How to Apply the General Reduction of Employer Contributions (Ex-Fillon) and URSSAF / Agirc-Arrco Allocations?

What is the General Reduction of Employer Contributions and What is Its Legal Framework in 2026?

The general reduction of employer contributions, formerly known as the “Fillon reduction”, is a common law provision codified in Articles L.241-13 and D.241-7 of the French Social Security Code. This mechanism allows employers to benefit from a decreasing reduction of their employer contributions on wages not exceeding 1.6 times the minimum wage (SMIC). Since the decree of December 31, 2025, the parameters for 2026 are in effect and significantly modify the calculation, notably with the change of the unfurnished old-age contribution rate to 2.11% effective January 1, 2026.

The uniform decreasing general reduction (RGDU) is a major tool in employment policy: it represents several tens of billions of euros in annual relief for French companies. Technical mastery of this mechanism is essential for any payroll manager. For a comprehensive approach to payroll mechanisms, consult our complete payroll guide.

Which Employer Contributions Are Eligible Under the T Scope of the General Reduction?

The T scope refers to all employer contributions considered for the calculation of the reduction coefficient. In 2026, this scope includes:

Sickness-Maternity-Disability-Death (MMID): standard rate of 13.00% (before applying the reduction of 6 points for wages under 2.5 SMIC);
Capped Old-Age Contributions: 8.55%;
Uncapped Old-Age Contributions: 2.11% effective January 1, 2026 (up from 1.90% previously), in accordance with the decree of December 31, 2025;
Family Allocations: standard rate of 5.25% (before applying the reduction of 1.80 points for wages under 3.5 SMIC);
Work Accidents / Occupational Diseases (AT/MP): a flat rate of 0.49 points, and not the actual rate of the company. This point is fundamental and a common source of errors;
FNAL: 0.10% (for companies with fewer than 50 employees) or 0.50% (for companies with 50 employees and more);
Unemployment Insurance: standard rate of 4.05%.

Why is the AT/MP Rate Used a Flat Rate of 0.49 Points and Not the Actual Rate?

The legislator has chosen a flat rate for the calculation of the general reduction to prevent companies with high claim rates (and therefore high AT/MP rates) from receiving a disproportionate reduction. The flat rate of 0.49 points is set by regulation and does not vary based on the sector of activity or the company’s individual rate. This rule is explicitly provided for in Article D.241-7 of the French Social Security Code. To delve deeper into the AT/MP theme, consult our ATMP guide.

How is the Unemployment Insurance Bonus-Malus Neutralized in the Calculation of the General Reduction?

Since the implementation of the bonus-malus system on the employer contribution for unemployment insurance (affected sectors: hospitality-restoration, agri-food, transportation, etc.), the question of its interaction with the general reduction has arisen. The answer is clear: the bonus-malus is neutralized for the calculation of coefficient T. In other words, it is the standard unemployment insurance rate of 4.05% that is considered in the T scope, and not the modulated rate (which can vary from 3.00% to 5.05% depending on the company’s layoff performance).

This neutralization ensures equal treatment among companies for the calculation of the general reduction, regardless of their layoff rates. The surplus (or reduction) of the unemployment contribution related to the bonus-malus is added (or subtracted) from the effective unemployment contributions but does not impact the calculation of the general reduction.

Which Contributions Are Excluded from the Scope of the General Reduction?

Several contributions and employer contributions are expressly excluded from the T scope:

CSG and CRDS: these contributions are not classified as employer contributions in the strict sense and are therefore excluded from the calculation;
Contribution to Professional Training: this contribution (0.55% or 1% depending on headcount) is not included in the reduction scope;
Apprenticeship Tax: excluded from the T scope;
Mobility Payment (formerly transport payment): excluded, even though it represents a significant charge for companies located within the area of a mobility organizing authority;
Contribution to Social Dialogue: excluded.

This exclusion means that these employer charges remain fully due, without the possibility of reducing them through the general reduction. Employers must ensure not to include them in the calculation of coefficient C, under penalty of unduly increasing the amount of the reduction.

How to Calculate the Reduction Coefficient C Step by Step?

The calculation of coefficient C 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 rates of eligible employer contributions. In 2026, for a company with 50 employees or more with an FNAL of 0.50%:

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

The total T rate with the eligible Agirc-Arrco contributions rises to approximately 0.4021 (or 40.21%) for an FNAL of 0.50%, and to approximately 0.3981 (or 39.81%) for an FNAL of 0.10%.

Step 2: Calculate the Coefficient C

The formula for the coefficient is:

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

The coefficient C must be calculated with four decimal places, applying the rounding rule to the nearest ten-thousandth. The coefficient C cannot exceed the maximum value Cmax = T. If the calculation yields a coefficient greater than T, T is retained.

