How to Calculate Special Severance Pay for Work-Related Unfitness in France

When an employee is dismissed for work-related unfitness (following a work accident or occupational illness), they are entitled to enhanced compensation under Article L.1226-14 of the French Labour Code. However, calculation errors are common: doubling the wrong indemnity, forgetting to compare with the collective bargaining agreement, confusing the two sums due, and so on. Here is the complete method for calculating correctly.

Table of Severance Indemnities for Unfitness

The amount depends on the origin of the unfitness. Here is an overview before going into detail:

Item	Non-work-related unfitness	Work-related unfitness (work accident / occupational illness)
Severance indemnity	Statutory indemnity (Art. L.1234-9), or the collective bargaining agreement indemnity if more favourable	Special indemnity = double the statutory indemnity (Art. L.1226-14); the collective agreement indemnity is not doubled
Notice period	Not worked; no compensatory notice indemnity, but the notice period is taken into account for calculating the severance indemnity (Art. L.1226-4)	An indemnity equal to the compensatory notice indemnity (Art. L.1226-14, referring to L.1234-5), due even if the notice period is not worked
Legal basis	Art. L.1226-4	Art. L.1226-14

The remainder of this article details the calculation for work-related unfitness — the situation most prone to errors.

What Does Article L.1226-14 of the French Labour Code Provide?

Article L.1226-14 provides that an employee dismissed for work-related unfitness is entitled to two distinct indemnities:

1. A termination indemnity equal in amount to the compensatory notice indemnity (Article L.1234-5).
2. A special severance indemnity equal to double the statutory severance indemnity (Article L.1234-9), unless more favourable provisions of the collective bargaining agreement apply.

Here is the exact text: “Termination of the employment contract in the cases provided for in the second paragraph of Article L.1226-12 entitles the employee to a compensatory indemnity equal in amount to the compensatory notice indemnity provided for in Article L.1234-5, as well as to a special severance indemnity which, unless more favourable provisions of the collective bargaining agreement apply, is equal to double the indemnity provided for in Article L.1234-9.”

It is imperative to clearly distinguish these two sums: they have different legal natures, different calculation bases, and different social security and tax regimes.

How to Calculate the Special Severance Indemnity?

Step 1: Calculate the statutory severance indemnity (L.1234-9)

The statutory severance indemnity is calculated according to the following formula:

• 1/4 of a month’s salary per year of service for the first 10 years.
• 1/3 of a month’s salary per year of service beyond 10 years.

The reference salary is the more favourable of: the average of the last 12 months, or one-third of the last 3 months (including bonuses and gratuities on a pro rata basis).

Step 2: Double the statutory indemnity

Special indemnity = 2 × statutory indemnity.

This is the core of Article L.1226-14. Note: only the statutory indemnity is doubled. The indemnity provided for by the collective bargaining agreement is never doubled, unless the collective agreement expressly provides otherwise (Cass. soc., 25 March 2009, No. 07-41.708, Bull. V No. 83; 18 February 2015, No. 13-20.171; 20 November 2024, No. 23-14.949).

Step 3: Compare with the collective agreement indemnity

You must carry out a mandatory comparison:

• A = 2 × statutory indemnity (special indemnity under L.1226-14).
• B = collective agreement severance indemnity (not doubled, calculated according to your collective bargaining agreement’s scale).

You pay the amount most favourable to the employee: max(A, B).

There is neither accumulation nor addition of the two: it is one or the other (Cass. soc., 10 May 2005, No. 03-44.313, Bull. V No. 153; 23 January 2013, No. 11-25.851).

Practical calculation example

Situation: an employee with 15 years of service and a reference salary of €3,000 gross.

Calculation A — Special indemnity (double the statutory):

• Statutory indemnity = (1/4 × 3,000 × 10) + (1/3 × 3,000 × 5) = 7,500 + 5,000 = €12,500
• Special indemnity = 2 × 12,500 = €25,000 gross

Calculation B — Collective agreement indemnity (example collective agreement):

• Assume the agreement provides for 1/3 of a month per year of service = 1/3 × 3,000 × 15 = €15,000

Comparison: A (€25,000) > B (€15,000) → payment of €25,000 gross (special indemnity).

