⚠️ 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 of Employer Contributions (formerly “Fillon”): 2026 Calculation and URSSAF / Agirc-Arrco Allocation
What is the general reduction of employer contributions and what is its legal framework in 2026?
The general reduction of employer social security contributions (réduction générale de cotisations patronales), formerly known as the “réduction Fillon”, is a general-law mechanism codified in Articles L.241-13 and D.241-7 of the French Social Security Code. This mechanism allows employers to benefit from a degressive reduction of their employer contributions on remuneration not exceeding 1.6 times the SMIC (the French statutory minimum wage). Since the decree of 31 December 2025, the 2026 parameters are in force and significantly alter the calculation, in particular with the increase of the uncapped old-age insurance 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 are eligible under the “T scope” of the general reduction?
The “T scope” (périmètre T) refers to all employer contributions and levies taken into account when calculating the reduction coefficient. In 2026, this scope includes:
- Sickness-maternity-invalidity-death (MMID): general-law rate of 13.00% (before applying the 6-point reduction for remuneration below 2.5 SMIC);
- Capped old-age insurance: 8.55%;
- Uncapped old-age insurance: 2.11% as of 1 January 2026 (up from 1.90% previously), pursuant to the decree of 31 December 2025;
- Family allowances: general-law rate of 5.25% (before applying the 1.80-point reduction for remuneration below 3.5 SMIC);
- Occupational accidents / occupational illnesses (AT/MP): a flat rate of 0.49 point, and not the company’s actual rate. This point is fundamental and a frequent source of errors;
- FNAL (National Housing Assistance Fund): 0.10% (companies with fewer than 50 employees) or 0.50% (companies with 50 or more employees);
- Unemployment insurance: general-law rate, i.e. 4.05%.
Why is the AT/MP rate used a flat 0.49 point rather than the actual rate?
The legislator chose a flat rate for calculating the general reduction so that companies with high claims experience (and therefore a high AT/MP rate) would not benefit from a disproportionate reduction. The 0.49-point flat rate is fixed by regulation and does not vary according to the sector of activity or the company’s individual rate. This rule is expressly provided for in 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 the general reduction calculation?
Since the introduction of the bonus-malus mechanism on the employer unemployment-insurance contribution (sectors concerned: hospitality-catering, food processing, 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, it is the general-law unemployment-insurance rate (4.05%) that is used within the T scope, and not the modulated rate (which may vary from 3.00% to 5.05% depending on the company’s separation performance).
This neutralisation ensures equal treatment among companies for the calculation of the general reduction, regardless of their separation rate. The additional (or reduced) unemployment contribution resulting from 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 scope:
- CSG and CRDS (general social contributions): these levies are not employer contributions in the strict sense and are therefore excluded from the calculation;
- Vocational training contribution: this contribution (0.55% or 1% depending on headcount) is not included within the reduction scope;
- Apprenticeship tax: excluded from the T scope;
- Mobility levy (versement mobilité, formerly versement transport): 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 through the general reduction. The employer must be careful not to include them in the calculation of the C coefficient, on pain of unduly increasing the amount of the reduction.
How to calculate the C coefficient of the general reduction step by step?
Calculating the C coefficient follows a precise regulatory formula, detailed in Article D.241-7 of the French Social Security Code. Here is the methodology in four steps:
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 the eligible Agirc-Arrco contributions, comes to 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 in no case exceed the maximum value Cmax = T. If the calculation gives a coefficient greater than T, T is used.
Step 3: Calculate the amount R of the reduction
The amount of the reduction 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 a progressive or annual regularisation (the progressive-regularisation method recommended by URSSAF).
Step 4: Allocate the reduction between URSSAF and Agirc-Arrco
The single amount R must be allocated between URSSAF and Agirc-Arrco according to an allocation key fixed by regulation. This allocation is detailed in the following section.
How to allocate the reduction R between URSSAF and Agirc-Arrco using the 2026 allocation key?
The reduction R calculated above is a single amount that must be applied 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 observed on pain of rejection by the collecting bodies.
