Calculating End of Fixed-Term Contract Indemnity in 2025: A Comprehensive Guide
Introduction: End of Fixed-Term Contract Indemnity, a Fundamental Right of Temporary Employees
The end of contract indemnity, commonly referred to as the “prime de précarité” (precarity bonus), is an essential element of the remuneration of employees on a fixed-term contract (CDD). Established by Article L.1243-8 of the French Labour Code, its purpose is to compensate for the precarious situation of the employee upon the conclusion of their contract. In 2025, the rules for calculation, the cases of exclusion, and the social regime of this indemnity remain regulated by the Official Bulletin of Social Security (BOSS, boss.gouv.fr) and the case law of the Court of Cassation.
This comprehensive guide is intended for payroll managers, HR directors, and HR managers. It covers the entire topic: calculation of the indemnity (basis, rate), cases of exclusion, social and fiscal regime, renewal and succession of CDDs, early termination, and the specific case of CDDs for a defined purpose.
What is the End of Fixed-Term Contract Indemnity?
Legal Foundation
The end of contract indemnity is governed by Articles L.1243-8 to L.1243-10 of the Labour Code. It is owed to the employee upon the conclusion of a CDD when the contractual relationship does not continue with a permanent contract (CDI). Its aim is to offset the employment instability inherent in fixed-term contracts.
Mandatory Nature
The payment of this indemnity is mandatory. The employer cannot exempt themselves from it through a clause in the contract or a collective agreement (except in the case of a reduced rate of 6% provided by an extended branch agreement). Any contractual clause allowing the employee to waive this indemnity is deemed null and void.
Calculating the End of Fixed-Term Contract Indemnity
Common Rate: 10%
The rate of the end of contract indemnity is set at 10% of the total gross remuneration received by the employee during the term of the contract, including renewals. This 10% rate serves as the legal minimum.
Reduced Conventional Rate: 6%
An extended branch agreement may provide for a reduced rate of 6%, provided that it offers the employee counter-benefits in terms of professional training (such as preferential access to training courses, skills assessments, etc.). In the absence of effective counter-benefits, the 10% rate applies as a matter of course.
Calculation Basis
The basis for the end of contract indemnity includes all gross remuneration received during the contract period, namely:
- Base salary
- Bonuses (such as seniority, performance, targets, prorated 13th month, etc.)
- In-kind benefits (such as housing, vehicle, food, etc.)
- Overtime and additional hours
- Compensatory indemnity for paid leave
- Various increases (night work, Sunday, public holidays)
Note: The end of contract indemnity itself is not included in its own calculation basis. Likewise, reimbursements for professional expenses are excluded.
Complete Calculation Example
An employee on a 6-month CDD received the following gross remuneration:
- Base salary: €2,200 × 6 = €13,200
- Performance bonus: €500
- Overtime: €1,800
- In-kind vehicle benefit: €200 × 6 = €1,200
- Compensatory indemnity for paid leave: €1,670
Total gross remuneration: €13,200 + €500 + €1,800 + €1,200 + €1,670 = €18,370
End of CDD indemnity (10%): €18,370 × 10% = €1,837
End of CDD indemnity (6% if branch agreement applies): €18,370 × 6% = €1,102.20
Cases of Exclusion from the End of Fixed-Term Contract Indemnity
Offer of CDI by the Employer
The indemnity is not owed when the employer offers the employee a CDI for the same job or a similar one, with at least equivalent remuneration, and the employee refuses this offer. It is essential for the employer to formalise this offer in writing and retain proof of the employee’s refusal.
Seasonal CDD
Seasonal contracts (for harvesting, tourism, ski resorts, etc.) are excluded from the benefit of the end of the CDD indemnity, in accordance with Article L.1243-10 of the Labour Code. However, a convention or collective agreement may provide for the payment of an indemnity in this case.
Usage CDD
Usage CDDs (sectors listed by decree: hospitality, entertainment, audiovisual, teaching, professional sports, etc.) are excluded from the precarity indemnity if the applicable collective agreement expressly provides for this.
Aided Contracts
CDDs concluded within the framework of employment policy (aided contracts, employment skills pathways, etc.) do not qualify for the end of CDD indemnity.
Students During Holiday Periods
CDDs with young people during school or university holiday periods are excluded from the scheme, provided that the contract is executed in its entirety during the holiday period.
Early Termination by the Employee
When the employee terminates the contract prematurely (resignation), the end of CDD indemnity is not owed. The same applies in cases of serious misconduct by the employee or force majeure.
Refusal of CDI by the Employee
Since the “Labour Market” law of December 2022, an employee’s refusal of a CDI offered by the employer at the end of the CDD results in the loss of the right to the precarity indemnity, provided that the CDI offer pertains to the same job or a similar job and that the remuneration conditions are at least equivalent.
Social Regime for the End of Fixed-Term Contract Indemnity
Subject to Social Contributions
The end of CDD indemnity is subject to the same social regime as salary. It is included in the basis for all social contributions (BOSS, boss.gouv.fr):
- Social security contributions (health insurance, pensions, family allowances, workplace accidents)
- Unemployment contributions and AGS
- Complementary retirement contributions AGIRC-ARRCO
- CSG (9.20%) and CRDS (0.50%) calculated on 98.25% of the amount
- Professional training contribution, apprenticeship tax
Impact on the Social Security Ceiling
Since the end of CDD indemnity is subject to contributions, it is included in the capped basis. For the calculation of capped contributions (basic pension, FNAL in certain cases), it is added to the remuneration of the last month and may lead to exceeding the monthly ceiling.
