French Labour Law

How to Calculate Paid Leave in Payroll in 2026: A Complete Guide

DAIRIA Law · 2026-07-14 · 12 min

How to Calculate Paid Leave in Payroll in 2026: A Complete Guide

Introduction: Paid Leave, a Crucial Calculation in Payroll

The calculation of paid leave is one of the most recurrent and technical operations in payroll management. Between the dixième rule (tenth rule) and the salary maintenance, the mandatory comparison between the two methods, the specifics for temporary workers and companies in the construction sector (BTP), and the significant reform of the law of April 22, 2024 on the acquisition of leave during illness, payroll managers must master a dense regulatory framework.

The BOSS (Bulletin Officiel de la Sécurité Sociale) provides essential clarifications on the impact of paid leave in calculating general reductions and on sector-specific specifics (BTP, temporary work). This complete guide assists you in mastering all aspects of calculating paid leave in 2025.

The Acquisition of Paid Leave

The Principle: 2.5 Days of Paid Leave per Month of Effective Work

Every employee acquires 2.5 days of paid leave for each month of effective work with the same employer, equating to 30 working days (5 weeks) for a full year of work. The reference period for acquisition runs from June 1 of year N-1 to May 31 of year N (unless a collective agreement specifies a different period, such as the calendar year).

When the number of days acquired is not a whole number, it is rounded up to the nearest whole number. For instance, an employee who has worked for 7 months will acquire: 7 x 2.5 = 17.5 days, rounded to 18 working days.

Counting in Working Days

Many companies count leave in working days (Monday to Friday, thus 5 days a week) rather than working days (Monday to Saturday, thus 6 days a week). In this case, the annual entitlement is 25 working days instead of 30 working days.

Switching to working days must never be disadvantageous to the employee compared to counting in working days. A verification must be performed, especially for employees whose rest days do not fall on Saturday.

Periods Considered as Effective Work

Certain periods of absence are deemed equivalent to effective work for the acquisition of paid leave:

  • Paid leave itself
  • Maternity, paternity, and adoption leave
  • Absences due to workplace accidents and occupational diseases (within one year)
  • Training leave
  • RTT (reduced working time) days
  • Ordinary sick leave (since the law of April 22, 2024)

The Revolution of the Law of April 22, 2024: Acquisition of Leave During Illness

The law n° 2024-364 of April 22, 2024 significantly altered the rules for acquiring paid leave during sick leave, transposing the jurisprudence of the Court of Justice of the European Union (CJEU).

The New Principle

Since this law, employees on non-work-related sick leave acquire paid leave at the rate of 2 days for each month of absence (instead of 2.5 days for effective work), capped at 24 working days per year (instead of 30). This acquisition applies retroactively from December 1, 2009.

Practical Impact for Payroll Managers

This reform involves several concrete changes:

  • Payroll software must be configured to generate the acquisition of paid leave during ordinary sick leave.
  • There is a right to carry over for unused leave due to illness: the employee has 15 months after returning to take this leave.
  • The employer must inform the employee of their leave rights within one month after returning.
  • Retroactive adjustments (since December 2009) are capped at 2 working days per month of sick leave.

In practice, this reform increases the cost of absenteeism for employers and requires rigorous monitoring of leave accounts in payroll software.

The Calculation of Paid Leave Indemnity: Tenth Rule vs. Salary Maintenance

The indemnity for paid leave is the amount paid to the employee during their leave. It is calculated using two methods, and the employer must apply the most favorable one to the employee.

The Salary Maintenance Rule

The employee receives the salary they would have earned had they worked. In practice, the payslip is prepared as if the employee were working normally: same base salary, same recurring bonuses, same benefits.

This method is straightforward to implement for employees with stable remuneration (monthly salaries without variation). It is generally more favorable for employees with high fixed salaries.

The Tenth Rule (1/10)

The indemnity equals 1/10 of the total gross salary received during the reference period. All remuneration components are taken into account:

  • Base salary
  • Overtime
  • Work-related bonuses (seniority bonuses, performance bonuses, etc.)
  • Benefits in kind
  • Paid leave indemnity from the previous period

Excluded are: annual bonuses (13th month, holiday bonus) paid independently of leave taken, expense reimbursements, and exceptional bonuses not related to work.

