⚠️ Archive — March 2025 reform. This article describes the law as it stood then. Since 1 January 2026 the SMIC is €12.02/hour (€12.31 from 1 June) and the RGDU (art. L.241-13 of the French Social Security Code) has replaced the réduction Fillon and the sickness and family rate reductions.

General Reduction in Employer Contributions (ex-Fillon): How to Apply It and Allocate It Between URSSAF and Agirc-Arrco

What is the general reduction in employer contributions and what is its legal framework in 2026?

The general reduction in employer social security contributions (réduction générale de cotisations patronales), formerly known as the “réduction Fillon”, is a standard mechanism codified in Articles L.241-13 and D.241-7 of the French Social Security Code. It allows employers to benefit from a degressive reduction in their employer contributions on remuneration not exceeding 1.6 times the French minimum wage (SMIC). Since the decree of 31 December 2025, the 2026 parameters have been in force and significantly change the calculation, notably with the increase of the uncapped old-age contribution rate to 2.11% as of 1 January 2026.

The uniform degressive general reduction (réduction générale dégressive uniforme, RGDU) is a major employment-policy tool: it represents several tens of billions of euros in annual relief for French companies. Technical mastery of it is essential for any payroll manager. For a comprehensive overview of payroll mechanisms, see our complete payroll guide.

Which employer contributions fall within the “T perimeter” of the general reduction?

The T perimeter refers to all employer contributions and levies taken into account when calculating the reduction coefficient. In 2026, this perimeter includes:

Sickness-maternity-invalidity-death (MMID): standard rate of 13.00% (before applying the 6-point reduction for remuneration below 2.5 SMIC);
Capped old-age contribution: 8.55%;
Uncapped old-age contribution: 2.11% as of 1 January 2026 (up from 1.90% previously), in accordance with the decree of 31 December 2025;
Family allowances: standard rate of 5.25% (before applying the 1.80-point reduction for remuneration below 3.5 SMIC);
Work accidents / occupational illnesses (AT/MP): a flat rate of 0.49 points, and not the company’s actual rate. This point is fundamental and a frequent source of error;
FNAL (national housing assistance fund): 0.10% (companies with fewer than 50 employees) or 0.50% (companies with 50 or more employees);
Unemployment insurance: standard rate of 4.05%.

Why is the AT/MP rate a flat 0.49 points rather than the actual rate?

The legislator opted for a flat rate in calculating the general reduction to prevent companies with high claims experience (and therefore high AT/MP rates) from benefiting from a disproportionate reduction. The flat rate of 0.49 points is set by regulation and does not vary according to the sector of activity or the company’s individual rate. This rule is expressly provided for by Article D.241-7 of the French Social Security Code. To explore the AT/MP topic further, see our AT/MP guide.

How is the unemployment insurance bonus-malus neutralised in calculating the general reduction?

Since the introduction of the bonus-malus system on the employer’s unemployment insurance contribution (affected sectors: hospitality-catering, agri-food, transport, etc.), the question of its interaction with the general reduction has arisen. The answer is clear: the bonus-malus is neutralised for the purpose of calculating the T coefficient. In other words, the standard unemployment insurance rate (4.05%) is used within the T perimeter, and not the modulated rate (which may range from 3.00% to 5.05% depending on the company’s separation performance).

This neutralisation ensures equal treatment among companies for the purpose of calculating the general reduction, regardless of their separation rate. The surplus (or the reduction) in unemployment contribution linked to the bonus-malus is added to (or subtracted from) the actual unemployment contribution, but without affecting the calculation of the general reduction.

Which contributions are excluded from the scope of the general reduction?

Several employer contributions and levies are expressly excluded from the T perimeter:

CSG and CRDS: these levies are not employer contributions in the strict sense and are therefore excluded from the calculation;
Vocational training contribution: this levy (0.55% or 1% depending on headcount) does not fall within the scope of the reduction;
Apprenticeship tax: excluded from the T perimeter;
Mobility levy (versement mobilité, formerly transport levy): excluded, even though it represents a significant charge for companies located within the area of a mobility organising authority;
Social dialogue contribution: excluded.

