How to Calculate the End of Fixed-Term Contract Compensation in Payroll in 2026: A Complete Guide
Introduction: End of Fixed-Term Contract Compensation, a Fundamental Right for Employees
The end of contract compensation, commonly referred to as “prime de précarité” (precarity premium), is an essential component of the remuneration for employees on fixed-term contracts (CDD). Provided for by Article L.1243-8 of the French Labour Code, it aims to compensate for the precarious situation faced by employees upon the conclusion of their contract. In 2026, the rules for calculating this compensation, the cases of exclusion, and its social regime remain governed by the Official Gazette 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 thoroughly covers the topic: calculation of the compensation (base, rate), cases of exclusion, social and tax regime, renewal and succession of CDD, early termination, and the specific case of CDD for a defined purpose.
What is End of Fixed-Term Contract Compensation?
Legal Basis
The end of contract compensation is provided for in Articles L.1243-8 to L.1243-10 of the French Labour Code. It is owed to the employee at the end of a CDD when the contractual relationship does not continue with a permanent contract (CDI). Its objective is to compensate for the job instability inherent to a CDD.
Mandatory Nature
The payment of this compensation is mandatory. The employer cannot exempt themselves from this obligation through a clause in the contract or a collective agreement (except in the case of the reduced rate of 6% provided by an extended branch agreement). Any contractual clause stipulating the employee’s waiver of this compensation is deemed void.
Calculation of End of Fixed-Term Contract Compensation
Common Rate: 10%
The rate of end of CDD compensation is set at 10% of the total gross remuneration received by the employee during the duration of the contract, including renewals. This 10% rate constitutes 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 counter-compensations in terms of professional training (privileged access to training actions, skills assessments, etc.). In the absence of effective counter-compensations, the 10% rate applies as a matter of right.
Calculation Base
The calculation base for end of CDD compensation 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 leave allowance
- Various increases (night work, Sundays, public holidays)
Note: The end of CDD compensation itself is not included in its own calculation base. Likewise, reimbursements for professional expenses are excluded.
Example of Complete Calculation
An employee on a 6-month CDD received the following gross remuneration:
- Base salary: €2,200 × 6 = €13,200
- Performance bonus: €500
- Overtime: €1,800
- Benefit in kind (vehicle): €200 × 6 = €1,200
- Compensatory leave allowance: €1,670
Total gross remuneration: €13,200 + €500 + €1,800 + €1,200 + €1,670 = €18,370
End of CDD compensation (10%): €18,370 × 10% = €1,837
End of CDD compensation (6% if branch agreement): €18,370 × 6% = €1,102.20
Exclusions from End of Fixed-Term Contract Compensation
Offer of CDI by the Employer
Compensation is not owed when the employer offers the employee a CDI to occupy the same job or a similar one, with at least equivalent remuneration, 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 end of CDD compensation, according to Article L.1243-10 of the French Labour Code. However, a convention or collective agreement may provide for the payment of compensation in this case.
Usage CDD
Usage CDD (sectors listed by decree: hospitality, entertainment, audiovisual, education, professional sports, etc.) are excluded from the precariousness premium if the applicable collective agreement explicitly provides for it.
Aided Contracts
CDDs concluded under employment policy (aided contracts, employment skills pathways, etc.) do not grant entitlement to end of CDD compensation.
Students During School Holidays
CDDs concluded with young people during school or university holidays are excluded from the scheme, provided the contract is fully executed during the holiday period.
Early Termination by the Employee
When the employee terminates the contract early (resignation), end of CDD compensation is not owed. This also 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 leads to the loss of the right to the precariousness premium, provided that the CDI offer pertains to the same job or a similar one and that the remuneration conditions are at least equivalent.
Social Regime of End of Fixed-Term Contract Compensation
Subject to Social Contributions
End of CDD compensation is subject to the same social regime as salary. It falls within the base for all social contributions (BOSS, boss.gouv.fr):
- Social security contributions (health, old age, family allowances, work accidents)
- Unemployment and AGS contributions
- AGIRC-ARRCO supplementary retirement contributions
- CSG (9.20%) and CRDS (0.50%) calculated on 98.25% of the amount
- Professional training contribution, apprenticeship tax
Impact on Social Security Ceiling
Since end of CDD compensation is subject to contributions, it falls within the capped base. For the calculation of capped contributions (basic old age, FNAL in certain cases), it adds to the remuneration of the last month and may lead to exceeding the monthly ceiling.
Example of Payroll Treatment
For an end of CDD compensation of €1,837 paid on the last payslip:
- Contribution base for social security: salary for the month + €1,837
- CSG/CRDS: €1,837 × 98.25% = €1,804.84 × 9.70% = €175.07
- The entire compensation is subject to income tax and is included in the taxable net income.
Tax Regime of End of Fixed-Term Contract Compensation
End of CDD compensation is fully subject to income tax. It is included in the employee’s taxable net income and is subject to withholding at source (PAS) at the applicable employee rate. There are no tax exemptions for this compensation.