What are the non-combination and combination rules of the general reduction with other schemes?
The non-combination on the same risk principle prohibits combining the general reduction with another relief measure applying to a contribution already included in the T scope. Where such a combination is possible, the employer must opt for the more favourable scheme. For example, an employer cannot combine the general reduction with a ZFU-TE (urban tax-free zone) exemption applying to the same contributions: they must choose one or the other.
Conversely, combinations are permitted with measures applying to contributions or levies located outside the T scope. Thus, the general reduction may be combined with:
- The flat-rate employer deduction on overtime hours (companies with fewer than 20 employees, then those with 20 to 249 employees);
- Exemptions from vocational training contributions;
- Specific overseas exemptions (LODEOM), under the conditions provided for in the applicable texts.
How to declare the general reduction in the DSN?
Declaring the general reduction in the DSN (Nominative Social Declaration) uses specific codes:
- CTP 668: general reduction — URSSAF share (negative amount as a deduction);
- CTP 669: regularisation of the general reduction — URSSAF share;
- CTP 671: general reduction — Agirc-Arrco share;
- CTP 801: regularisation of the general reduction — Agirc-Arrco share.
The reduction is attached to the month of work (and not the month of payment). In the event of progressive regularisation, adjustments are declared month by month with the corresponding regularisation CTPs. The employer must ensure that the declared amounts correspond exactly to the calculations performed, 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) Calculate the C coefficient: to 4 decimal places, verifying that C ≤ Cmax (= T);
- (ii) Calculate the amount R: C × gross remuneration, rounded to the nearest euro cent;
- (iii) Allocate using the key: split between the URSSAF share and the 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 an adjustment of the residual share if necessary to avoid rounding discrepancies).
This order is mandatory. Any inversion (for example, allocating before rounding R) may create significant cumulative discrepancies over a full financial year, liable to trigger 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 increases or decreases the T coefficient and therefore the amount of the reduction. A URSSAF reassessment may result in either direction.
2. Taking the unemployment bonus-malus rate into account instead of the general-law rate. The bonus-malus must be neutralised within the T scope. Only the 4.05% rate is used.
3. Decimal-place error in calculating the C coefficient. The coefficient must comprise exactly 4 decimal places. Rounding to 2 decimal places significantly distorts the calculation for remuneration close to the SMIC.
4. Failure to update the parameters as of 1 January 2026. The increase of the uncapped old-age rate from 1.90% to 2.11% changes the value of T. Payroll software must be updated accordingly.
5. Prohibited combination with an exemption applying to the same risk. The employer must systematically verify the absence of any double benefit on a single risk covered by the T scope.
FAQ — Frequently asked questions on the general reduction of 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) that replaces the general reduction. Apprentices are therefore not eligible for the “réduction Fillon”, but benefit from their own scheme that is at least as favourable.
How to handle part-time work 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 at 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 that the employee’s remuneration exceeds 1.6 SMIC. In that case, the reduction is nil (C = 0). The employee does not give rise to a right to the general reduction for the period concerned. Under progressive regularisation, one month may yield a positive C and another a negative C, with the regularisation carried out by offsetting.
Can the general reduction be combined with the CICE?
The CICE (Competitiveness and Employment Tax Credit) was abolished on 1 January 2019 and converted into a permanent reduction of employer contributions (a 6-point reduction in the sickness rate for remuneration below 2.5 SMIC). This reduction is now integrated into the T scope of the general reduction. The question of combination therefore no longer arises.
How to regularise at year-end if the progressive method has not been applied?
If the employer has applied the monthly calculation method without progressive regularisation, an annual regularisation must be carried out in December (or on the last payslip of the financial year). The annual amount of the reduction is recalculated on the basis of the total annual remuneration, and the difference against the sum of the monthly reductions is applied (as an increase or decrease) on the last payslip. This regularisation is declared in the DSN using CTP codes 669 and 801.
For any question on applying the general reduction within your company, contact our firm. We can audit your payslips and secure your calculations ahead of any URSSAF audit.