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 cent. In practice, the calculation is performed month by month with a progressive or annual adjustment (the method of progressive adjustment 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 contributions according to a distribution key set by regulation. This allocation is detailed in the following section.

How to Allocate the Reduction R Between URSSAF and Agirc-Arrco According to the 2026 Allocation Key?

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

Companies with FNAL at 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 FNAL at 0.50% (50 employees and more)

URSSAF Share = R × (34.20 ÷ 40.21) ≈ R × 85.05%
Agirc-Arrco Share = R − URSSAF Share ≈ R × 14.95%

The rounding is done to the nearest cent. The difference between the two formulas is minimal, but it must be respected under penalty of rejection by the collection agencies.

What are the Rules for Non-Cumulative and Cumulative Reduction General with Other Provisions?

The principle of non-cumul on the same risk prohibits the cumulative use of the general reduction with another waiver on a contribution already included in the T scope. When such a cumulative is possible, the employer must opt for the most favorable provision. 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.

Conversely, cumulatives are authorized with measures concerning contributions located outside the T scope. Thus, the general reduction can be cumulative with:

The employer’s lump-sum deduction on overtime (companies with fewer than 20 employees, then from 20 to 249 employees);
Exemptions from professional training contributions;
Specific exemptions for overseas territories (LODEOM), under the conditions set out in the texts.

How to Declare the General Reduction in DSN?

The declaration of the general reduction in DSN follows specific codes:

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

The attachment is made to the month of work (and not to the month of payment). In the case of progressive regularization, adjustments are declared month by month with the corresponding regularization CTP. The employer must ensure that the amounts declared correspond exactly to the calculations made, with the regulatory rounding.

What is the Complete Operational Order for Calculating the General Reduction?

To avoid any errors, here is the order to be strictly followed:

(i) Calculation of Coefficient C: with 4 decimal places, ensuring that C ≤ Cmax (= T);
(ii) Calculation of Amount R: C × gross remuneration, rounded to the nearest cent;
(iii) Allocation according to the key: distribution 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 imperative. Any inversion (for example, allocating before rounding R) can create significant cumulative discrepancies over a full year, which may trigger DSN anomalies.

What are the Common Errors in Applying the General Reduction?

URSSAF audits regularly reveal the following errors:

1. Use of the actual AT/MP rate instead of the flat rate of 0.49 points. This is the costliest mistake: it artificially inflates or deflates coefficient T and thus the amount of the reduction. A URSSAF adjustment may result from this in either direction.

2. Consideration of the unemployment bonus-malus rate instead of the standard rate. The bonus-malus must be neutralized within the T scope. Only the rate of 4.05% is retained.

3. Decimal errors in the calculation of coefficient C. The coefficient must have exactly 4 decimal places. Rounding to 2 decimal places significantly skews calculations for wages close to the SMIC.

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

5. Prohibited cumulative with an exemption covering the same risk. The employer must systematically verify the absence of double advantage on a single risk covered by the T scope.

FAQ — Frequently Asked Questions About the General Reduction of Contributions

Does the General Reduction Apply to Apprentices?

No. Since January 1, 2019, apprenticeship contracts benefit from a specific exemption (Article L.6243-2 of the Labour Code) that replaces the general reduction. Apprentices are therefore not eligible for the Fillon reduction but benefit from a system that is at least as favorable.

How to Handle Part-Time Employees in the Calculation of the Reduction?

For part-time employees, the SMIC considered in the formula for coefficient C is prorated based on the contractual working hours relative to the legal duration. For example, a part-time employee working 80% will see the reference annual SMIC multiplied by 0.80. This proration is automatic in most payroll software.

What Happens If the Calculated Coefficient C is Negative?

A negative coefficient C means that the employee’s remuneration exceeds 1.6 times the SMIC. In this case, the reduction is zero (C = 0). The employee does not qualify for the general reduction for the period concerned. In the case of progressive regularization, it is possible that one month generates a positive C and another a negative C, with regularization taking place by compensation.

Is the General Reduction Cumulative with the CICE?

The CICE was abolished on January 1, 2019, and transformed into a permanent reduction of employer contributions (6-point reduction in the health rate for remuneration under 2.5 SMIC). This decrease is now included in the T scope of the general reduction. Therefore, the question of cumulation no longer arises.

How to Regularize at Year-End If the Progressive Method Has Not Been Applied?

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

For any questions regarding the application of the general reduction in your company, contact our firm. We can audit your pay slips and secure your calculations prior to a potential URSSAF audit.