Renewal and Succession of CDDs
Renewal of CDD
A CDD can be renewed twice, within the limit of the maximum duration (usually 18 months). The end of CDD compensation is calculated on the entire duration of the contract, including renewals. It is only paid at the conclusion of the last renewal.
Succession of Distinct CDDs
In the case of succession of distinct CDDs (with compliance with the waiting period), each contract entitles the employee to its own end of CDD compensation, calculated on the gross remuneration of the relevant contract. If the contracts are reclassified as a CDI by the judge, the end of CDD compensation is no longer payable, but the employee may claim severance compensation for the CDI.
Waiting Period Between Two CDDs
The waiting 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. Non-compliance with the waiting period may result in reclassification as a CDI.
Early Termination of the CDD
Termination by the Employer
Except in cases of gross misconduct, force majeure, or incapacity, the early termination of a CDD by the employer entitles the employee to damages at least equal to the remuneration remaining due until the end of the contract, plus the end of CDD compensation calculated on all remuneration received (including damages).
Termination by the Employee
The employee may only terminate the CDD early in the following cases:
- Hiring into a CDI (proof required)
- Gross misconduct by the employer
- Force majeure
- Incapacity as determined by the occupational physician
In cases of early termination for hiring into a CDI, the employee must respect a notice period calculated at the rate of one day for each week of the duration of the contract (including renewals), up to a maximum of 2 weeks. The end of CDD compensation remains owed in this case.
Termination by Mutual Agreement
Both parties may agree to terminate the CDD mutually. In this case, the end of CDD compensation remains owed unless the parties agree otherwise in the termination agreement (which is legally risky).
CDD for a Defined Purpose
Specificities
The CDD for a defined purpose (or mission CDD), reserved for engineers and executives, has a duration between 18 and 36 months. It concludes with the completion of the purpose for which it was established, following a notice period of at least 2 months.
Specific Compensation
At the end of a CDD for a defined purpose, the employee receives compensation equal to 10% of the total gross remuneration. This compensation has the same nature and social regime as regular end of CDD compensation. It is not owed if the contract continues with a CDI.
Handling in DSN
Declaration of the Compensation
The end of CDD compensation is reported in the DSN in the remuneration block (S21.G00.51) with the remuneration type code “002 – Non-capped gross remuneration.” It must appear in the gross remuneration of the last month of the contract.
Reporting of Contract Conclusion
The end of the CDD gives rise to an event reporting (block S21.G00.62) with the appropriate termination reason. The amount of end of CDD compensation must appear in the remuneration elements of the last month.
Points of Vigilance for the Payroll Manager
Systematic Verification of the Right to Compensation
Before each end of CDD, the payroll manager must verify if the employee is entitled to the precariousness premium by checking:
- The type of CDD (standard, seasonal, usage, aided, student)
- The existence or not of an offer for a CDI
- The circumstances of the end of the contract (normal term, early termination, reason)
- The applicable collective provisions (6% or 10% rate)
Retention of Supporting Documents
The employer must retain supporting documents for at least 3 years (prescription period for salaries): employment contract, renewal amendments, letter of CDI offer if applicable, acknowledgment of receipt of the employee’s refusal.
Risks in Case of URSSAF Control
Failure to pay the end of CDD compensation or incorrect calculation may lead to URSSAF reassessment regarding unpaid contributions, along with penalties. Furthermore, the employee may refer the matter to the labor tribunal to claim payment of the compensation, along with damages.
FAQ: End of Fixed-Term Contract Compensation in Payroll
Is end of CDD compensation owed if the CDD is converted to a CDI?
No. If the CDD is immediately followed by a CDI, end of CDD compensation is not owed. The continuation of the employment relationship in a CDI eliminates the precariousness situation that the compensation aims to compensate. Note: there must be continuity in the employment relationship, without interruption.
Is the precariousness premium cumulative with the compensatory leave allowance?
Yes, both compensations are cumulative. The compensatory leave allowance is even included in the calculation base of end of CDD compensation. The employee therefore receives both at the time of the final settlement.
What is the prescription period for claiming end of CDD compensation?
The employee has a period of 3 years from the end of the contract to claim payment of end of CDD compensation before the labor tribunal (Article L.3245-1 of the Labour Code, prescription for salary claims).
Does end of CDD compensation count towards unemployment rights?
Yes. Since end of CDD compensation is subject to unemployment contributions, it counts towards the reference salary for calculating unemployment benefit (ARE). It is taken into account in determining the daily reference salary (SJR).
Is a CDD terminated for gross misconduct entitled to the precariousness premium?
No. Early termination of a CDD for gross misconduct by the employee deprives them of the benefit of end of CDD compensation, in accordance with Article L.1243-10 of the Labour Code. However, the employer must prove the existence of gross misconduct (an act by the employee making it impossible to maintain the contract).