their earnings in most cases.

1.2 A Particularly Favorable Regime

This 79% exemption regime had the advantage of simplicity: for most apprentices, gross remuneration equaled net remuneration (excluding any mandatory supplementary health insurance if applicable). Only the older apprentices (aged 26 and above, earning 100% of the SMIC or the minimum contractual wage) or those in their third year of apprenticeship might have seen their remuneration exceed the threshold and subject to payroll contributions on the excess.

2. The New Regime: Lowering the Threshold to 50% of the SMIC

2.1 Effective Date of March 1, 2025

The LFSS 2025 modified Article L. 6243-2 of the Labour Code to lower the exemption threshold for payroll contributions from 79% to 50% of the gross monthly SMIC. The application decree, published in the Official Journal, set the effective date for March 1, 2025.

The new threshold is thus established at €1,801.80 × 50% = €900.90 (based on the SMIC as of January 1, 2025). This threshold is applied monthly and must be prorated in the case of part-time work, absence, or incomplete months.

2.2 Significance of the Reduction

The reduction of the threshold directly expands the base subject to CSG and CRDS for apprentices. Beyond 50% of the SMIC, an apprentice’s remuneration is now subject to the following deductions:

• CSG at the rate of 9.20% (of which 6.80% is deductible and 2.40% non-deductible);
• CRDS at the rate of 0.50% (non-deductible).

The total deductions amount to 9.70% on the portion of remuneration exceeding 50% of the SMIC. The base for calculating CSG/CRDS is determined from 98.25% of the remuneration (applying a 1.75% professional expenses deduction), within the annual social security ceiling limits.

2.3 Other Payroll Contributions Beyond CSG/CRDS

It is important to clarify that the exemption from payroll contributions (health insurance, retirement, unemployment) remains applicable up to 50% of the SMIC. Beyond this threshold, standard payroll contributions theoretically become payable. However, in practice, it is primarily the CSG and CRDS that have the most significant impact on apprentices, while other payroll contributions tend to remain limited in most remuneration configurations.

3. Impact on the Apprentice Remuneration Grid

3.1 Reminder of the Legal Remuneration Grid

The minimum remuneration for apprentices is set as a percentage of the SMIC (or the highest applicable minimum contractual wage) depending on the apprentice’s age and the year of contract execution. The applicable grid for 2025 is as follows:

Apprentices Aged 16-17:

• 1st year: 27% of SMIC (€486.49)
• 2nd year: 39% of SMIC (€702.70)
• 3rd year: 55% of SMIC (€990.99)

Apprentices Aged 18-20:

• 1st year: 43% of SMIC (€774.77)
• 2nd year: 51% of SMIC (€918.92)
• 3rd year: 67% of SMIC (€1,207.21)

Apprentices Aged 21-25:

• 1st year: 53% of SMIC (€954.95)
• 2nd year: 61% of SMIC (€1,099.10)
• 3rd year: 78% of SMIC (€1,405.40)

Apprentices Aged 26 and Older:

• All years: 100% of SMIC (€1,801.80)

3.2 Identification of Affected Apprentices

With the new threshold set at 50% of the SMIC (€900.90), apprentices whose remuneration exceeds this amount are now subject to CSG/CRDS on the excess portion. The directly impacted include:

• Apprentices aged 16-17 in their 3rd year (55% of SMIC = €990.99);
• Apprentices aged 18-20 from their 2nd year (51% of SMIC = €918.92);
• Apprentices aged 21-25 from their 1st year (53% of SMIC = €954.95);
• Apprentices aged 26 and older (100% of SMIC = €1,801.80).

In contrast, apprentices aged 16-17 in their 1st year (27% = €486.49) and 2nd year (39% = €702.70), as well as apprentices aged 18-20 in their 1st year (43% = €774.77), remain fully exempt as their remuneration is below 50% of the SMIC.