The daily indemnity for a day of leave is calculated as follows:

Daily Indemnity = (Annual Gross Salary / 10) / Number of Paid Leave Days Acquired

Numerical Comparison Example

An employee takes 12 working days of leave (2 weeks). Their monthly salary is €2,800. During the reference period, they received a total gross salary of €35,600 (including bonuses and overtime). They have acquired 30 days of paid leave.

Salary Maintenance Method:

  • The employee receives their usual salary of €2,800 for the entire month.
  • Indemnity for 12 days = 2,800 x (12/26 working days) = €1,292.31.

Tenth Method:

  • 1/10 of annual salary: 35,600 / 10 = €3,560.
  • Indemnity for 12 days: 3,560 x (12/30) = €1,424.

Comparison: €1,424 (tenth) > €1,292.31 (maintenance). The employer must apply the tenth rule, which is more favorable to the employee in this case.

This comparison is mandatory for each instance of leave taken. Payroll software performs this calculation automatically, but it is advisable to check the parameters, particularly the remuneration elements included in the base for the tenth rule.

The Principle of Paid Leave Funds

In certain sectors, particularly the BTP (building and public works), the management of paid leave is pooled through paid leave funds. The employer pays contributions to the fund, which then directly disburses paid leave indemnities to the employees.

The BOSS specifies the applicable rules regarding payments by the funds:

  • 100% Payment (code 100): the fund pays the entire indemnity directly to the employee.
  • 90% Payment (code 90): the fund pays 90% of the indemnity, with the remaining 10% retained to cover social charges.

Impact on Social Contributions

The indemnities paid by paid leave funds are subject to social contributions. The employer must report the amounts paid by the fund in the DSN and include them in the contribution assessment. Payroll configuration must be rigorous to avoid double counting.

Temporary Workers: 10% Indemnity Increase

The BOSS reminds that temporary employees benefit from a compensatory paid leave indemnity (ICCP) equal to 10% of the total gross salary received during the assignment. This indemnity is paid at the end of each assignment (or monthly in the case of long-term assignments).

Moreover, for the calculation of general contributions reductions, the BOSS provides for a 1.1 increase to the reference SMIC (minimum wage) for temporary employees. This increase takes into account the 10% ICCP included in the remuneration.

Example: For a temporary worker in 2026, the monthly reference SMIC for calculating reductions is:

1,867.02 x 1.1 = €2,053.72 (SMIC as of June 1, 2026).

This increase ensures that the temporary worker is not penalized in the calculation of the general reduction due to the ICCP.

The Impact of Paid Leave on General Reductions

The BOSS specifies the modalities of integrating paid leave into the formulas for calculating employer’s general contribution reductions (unique phased general reduction since January 1, 2026, art. L.241-13 CSS).

The General Case

Paid leave indemnities are an integral part of the gross remuneration included in the numerator of the calculation formula for the reduction coefficient. The SMIC in the denominator is calculated based on paid hours, including the hours corresponding to paid leave.

When leave is managed by a fund (BTP), the BOSS provides specific formulas that integrate the contribution rates of paid leave in the calculation. The employer does not directly pay the paid leave indemnity, but the fund contribution affects the calculation of the reduction.

The calculation formula for the T coefficient (maximum reduction rate) incorporates the contributions for paid leave paid to the fund, which modifies the threshold of degression of the reduction.

Counting Paid Leave Taken

Counting in Working Days

The counting of working days (from Monday to Saturday, thus 6 days a week) is the legal counting method. The first day of leave counted is the first working day the employee was supposed to work. The last counted day is the last working day before returning, including Saturday.

Example: An employee working from Monday to Friday takes a week of leave from Monday to Friday. In working days, the count is 6 days (Monday, Tuesday, Wednesday, Thursday, Friday, Saturday).

