How to Apply the General Reduction of Employer Contributions (Formerly Fillon) and Its 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 mechanism codified in Articles L.241-13 and D.241-7 of the French Social Security Code. This provision allows employers to benefit from a decreasing reduction of their employer contributions on salaries not exceeding 1.6 times the minimum wage (SMIC). As of the decree of 31 December 2025, the parameters for 2026 are in effect, significantly modifying the calculation, particularly with the non-capped old-age contribution rate set at 2.11% from 1 January 2026.

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

Which Employer Contributions are Eligible Under the General Reduction Scope T?

Scope T refers to all the employer contributions considered for calculating the reduction coefficient. In 2026, this scope includes:

Health-Maternity-Disability-Death (MMID): standard rate of 13.00% (before applying a 6-point reduction for salaries below 2.5 SMIC);
Capped Old-Age Contribution: 8.55%;
Non-Capped Old-Age Contribution: 2.11% since 1 January 2026 (up from 1.90% previously), as per the decree of 31 December 2025;
Family Benefits: standard rate of 5.25% (before applying a 1.80-point reduction for salaries below 3.5 SMIC);
Work Accidents/Occupational Diseases (AT/MP): flat rate of 0.49 points, not the actual company rate. This point is fundamental and a source of frequent errors;
FNAL (National Fund for Housing Assistance): 0.10% (for companies with fewer than 50 employees) or 0.50% (for companies with 50 employees or more);
Unemployment Insurance: standard rate of 4.05%.

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

The legislator opted for a flat rate for calculating the general reduction to prevent high-risk companies (and thus 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 expressly provided for in Article D.241-7 of the French Social Security Code. For more on AT/MP topics, consult our ATMP guide.

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

Since the implementation of the bonus-malus system on employers’ contributions to unemployment insurance (affected sectors: accommodation-restoration, agri-food, transport, etc.), the interaction with the general reduction has been a key question. The answer is clear: the bonus-malus is neutralised for calculating coefficient T. In other words, the standard unemployment insurance rate of 4.05% is used in the scope T, rather than the adjusted rate (which can vary from 3.00% to 5.05% based 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 surplus (or reduction) in unemployment contributions related to the bonus-malus is added (or subtracted) from the actual unemployment contributions but does not affect the calculation of the general reduction.

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

Several employer contributions are expressly excluded from Scope T:

CSG and CRDS: these contributions are not considered 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 staff size) is not included in the reduction scope;
Apprenticeship Tax: excluded from Scope T;
Mobility Payment (formerly Transport Payment): excluded, although it represents a significant burden for companies located within the jurisdiction of a mobility organising authority;
Contribution to Social Dialogue: excluded.

This exclusion means that these employer expenses remain fully payable, without the possibility of reduction through the general reduction. Employers must ensure these are not included in the calculation of coefficient C, to avoid unduly increasing the value of the reduction.

How to Calculate the Coefficient C of the General Reduction 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 total of eligible employer contribution rates. In 2026, for a company with 50 or more employees and a FNAL of 0.50%:

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

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

Step 2: Calculate Coefficient C

The formula for coefficient C is:

C = (T ÷ 0.6) × \[(1.6 × Annual SMIC ÷ Annual Gross Salary) − 1\]

Coefficient C must be calculated to four decimal places, applying rounding to the nearest ten-thousandth. The coefficient C cannot exceed the maximum value Cmax = T. If the calculation produces a coefficient above T, T will be taken.

Step 3: Calculate the Amount R of the Reduction

The amount of the reduction is:

R = C × Annual Gross Salary

Amount R is rounded to the nearest cent. Practically, the calculation is performed monthly with either a gradual or annual adjustment (progressive regularisation method recommended by URSSAF).

Step 4: Allocate the Reduction Between URSSAF and Agirc-Arrco

The unique amount R must be allocated between 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 company:

Companies with FNAL at 0.10% (fewer than 50 employees)

Share URSSAF = R × (33.80 ÷ 39.81) ≈ R × 84.90%
Share Agirc-Arrco = R − Share URSSAF ≈ R × 15.10%

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

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

Rounding is performed to the nearest cent. The difference between the two formulas is minimal, but must be adhered to avoid rejection by collecting agencies.

What Are the Non-Cumulative and Cumulative Rules of the General Reduction with Other Schemes?

The principle of non-cumulation on the same risk prohibits combining the general reduction with another relief applicable to a contribution already included in Scope T. When such combination is possible, the employer must opt for the most 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.

Conversely, accumulation is permitted with measures concerning contributions or charges located outside Scope T. Thus, the general reduction can be accumulated with:

The flat employer deduction on overtime (for companies with fewer than 20 employees, then from 20 to 249 employees);
Exemptions from contributions for professional training;
Specific exemptions for Overseas Territories (LODEOM), under the conditions provided by 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: 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 attachment is made to the month of work (and not the month of payment). In the case of progressive regularisation, adjustments are declared month by month with the corresponding regularisation CTPs. Employers must ensure that the amounts declared match precisely with the calculations performed, including the regulatory rounding.

What is the Complete Operational Order of the General Reduction Calculation?

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

(i) Calculate Coefficient C: to 4 decimal places, ensuring that C ≤ Cmax (= T);
(ii) Calculate Amount R: C × gross remuneration, rounded to the nearest cent;
(iii) Allocate According to the Key: distribution between URSSAF and Agirc-Arrco shares based on the applicable ratios;
(iv) Round Off: each share is rounded to the nearest cent. The sum of the two shares must equal amount R (with adjustment of the residual share if necessary to avoid rounding discrepancies).

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

What Are Common Errors in Applying the General Reduction?

URSSAF audits regularly reveal the following errors:

1. Using the actual AT/MP rate instead of the flat rate of 0.49 points. This is the most costly error: it artificially increases or decreases coefficient T and thus the amount of the reduction. A URSSAF adjustment can result in consequences in either direction.

2. Considering the unemployment bonus-malus rate instead of the standard rate. The bonus-malus must be neutralised within Scope T. Only the rate of 4.05% is considered.

3. Decimal errors in calculating coefficient C. The coefficient must contain exactly four decimal places. Rounding to 2 decimal places significantly distorts the calculation for salaries close to SMIC.

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

5. Prohibited accumulation with an exemption covering the same risk. Employers must systematically verify the absence of double advantages on a single risk covered by Scope T.

FAQ — Frequently Asked Questions About the General Reduction of Contributions

Does the General Reduction Apply to Apprentices?

No. Since 1 January 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 scheme at least as favourable.

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

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

What Happens if the Calculated Coefficient C is Negative?

A negative coefficient C means the employee’s salary exceeds 1.6 SMIC. In this case, the reduction is nil (C = 0). The employee does not qualify for the general reduction for the specified period. In cases of progressive regularisation, it is possible for one month to yield a positive C and another a negative C, with regularisation occurring through offsetting.

Is the General Reduction Cumulable with the CICE?

The CICE was abolished on 1 January 2019 and transformed into a permanent reduction in employer contributions (6-point reduction in the health rate for salaries below 2.5 SMIC). This reduction is now included in Scope T of the general reduction. Thus, the question of accumulation no longer arises.

How to Regularise at Year-End if the Progressive Method Has Not Been Applied?

If the employer has applied monthly calculation methods without progressive regularisation, an annual adjustment must be performed in December (or during the last payslip of the financial year). The annual amount of the reduction is recalculated based on the total annual salary, and the difference with the sum of monthly reductions is allocated (either plus or minus) on the last payslip. This regularisation 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 payslips and secure your calculations before any potential URSSAF audit.