If the agreement provided for an indemnity of €30,000: B (€30,000) > A (€25,000) → payment of €30,000 (collective agreement indemnity, not doubled).

How to Calculate the Indemnity “Equal in Amount to the Notice Period”?

This is the second sum provided for by L.1226-14. Its amount is equal to that of the compensatory notice indemnity (Article L.1234-5), but its legal nature is different. It is not a notice indemnity — it is a specific termination indemnity.

Calculation rules

• The amount is determined by reference to the statutory notice period, not the contractual notice period even if the latter is longer (Cass. soc., 12 July 1999, No. 97-43.641; 20 November 2024, No. 23-14.949).
• The doubling of the notice period for disabled workers does not apply to this indemnity (Cass. soc., 10 March 2009, No. 08-42.249; 4 September 2019, No. 18-13.779).

Social security and tax regime

• Subject to social security contributions (Cass. soc., 11 January 2017, No. 15-19.959).
• Does not give rise to paid leave entitlement (Cass. soc., 4 December 2001, No. 99-44.677; 30 April 2014, No. 12-28.374; 7 February 2024, No. 22-15.988).
• Excluded from the base for calculating the compensatory paid-leave indemnity (Cass. soc., 12 October 2011, No. 10-18.904).
• Does not postpone the contract end date: the contract ends on the date of notification of the dismissal (Cass. soc., 15 June 1999, No. 97-15.328).
• May be combined with daily social security allowances (IJSS).

Example

A managerial employee (cadre) with a 2-month statutory notice period and a salary of €3,000 gross → indemnity = €6,000 gross.

Which Wording Should Be Used on Payslips?

Terminological rigour is essential to avoid any subsequent dispute:

On the payslip

• For the special indemnity: “Special severance indemnity – Art. L.1226-14 (double the statutory indemnity – Art. L.1234-9)” OR “Collective agreement severance indemnity (not doubled) – more favourable”.
• For the indemnity equivalent to the notice period: “Termination indemnity – Art. L.1226-14 – amount equal to the compensatory notice indemnity (Art. L.1234-5)”.

Absolutely to be avoided: any standalone use of “compensatory notice indemnity” as a label. This terminological confusion may generate ancillary claims (claims for paid leave on the notice period, postponement of the contract end date, etc.).

In the dismissal letter

Explicitly cite Articles L.1226-12 (second paragraph) and L.1226-14 as the legal grounds for the indemnities paid, distinguishing the two sums.

What Are the Most Common Mistakes to Avoid?

1. Doubling the collective agreement indemnity instead of the statutory one — a costly and legally unfounded error.
2. Adding together the special indemnity and the collective agreement indemnity — it is one or the other (whichever is more favourable).
3. Omitting the A vs B comparison — mandatory in all cases.
4. Confusing the “amount equal to the notice period” indemnity with an actual notice indemnity.
5. Calculating in net instead of gross — the special indemnity is expressed in gross terms (Cass. soc., 7 May 2024, No. 22-21.479).
6. Using the contractual notice period for the L.1226-14 indemnity — only the statutory period counts.

What If Length of Service Is Insufficient for the Statutory Indemnity?

If the employee does not have the length of service required for the statutory indemnity, the calculation gives: A = 2 × 0 = 0. You then calculate B (the collective agreement indemnity); if B > 0, you pay B. The special indemnity may therefore be nil if the collective agreement indemnity is also nil — but this is rare, since most collective bargaining agreements provide for lower length-of-service conditions.

Special Case: Fixed-Term Contract (CDD) Terminated for Work-Related Unfitness

For a fixed-term contract (contrat à durée déterminée, or CDD), the termination indemnity may not be lower than double the statutory severance indemnity (Article L.1226-20, paragraph 4), with no one-year length-of-service requirement (pro rata calculation if less than one year). To this is added the precariousness indemnity (10%), which is cumulative — early termination for unfitness not being one of the exclusion cases under Article L.1243-10.