This exclusion means that these employer charges remain fully payable, with no possibility of reducing them via the general reduction. The employer must ensure they are not included in the calculation of the C coefficient, failing which the reduction amount would be unduly inflated.

How to calculate the general reduction’s C coefficient step by step?

The calculation of the C coefficient follows a precise regulatory formula, detailed in Article D.241-7 of the French Social Security Code. Here is the four-step methodology:

Step 1: Determine the value of T

T corresponds to the sum of the eligible employer contribution rates. In 2026, for a company with 50 or more employees and an FNAL rate of 0.50%:

T = 7.00% (reduced MMID) + 8.55% (capped old-age) + 2.11% (uncapped old-age) + 3.45% (reduced family allowances) + 0.49% (AT/MP flat rate) + 0.50% (FNAL) + 4.05% (unemployment) + eligible supplementary pension

The total T rate, including eligible Agirc-Arrco contributions, is approximately 0.4021 (i.e. 40.21%) for an FNAL rate of 0.50%, and approximately 0.3981 (i.e. 39.81%) for an FNAL rate of 0.10%.

Step 2: Calculate the C coefficient

The coefficient formula is:

C = (T ÷ 0.6) × [(1.6 × annual SMIC ÷ annual gross remuneration) − 1]

The C coefficient must be calculated to four decimal places, applying the rule of rounding to the nearest ten-thousandth. The C coefficient may under no circumstances exceed the maximum value Cmax = T. If the calculation yields a coefficient greater than T, T is used.

Step 3: Calculate the reduction amount R

The reduction amount is:

R = C × annual gross remuneration

The amount R is rounded to the nearest euro cent. In practice, the calculation is carried out month by month with progressive or annual adjustment (the progressive adjustment method recommended by URSSAF).

Step 4: Split the reduction between URSSAF and Agirc-Arrco

The single amount R must be split between URSSAF and Agirc-Arrco according to an allocation key set by regulation. This split is detailed in the following section.

How to split the reduction R between URSSAF and Agirc-Arrco under the 2026 allocation key?

The reduction R calculated above is a single amount that must be allocated to two sets of contributions: those paid to URSSAF and those paid to Agirc-Arrco. The allocation key depends on the FNAL rate applicable to the company:

Companies with an FNAL rate of 0.10% (fewer than 50 employees)

URSSAF share = R × (33.80 ÷ 39.81) ≈ R × 84.90%

Agirc-Arrco share = R − URSSAF share ≈ R × 15.10%

Companies with an FNAL rate of 0.50% (50 or more employees)

URSSAF share = R × (34.20 ÷ 40.21) ≈ R × 85.05%

Agirc-Arrco share = R − URSSAF share ≈ R × 14.95%

Rounding is done to the nearest cent. The difference between the two formulas is minimal, but it must be respected, failing which the collecting bodies may reject the declaration.

What are the non-cumulation and cumulation rules for the general reduction with other schemes?

The principle of non-cumulation on the same risk prohibits combining the general reduction with another relief measure covering a contribution already included in the T perimeter. Where such cumulation is possible, the employer must opt for the more favourable scheme. For example, an employer cannot combine the general reduction with a ZFU-TE exemption covering the same contributions: they must choose one or the other.

By contrast, cumulation is permitted with measures covering contributions or levies located outside the T perimeter. Thus, the general reduction may be combined with:

The flat-rate employer deduction on overtime (companies with fewer than 20 employees, then those with 20 to 249 employees);
Vocational training contribution exemptions;
Specific overseas territories (LODEOM) exemptions, under the conditions provided for by the legislation.

How to declare the general reduction in the DSN?