4. Concrete Impact on the Payslip

4.1 Numerical Example: 21-Year-Old Apprentice in 2nd Year

Consider the example of a 21-year-old apprentice in their 2nd year, earning 61% of the SMIC, which amounts to €1,099.10 gross monthly.

Before March 1, 2025 (threshold at 79% of SMIC = €1,423.42):

• Gross remuneration: €1,099.10
• Remuneration below the 79% threshold → total exemption
• Net to pay: €1,099.10

Since March 1, 2025 (threshold at 50% of SMIC = €900.90):

• Gross remuneration: €1,099.10
• Exempt portion: €900.90
• Portion subject to CSG/CRDS: €1,099.10 – €900.90 = €198.20
• CSG/CRDS base (after 1.75% deduction): €198.20 × 98.25% = €194.73
• CSG: €194.73 × 9.20% = €17.92
• CRDS: €194.73 × 0.50% = €0.97
• Total deduction: €18.89
• Net to pay: €1,080.21

The net loss for the apprentice amounts to €18.89 per month, or approximately €227 per year.

4.2 Numerical Example: Apprentice Aged 26 and Older

For an apprentice aged 26 and older, earning 100% of the SMIC, which amounts to €1,801.80 gross monthly, the impact is significantly greater:

• Taxable portion: €1,801.80 – €900.90 = €900.90
• CSG/CRDS base: €900.90 × 98.25% = €885.13
• CSG + CRDS: €885.13 × 9.70% = €85.86
• Monthly net loss: €85.86, or approximately €1,030 per year.

This impact is far from negligible for older apprentices and constitutes a major point of attention for HR services in informing prospective apprenticeship candidates.

5. Employer Contributions: The General Reduction Applicable

5.1 Common Law Calculation

From the employer’s perspective, the employer contributions on apprentices’ remuneration are subject to the common law regime. The general reduction of employer contributions (known as the “Fillon reduction”) applies under the same terms as for other employees. The reduction coefficient is calculated based on the ratio of annual gross remuneration to the annual SMIC, following the usual formula.

5.2 Impact on the Overall Cost of Apprenticeship

The general reduction significantly lowers the employer’s cost of apprenticeship, particularly for apprentices whose remuneration is close to the SMIC. The calculation of the reduction coefficient takes into account the actual remuneration of the apprentice (and not a reconstructed remuneration), which results in a high coefficient for lower-paid apprentices.

For companies with fewer than 50 employees, the maximum coefficient of the general reduction reaches 0.3194 (value for 2025), providing substantial relief from employer contributions. For companies with 50 or more employees, the maximum coefficient is 0.3234 (including the increased FNAL contribution).

6. Apprenticeship Hiring Aid in 2025

6.1 Maintenance of the €6,000 Aid

The apprenticeship hiring aid, set at €6,000 for the first year of contract execution, is maintained in 2025. This aid is disbursed monthly (€500 per month for 12 months) and applies to all apprenticeship contracts concluded between January 1 and December 31, 2025, regardless of company size or the preparation level of the diploma.

6.2 Eligibility Conditions

To qualify for the aid, the employer must:

• Conclude an apprenticeship contract between January 1 and December 31, 2025;
• Submit the contract to the designated skills operator (OPCO) within the regulatory deadlines;
• Provide the monthly DSN that enables the automatic payment of the aid by the ASP (Payment and Services Agency).

The aid is cumulative with the social contribution exemptions applicable to apprentices. It helps cover a significant portion of the apprentice’s salary cost in the first year, making apprenticeship financially attractive despite the reform of the exemption threshold.

7. Specific Case of the Public Sector

7.1 Maintained Specific Exemption

Employers in the non-industrial public sector continue to benefit from a specific exemption regime for apprentices, distinct from the common law regime. This regime, outlined in Article L. 6227-8-1 of the Labour Code, provides for a total exemption from employer contributions (excluding additional retirement contributions for public servants) and is maintained unchanged by the LFSS 2025.