Counting in Working Days

In working days (days typically worked, usually from Monday to Friday), the same week of leave corresponds to 5 working days.

Switching from one counting method to another must not disadvantage the employee. The verification is made on the total annual rights: 30 working days = 25 working days = 5 weeks of leave.

Compensatory Paid Leave Indemnity (ICCP) Upon Departure

Upon termination of the employment contract (for any reason: resignation, dismissal, mutual termination, end of a fixed-term contract), the employee receives a compensatory indemnity for the leave acquired and not taken.

The calculation of the ICCP follows the same rules as the paid leave indemnity: comparison between the tenth rule and salary maintenance, applying the most favorable method.

Example: An employee leaves the company with a balance of 15 working days of unused leave. Their gross remuneration during the reference period is €34,000.

  • Tenth Method: 34,000 / 10 = 3,400 €.
  • ICCP for 15 days: 3,400 x (15/30) = 1,700 €.

This indemnity is subject to social contributions and withholding tax under common law.

The law of April 22, 2024 also introduced important rules regarding the interaction between paid leave and illness:

  • An employee who falls ill during their leave can now carry over leave days not taken due to illness, provided they justify an absence.
  • The carryover right is limited to 15 months after the end of the leave period.
  • The employer must inform the employee of their carryover rights within one month after their return.

These new provisions enhance employee protection and impose a more precise management of leave accounts on HR services.

Summary Table of Key Rules in 2026

  • Acquisition: 2.5 working days/month (effective work) or 2 working days/month (non-work-related illness)
  • Annual Rights: 30 working days (25 working days) = 5 weeks
  • Paid Leave Indemnity: max(salary maintenance, 1/10 of annual gross salary)
  • Temporary Workers: 10% ICCP + SMIC increase x 1.1 for reductions
  • Paid Leave Funds (BTP): 100% or 90% payment according to fund code
  • Illness: acquisition of 2 working days/month since the law of April 22, 2024
  • Carryover: 15 months after return for leave acquired during illness

FAQ: Your Questions About Paid Leave in Payroll in 2026

Is the employer always required to compare the tenth rule and salary maintenance?

Yes, the comparison between the two methods is a legal obligation for each leave taken. The employer must calculate the indemnity using both methods and apply the most favorable one to the employee. This comparison can be performed comprehensively on all leaves taken during the period or at each leave instance. In practice, payroll software automatically performs this comparison, but it is essential to verify that the base for the tenth method includes all required remuneration elements.

Does an employee on sick leave acquire as much leave as an employee at work?

No, since the law of April 22, 2024, an employee on non-work-related sick leave acquires 2 working days per month (instead of 2.5 for effective work), capped at 24 working days per year. However, an employee on leave for a workplace accident or occupational illness continues to acquire 2.5 working days per month, as if they were at work, for a period limited to one year of absence.

How does the 1.1 increase for temporary workers work in calculating reductions?

The 1.1 increase in the reference SMIC for temporary workers aims to neutralize the effect of the 10% ICCP in the calculation of general reductions. Without this increase, the ICCP would artificially increase the temporary worker’s gross salary compared to the SMIC, thus reducing the amount of the reduction. With the increase, the reference SMIC goes from €1,867.02 to €2,053.72 as of June 1, 2026, maintaining balance in the calculation.

What are the consequences of failing to respect the right to carry over leave after illness?

If the employer does not respect the 15-month carryover right established by the law of April 22, 2024, they risk judicial condemnation for damages. The employee could claim compensation corresponding to the lost leave, calculated according to the most favorable method (tenth or maintenance). Additionally, the employer has an obligation to inform the employee of their rights within one month after returning. The failure to inform could be considered a fault implicating the employer’s liability.

Is the compensatory paid leave indemnity subject to social contributions?

Yes, the ICCP is fully subject to social contributions and withholding tax under common law. It is included in the assessment base for all contributions (social security, unemployment, supplementary retirement, CSG/CRDS). It also contributes to the calculation of the net social amount (MNS) and the taxable net amount. It must appear on the final settlement and the employee’s last payslip.

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