How to Calculate End of Fixed-Term Contract Indemnity in Payroll for 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 “prime de précarité” (precarity bonus), is an essential component of the compensation for employees on fixed-term contracts (CDD). As provided by Article L.1243-8 of the French Labour Code, it aims to compensate for the precarious situation the employee faces at the end of their contract. In 2025, the rules for calculation, exclusions, and the social regime of this indemnity remain governed by the Official Bulletin of Social Security (BOSS, boss.gouv.fr) and the jurisprudence of the Court of Cassation.
This comprehensive guide is aimed at payroll managers, HR directors, and HR managers. It covers the entirety of the topic: calculation of the indemnity (base, rate), cases of exclusion, social and tax regime, renewal and succession of CDD, early termination, and special cases of the defined-object CDD.
What is the End of Fixed-Term Contract Indemnity?
Legal Basis
The end of contract indemnity is stipulated in Articles L.1243-8 to L.1243-10 of the French Labour Code. It is owed to the employee at the conclusion of a CDD when the contractual relationship does not continue with a permanent contract (CDI). Its purpose is to compensate for the employment instability inherent in a CDD.
Mandatory Nature
The payment of this indemnity is mandatory. The employer cannot exempt themselves from this obligation through a contractual clause or a collective agreement (except in cases where a reduced rate of 6% is provided for by an extended branch agreement). Any contractual clause stipulating that the employee waives this indemnity is deemed void.
Calculation of the End of Fixed-Term Contract Indemnity
Common Rate: 10%
The rate for the end of fixed-term contract indemnity is set at 10% of the total gross remuneration received by the employee during the contract period, including renewals. This 10% rate is the legal minimum.
Reduced Conventional Rate: 6%
An extended branch agreement may provide for a reduced rate of 6%, provided that the employee is offered counterparts in terms of professional training (such as preferential access to training actions, skills assessment, etc.). In the absence of effective counterparts, the 10% rate applies by default.
Calculation Base
The calculation base for the end of fixed-term contract indemnity includes all gross remuneration received during the contract, namely:
- Base salary
- Bonuses (seniority, performance, targets, prorated 13th month, etc.)
- Benefits in kind (housing, vehicle, food, etc.)
- Overtime and additional hours
- Compensatory indemnity for paid leave
- Various bonuses (night work, Sundays, public holidays)
Note: the end of fixed-term contract indemnity itself is not included in its own calculation base. Similarly, reimbursements of professional expenses are excluded.
Example of Complete Calculation
An employee on a 6-month CDD received the following gross remunerations:
- Base salary: €2,200 × 6 = €13,200
- Performance bonus: €500
- Overtime: €1,800
- Benefit in kind (vehicle): €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
Exclusions from the End of Fixed-Term Contract Indemnity
Offer of a CDI by the Employer
The indemnity is not owed when the employer offers the employee a CDI to occupy the same job or a similar one, with at least equivalent pay, and the employee refuses this offer. It is essential for the employer to formalize this offer in writing and retain proof of the employee’s refusal.
Seasonal CDD
Seasonal contracts (harvests, tourism, ski resorts, etc.) are excluded from the benefit of the end of fixed-term contract indemnity, as per Article L.1243-10 of the French Labour Code. However, a convention or collective agreement may provide for the payment of an indemnity in this case.
Occasional CDD
Occasional CDDs (industries listed by decree: hospitality-restoration, performance, audiovisual, education, professional sports, etc.) are excluded from the precarious indemnity if expressly stipulated by the applicable collective agreement.
Aid Contracts
CDD contracts concluded under employment policy (aid contracts, skills employment pathways, etc.) do not entitle the employee to the end of contract indemnity.
Students during School Vacations
CDD contracts with young individuals during school or university vacations are excluded from this mechanism, provided that the contract is executed entirely during the vacation period.
Early Termination by the Employee
When the employee terminates the contract early (resignation), the end of contract indemnity is not owed. The same applies in cases of gross 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 precarious indemnity, provided that the CDI offer pertains to the same job or a similar one, and that the pay conditions are at least equivalent.
Social Regime of 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 base for all social contributions (BOSS, boss.gouv.fr):
- Social security contributions (health, old age, family allowances, workplace accidents)
- Unemployment contributions and AGS
- AGIRC-ARRCO complementary retirement contributions
- 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
As the end of CDD indemnity is subject to contributions, it is included in the ceiling limit. For the calculation of capped contributions (basic old-age, FNAL in some cases), it adds to the remuneration of the last month which may result in exceeding the monthly ceiling.
Example of Payroll Treatment
For an end of CDD indemnity of €1,837 paid on the last payslip:
- Contribution base: monthly salary + €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 income.