7.2 Coordination with the New Threshold

The lowering of the salary exemption threshold to 50% of the SMIC also applies to apprentices in the public sector. However, the specific employer exemption regime remains unchanged, ensuring a continued advantage for public employers compared to common law.

8. Impacts on DSN

8.1 Reporting of Payroll Contributions

The implementation of the new threshold requires an adaptation of DSN settings. Payroll software vendors must update calculation rules to distinguish the exempt portion (up to 50% of the SMIC) from the liable portion (beyond 50% of the SMIC). The specific personnel type codes (CTP) for apprentices must be accurately filled out to avoid any reporting discrepancies.

8.2 Cautionary Points

Payroll managers must be particularly vigilant regarding the following points:

• The proration of the threshold in the case of incomplete months (hiring or departure during the month);
• The proration of the threshold in the case of part-time work;
• The management of the transitional period (before and after March 1, 2025, within the same month of March);
• The proper allocation of CTPs on the contributions blocks in the DSN;
• The verification of the applied CSG/CRDS rates (9.20% + 0.50% on the base after deduction).

9. Impact Analysis: A Paradigm Shift for the Attractiveness of Apprenticeship?

9.1 A Net Additional Cost for the Apprentice

The lowering of the exemption threshold represents a decrease in purchasing power for apprentices whose remuneration exceeds 50% of the SMIC. While the impact is moderate for younger and less experienced apprentices, it can be significant for apprentices aged 26 and older, for whom the net loss exceeds €1,000 per year.

9.2 A Political Signal to Monitor

This measure fits within a context of seeking revenue for financing social security. It reflects a desire to streamline social exemptions by targeting them more towards the most vulnerable groups. Employer organizations and trade unions have expressed concerns about the potential impact on the uptake of apprenticeships, especially for older adults undergoing professional retraining.

9.3 Maintaining the €6,000 Aid as a Counterbalance

Maintaining the €6,000 hiring aid in 2025 serves as an important counterbalancing factor for employers. This aid, combined with the general reduction in employer contributions, helps to keep the net cost of apprenticeship generally attractive, despite the rise in gross costs related to the new payroll contributions regime.

FAQ – Frequently Asked Questions about the New Apprenticeship Exemption Threshold

Does the new 50% threshold apply to ongoing contracts or only to new contracts?

The new 50% SMIC threshold applies to all ongoing apprenticeship contracts as of March 1, 2025, not just contracts concluded after this date. This is a straightforward modification of the social regime applicable by right, regardless of the date the contract was concluded. Payroll managers should therefore update the processing of all apprentices’ payslips starting with the March 2025 payroll.

How to manage payroll for March 2025, transitioning between the old and new regime?

For March 2025, two methods are possible: either a prorated approach (applying the old threshold from February 1-28, and the new threshold starting March 1), or applying the new threshold for the entire month of March. The BOSS and ministerial instructions recommend applying the new threshold for the entire month of March 2025 for simplification purposes. Employers should refer to their payroll software provider’s guidelines.

Is the specific exemption from employer contributions for apprentices changed?

No, the reform only affects the threshold for salary contribution exemptions. The regime of employer contributions remains unchanged: the general employer contribution reduction (Fillon reduction) still applies under the same terms as before. Employers continue to benefit from significant reductions in employer charges for apprentice remuneration.

What impact does the mandatory health insurance have on apprentices?

The employee’s contribution to the mandatory supplementary health insurance is not altered by the reform of the exemption threshold. The employee’s share of the health insurance contribution remains due under the same conditions as before. However, apprentices whose employee contribution exceeds 10% of their gross remuneration may request an exemption from affiliation. This provision remains unchanged and may be particularly relevant for younger apprentices with lower remuneration.

Is the €6,000 hiring aid affected by this reform?

No, the €6,000 apprenticeship hiring aid is completely independent of the salary contribution regime. It is maintained in 2025 for all apprenticeship contracts, without condition regarding company size or the level of the diploma. The aid remains disbursed monthly by the ASP, based on data transmitted in the DSN by the employer.