Calculation Checklist — Summary in 6 Steps

1. Fix the dates: unfitness examination, receipt of the medical opinion, notification of dismissal.
2. Qualify the origin as at the termination date: work-related (work accident / occupational illness) or not.
3. Calculate A = 2 × statutory indemnity (L.1234-9).
4. Calculate B = collective agreement indemnity (not doubled).
5. Pay max(A, B) + the L.1226-14 indemnity “equal in amount to the notice period” (statutory duration).
6. Label correctly the payslip and the dismissal letter (article references, exact terminology).

FAQ — Special Indemnity for Work-Related Unfitness

Is the special indemnity subject to income tax?

The special severance indemnity follows the tax regime of severance indemnities: it is exempt within the limits provided for by Article 80 duodecies of the French General Tax Code (the higher of twice the gross annual remuneration or 50% of the indemnity paid, up to a limit of 6 times the annual social security ceiling, or PASS).

Can the special indemnity be combined with damages?

Yes. If the dismissal is held to be without genuine and serious cause (for example, due to failure to redeploy the employee), the employee may obtain damages in addition to the special indemnity. The minimum compensation is 6 months’ salary (Article L.1226-15), without application of the “Macron” scale.

Can the collective agreement indemnity be doubled?

No, unless the collective bargaining agreement expressly provides for it. In the absence of a doubling clause, only the statutory indemnity is doubled. The collective agreement indemnity serves solely as a point of comparison (Cass. soc., 25 March 2009, No. 07-41.708).

Need to check your indemnity calculations? Contact the lawyers at DAIRIA for an audit of your final settlement.

To go further: severance indemnity simulator | complete dismissal guide

The Procedure for Recognising a Work Accident or Occupational Illness

Managing work accidents and occupational illnesses (AT/MP) is a major issue for the employer, both on a human and a financial level. The legal framework is set out in Articles L.411-1 et seq. of the French Social Security Code.

As regards work accidents, Article L.411-1 of the Social Security Code defines a work accident as any accident occurring by reason of, or in connection with, work, whatever its cause. The presumption of attributability benefits the employee: as soon as the accident occurs at the time and place of work, it is presumed to be work-related.

The employer must:

• Declare the accident within 48 hours (Article R.441-3 of the Social Security Code) via the nominative social declaration (DSN) or Cerfa form No. 14463*03
• Provide the employee with the accident form (form S6201), enabling them to benefit from 100% coverage of medical expenses
• Issue substantiated reservations where appropriate, within the work accident declaration (DAT) itself, if the employer doubts the work-related nature of the accident

The French health insurance fund (CPAM) has 30 clear days to rule on recognition of the work-related nature (90 days in the event of additional investigations). See our AT/MP guide to understand your rights and obligations.

The Financial Impact of Work Accidents and Occupational Illnesses on Employer Contributions

The AT/MP contribution rate is directly linked to the company’s accident and illness record. Three pricing methods exist depending on headcount:

• Collective pricing (companies with fewer than 20 employees): rate set by sector of activity
• Mixed pricing (from 20 to 149 employees): a combination of the collective rate and the company’s own rate
• Individual pricing (150 employees and more): rate calculated on the establishment’s own accident record

The average cost of a work accident is categorised according to the duration of the work stoppage and any after-effects. A serious accident resulting in permanent disability can impact the AT/MP rate for 3 consecutive years, representing a considerable additional contribution cost.

The French Court of Cassation held, in a ruling of Cass. 2e civ., 16 November 2023, No. 22-11.789, that the employer may challenge the enforceability of the coverage decision even after the deadline for contesting the contribution rate, provided it invokes a substantial procedural defect.

It is therefore essential to establish active monitoring of your AT/MP rates and to challenge coverage decisions where the conditions of the presumption of attributability are not met. Our firm, through DAIRIA IA, can assist you with automated monitoring of your accident and illness record.

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