Tax Regime of the End of Fixed-Term Contract Indemnity
The end of CDD indemnity is fully subject to income tax. It is included in the employee’s taxable net income and is subject to withholding tax (PAS) at the rate applicable to the employee. There are no tax exemptions for this indemnity.
Renewal and Succession of CDD
Renewal of CDD
A CDD can be renewed twice, within the limit of the total maximum duration (generally 18 months). The end of CDD indemnity is calculated on the total duration of the contract, including renewals. It is only paid at the end of the last renewal.
Succession of Distinct CDDs
In cases of succession of distinct CDDs (with respect to the cooling-off period), each contract entitles the employee to its own end of CDD indemnity, calculated on the gross remuneration of the contract concerned. If the contracts are requalified as a CDI by a judge, the end of CDD indemnity is no longer owed, but the employee may claim severance pay entitlements applicable to a CDI.
Cooling-Off Period Between Two CDDs
The cooling-off period between two CDDs for the same position is equal to 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 comply with the cooling-off period may lead to requalification as a CDI.
Early Termination of the CDD
Termination at the Employer’s Initiative
Except in cases of gross misconduct, force majeure, or incapacity, early termination of a CDD by the employer entitles the employee to damages amounting to at least the remuneration due until the contract’s term, plus the end of CDD indemnity calculated on all remuneration received (including damages).
Termination at the Employee’s Initiative
The employee can only terminate the CDD earlier in the following cases:
- Hiring for a CDI (proof required)
- Employer’s gross misconduct
- Force majeure
- Medical incapacity certified by the occupational physician
In cases of early termination for hiring into a CDI, the employee must respect a notice period calculated at one day per week of contract duration (including renewals), up to a maximum of 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 the parties agree otherwise in the termination agreement (which is legally risky).
Defined-Object CDD
Specificities
The defined-object CDD (or mission CDD), reserved for engineers and executives, has a duration between 18 and 36 months. It ends with the realization of the object for which it was concluded, after a minimum notice period of 2 months.
Specific Indemnity
At the end of a defined-object CDD, the employee receives an indemnity equal to 10% of the total gross remuneration. This indemnity has the same nature and social regime as the classic end of CDD indemnity. It is not owed if the contract continues as a CDI.
Handling in the DSN
Declaration of Indemnity
The end of CDD indemnity is declared in the DSN in the remuneration block (S21.G00.51) with the remuneration type code “002 – Uncapped gross remuneration.” It must appear in the gross remuneration of the last month of the contract.
Notification of Contract Termination
The end of the CDD warrants an event notification (block S21.G00.62) with the appropriate termination reason. The amount of the end of CDD indemnity must appear in the remuneration elements for the last month.
Points of Vigilance for the Payroll Manager
Systematic Verification of the Right to Indemnity
Before each end of a CDD, the payroll manager must verify whether the employee is entitled to the precarious indemnity by checking:
- The type of CDD (classic, seasonal, occasional, aid, student)
- The existence or not of a CDI offer
- The circumstances of the contract termination (normal end, early termination, reason)
- The applicable collective provisions (rate of 6% or 10%)
Retention of Supporting Documents
The employer must retain supporting documents for at least 3 years (statute of limitations for wages): employment contract, renewal amendments, letter of CDI proposal if applicable, acknowledgment of receipt of employee refusal.
Risks in the Event of URSSAF Control
Failure to pay the end of CDD indemnity or incorrect calculation can lead to a URSSAF audit resulting in back payments of unpaid contributions, increased by penalties. Furthermore, the employee may file a claim with the labour court to demand payment of the indemnity, along with damages.
FAQ: End of Fixed-Term Contract Indemnity in Payroll
Is the end of CDD indemnity owed if the CDD is transformed into a 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 eliminates the precarious situation that the indemnity aims to compensate. Note: there must be continuity in the employment relationship, without interruption.
Is the precarious indemnity cumulative with the compensatory paid leave indemnity?
Yes, both indemnities are cumulative. The compensatory paid leave indemnity is even included in the base calculation for the end of CDD indemnity. The employee thus receives both at the time of the final settlement.
What is the statute of limitations for claiming the end of CDD indemnity?
The employee has a period of 3 years from the end of the contract to claim the payment of the end of CDD indemnity before the labour court (Article L.3245-1 of the Labour Code, limitation of salary claims).
Does the end of CDD indemnity count toward unemployment rights?
Yes. The end of CDD indemnity, being subject to unemployment contributions, is included in the reference salary for calculating unemployment benefits (ARE). It is taken into account in determining the daily reference salary (SJR).
Does a CDD terminated for gross misconduct give right to the precarious indemnity?
No. Early termination of the CDD for gross 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. However, the employer must prove the existence of the gross misconduct (an act attributable to the employee that makes it impossible to maintain the contract).