Declaring the general reduction in the DSN (the French unified nominative social declaration) follows specific codes:

CTP 668: general reduction — URSSAF share (negative amount as a deduction);
CTP 669: adjustment of the general reduction — URSSAF share;
CTP 671: general reduction — Agirc-Arrco share;
CTP 801: adjustment of the general reduction — Agirc-Arrco share.

Allocation is made to the month of work (and not the month of payment). In the case of progressive adjustment, the adjustments are declared month by month using the corresponding adjustment CTPs. The employer must ensure that the declared amounts exactly match the calculations made, with the regulatory rounding.

What is the complete operational order for calculating the general reduction?

To avoid any error, here is the order that must be strictly followed:

(i) Calculation of the C coefficient: to 4 decimal places, verifying that C ≤ Cmax (= T);
(ii) Calculation of the amount R: C × gross remuneration, rounded to the nearest euro cent;
(iii) Split according to the key: allocation between URSSAF share and Agirc-Arrco share according to the applicable ratios;
(iv) Rounding: each share is rounded to the nearest cent. The sum of the two shares must equal the amount R (with adjustment of the residual share if necessary to avoid rounding discrepancies).

This order is mandatory. Any inversion (for example, splitting before rounding R) can create significant cumulative discrepancies over a full financial year, potentially triggering DSN anomalies.

What are the common errors in applying the general reduction?

URSSAF audits regularly reveal the following errors:

1. Using the actual AT/MP rate instead of the 0.49-point flat rate. This is the most costly error: it artificially inflates or reduces the T coefficient and therefore the reduction amount. A URSSAF reassessment may result in either direction.

2. Using the unemployment bonus-malus rate instead of the standard rate. The bonus-malus must be neutralised within the T perimeter. Only the 4.05% rate is used.

3. Decimal error in calculating the C coefficient. The coefficient must have exactly 4 decimal places. Rounding to 2 decimal places significantly distorts the calculation for remuneration close to the SMIC.

4. Failure to update parameters as of 1 January 2026. The increase in the uncapped old-age rate from 1.90% to 2.11% changes the value of T. Payroll software must be updated accordingly.

5. Prohibited cumulation with an exemption covering the same risk. The employer must systematically verify the absence of a double benefit on the same risk covered by the T perimeter.

FAQ — Frequently asked questions on the general reduction in contributions

Does the general reduction apply to apprentices?

No. Since 1 January 2019, apprenticeship contracts have benefited from a specific exemption (Article L.6243-2 of the French Labour Code) which replaces the general reduction. Apprentices are therefore not eligible for the réduction Fillon, but benefit from their own regime that is at least as favourable.

How to treat part-time employees in the reduction calculation?

For part-time employees, the SMIC used in the C coefficient formula is prorated according to the contractual working time relative to the statutory working time. For example, an employee working 80% will have the reference annual SMIC multiplied by 0.80. This proration is automatic in most payroll software.

What happens if the calculated C coefficient is negative?

A negative C coefficient means the employee’s remuneration exceeds 1.6 SMIC. In this case, the reduction is nil (C = 0). The employee does not give rise to entitlement to the general reduction for the period concerned. In the case of progressive adjustment, one month may yield a positive C and another a negative C, with the adjustment being made by offsetting.

Can the general reduction be combined with the CICE?

The CICE was abolished as of 1 January 2019 and converted into a permanent reduction in employer contributions (a 6-point reduction in the sickness rate for remuneration below 2.5 SMIC). This reduction is now integrated into the T perimeter of the general reduction. The question of cumulation therefore no longer arises.

How to make year-end adjustments if the progressive method was not applied?

If the employer applied the monthly calculation method without progressive adjustment, an annual adjustment must be made in December (or on the last payslip of the financial year). The annual reduction amount is recalculated on the basis of total annual remuneration, and the difference from the sum of the monthly reductions is allocated (up or down) to the last payslip. This adjustment is declared in the DSN using CTP 669 and 801.

For any questions on applying the general reduction in your company, contact our firm. We can audit your payslips and secure your calculations ahead of any URSSAF audit.