Example of Payroll Treatment
For an end of CDD indemnity of €1,837 paid on the last pay slip:
- Contribution basis for social security: salary of the month + €1,837
- CSG/CRDS: €1,837 × 98.25% = €1,804.84 × 9.70% = €175.07
- The entire indemnity is subject to income tax and is included in the taxable net amount.
Fiscal Regime for the End of Fixed-Term Contract Indemnity
The end of CDD indemnity is fully subject to income tax. It is part of the employee’s taxable net and is subject to withholding tax (PAS) at the applicable employee rate. There is no tax exemption for this indemnity.
Renewal and Succession of CDDs
Renewal of the CDD
A CDD may be renewed twice, within the limit of the total maximum duration (18 months generally). The end of CDD indemnity is calculated on the entire duration of the contract, including renewals. It is only paid at the conclusion of the last renewal.
Succession of Distinct CDDs
In the case of succession of distinct CDDs (with compliance with the cooling-off period), each contract entitles the employee to their own end of CDD indemnity, calculated on the gross remuneration of the relevant contract. If the contracts are reclassified as a CDI by the judge, the end of CDD indemnity is no longer owed, but the employee may claim termination indemnities from the CDI.
Cooling-Off Period Between Two CDDs
The cooling-off period between two CDDs for the same position equals one-third of the duration of the previous contract (including renewals) if the contract lasted 14 days or more, or half the duration if the contract lasted less than 14 days. Failure to respect the cooling-off period may result in reclassification as a CDI.
Early Termination of the CDD
Termination at the Initiative of the Employer
Except in cases of serious misconduct, force majeure, or unfitness, early termination of a CDD by the employer entitles the employee to damages amounting to at least the remuneration remaining due until the end of the contract, in addition to the end of CDD indemnity calculated on the entire remuneration received (including damages).
Termination at the Employee’s Initiative
The employee can only terminate the CDD early in the following cases:
- Hiring into a CDI (justification required)
- Serious misconduct of the employer
- Force majeure
- Unfitness confirmed by the occupational physician
In the event of early termination for hiring into a CDI, the employee must respect a notice period calculated at one day for each week of contract duration (including renewals), limited to 2 weeks. The end of CDD indemnity remains owed in this case.
Termination by Mutual Agreement
The parties may agree to terminate the CDD by mutual consent. In this case, the end of CDD indemnity remains owed, unless otherwise agreed in the termination agreement (which is, however, legally risky).
CDD for a Defined Purpose
Specificities
The CDD for a defined purpose (or mission CDD), reserved for engineers and executives, lasts between 18 and 36 months. It ends with the achievement of the purpose for which it was concluded, after a minimum notice period of 2 months.
Specific Indemnity
At the conclusion of the CDD for a defined purpose, the employee receives an indemnity equal to 10% of the total gross remuneration. This indemnity has the same nature and social regime as the classical end of CDD indemnity. It is not owed if the contract continues as a CDI.
Treatment in DSN
Declaration of the Indemnity
The end of CDD indemnity is reported in DSN within the remuneration block (S21.G00.51) using the remuneration type code “002 – Uncapped gross remuneration.” It must be included in the gross remuneration for the last month of the contract.
Reporting of Contract Termination
The end of the CDD results in an event reporting (block S21.G00.62) with the appropriate reason for contract termination. The amount of the end of CDD indemnity must appear in the remuneration elements of the last month.
Points of Caution for Payroll Managers
Systematic Verification of Indemnity Entitlement
Before each end of a CDD, the payroll manager must check whether the employee is entitled to the precariousness indemnity by verifying:
- The type of CDD (classic, seasonal, usage, aided, student)
- The existence or lack of an offer for a CDI
- The circumstances for the end of the contract (normal term, early termination, reason)
- Applicable collective agreement provisions (rate of 6% or 10%)
Retention of Documents
The employer must retain documents for at least 3 years (the prescription period for salaries): employment contract, renewal amendments, letter of CDI offer if applicable, acknowledgement of receipt of the employee’s refusal.
Risks in the Event of URSSAF Control
Failure to pay the end of CDD indemnity or incorrect calculation may lead to a URSSAF recovery regarding unpaid contributions, plus penalties. Furthermore, the employee may refer to the industrial tribunal to demand payment of the indemnity, including damages.
FAQ: End of Fixed-Term Contract Indemnity in Payroll
Is the end of CDD indemnity owed in the event of conversion from CDD to CDI?
No. If the CDD is immediately followed by a CDI, the end of CDD indemnity is not owed. The continuation of the employment relationship in CDI removes the precarious situation that the indemnity aims to compensate. Note: there must be continuity in the employment relationship, without interruption.
Is the precarity indemnity cumulative with the compensatory indemnity for paid leave?
Yes, the two indemnities are cumulative. The compensatory indemnity for paid leave is even included in the calculation basis for the end of CDD indemnity. The employee thus receives both at the time of final settlement of accounts.
What is the limitation period for claiming the end of CDD indemnity?
The employee has a period of 3 years from the end of the contract to claim payment of the end of CDD indemnity before the industrial tribunal (Article L.3245-1 of the Labour Code, limitation for salary claims).
Does the end of CDD indemnity count towards unemployment rights?
Yes. As the end of CDD indemnity is subject to unemployment contributions, it counts towards the reference salary used for calculating unemployment benefit (ARE). It is taken into account in determining the daily reference salary (SJR).
Does a CDD terminated for serious misconduct entitle the indeterminate end of precarity indemnity?
No. Early termination of the CDD for serious misconduct by the employee deprives them of the benefit of the end of CDD indemnity, in accordance with Article L.1243-10 of the Labour Code. The employer must, however, prove the reality of serious misconduct (conduct attributable to the employee that makes it impossible to maintain the contract).