How to Calculate the End-of-Fixed-Term Contract Indemnity for Payroll in 2025: A Complete Guide
Introduction: The End-of-Fixed-Term Contract Indemnity, a Fundamental Right for Precarious Employees
The end-of-contract indemnity, commonly referred to as “prime de précarité” (precarity bonus), is an essential component of the remuneration for employees on fixed-term contracts (CDD). As stipulated in Article L.1243-8 of the French Labour Code, it aims to compensate for the precarious situation in which the employee finds themselves at the end of their contract. In 2025, the rules for calculation, cases of exclusion, and the social regime of this indemnity remain governed by the Bulletin Officiel de la Sécurité Sociale (BOSS, boss.gouv.fr) and the jurisprudence of the Cour de cassation (Supreme Court).
This comprehensive guide is intended for payroll managers, HR directors, and HR managers. It covers the entire subject: calculation of the indemnity (base, rate), cases of exclusion, social and tax regime, renewal and succession of fixed-term contracts, early termination, and the specific case of fixed-term contracts with a defined purpose.
What is the End-of-Fixed-Term Contract Indemnity?
Legal Basis
The end-of-contract indemnity is provided for by Articles L.1243-8 to L.1243-10 of the Labour Code. It is owed to the employee at the end of a fixed-term contract when the contractual relationship is not continued by an indefinite-term contract (CDI). Its purpose is to compensate for the job instability inherent to CDDs.
Mandatory Nature
The payment of this indemnity is mandatory. The employer cannot exempt themselves from it through a clause in the contract or a collective agreement (except in the case of the reduced rate of 6% stipulated by an extended branch agreement). Any contractual clause providing for the employee’s waiver of this indemnity is deemed null and void.
Calculation of the End-of-Fixed-Term Contract Indemnity
Common Rate: 10%
The rate of the end-of-fixed-term contract indemnity is set at 10% of the total gross remuneration received by the employee during the contract duration, 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 receives compensatory measures in terms of professional training (preferential access to training actions, skills assessment, etc.). In the absence of effective compensatory measures, the 10% rate applies by right.
Calculation Base
The calculation base for the end-of-fixed-term contract indemnity includes all gross remuneration received during the contract, including:
- Base salary
- Bonuses (seniority, performance, objectives, prorated 13th month, etc.)
- Benefits in kind (housing, vehicle, meals, etc.)
- Overtime and additional hours
- Indemnity compensating for paid leave
- Various increases (night work, Sunday, public holidays)
Note: The end-of-fixed-term contract indemnity itself is not included in its own calculation base. Likewise, reimbursements of professional expenses are excluded.
Complete Calculation Example
A 6-month fixed-term employee received the following gross remunerations:
- Base salary: €2,200 × 6 = €13,200
- Performance bonus: €500
- Overtime: €1,800
- Vehicle benefit in kind: €200 × 6 = €1,200
- Indemnity compensating for paid leave: €1,670
Total gross remuneration: €13,200 + €500 + €1,800 + €1,200 + €1,670 = €18,370
End-of-fixed-term contract indemnity (10%): €18,370 × 10% = €1,837
End-of-fixed-term contract indemnity (6% if branch agreement applies): €18,370 × 6% = €1,102.20
Cases of Exclusion from the End-of-Fixed-Term Contract Indemnity
Offer of CDI by the Employer
The indemnity is not owed when the employer offers the employee a CDI to occupy the same or a similar position, with remuneration at least equivalent, and the employee refuses this offer. It is essential for the employer to formalize this proposal in writing and retain proof of the employee’s refusal.
Seasonal Fixed-Term Contracts
Seasonal contracts (harvests, tourism, ski resorts, etc.) are excluded from the benefit of the end-of-fixed-term contract indemnity, in accordance with Article L.1243-10 of the Labour Code. However, a convention or collective agreement may provide for the payment of an indemnity in this case.
Temporary Usage Fixed-Term Contracts
Temporary usage CDDs (sectors listed by decree: hospitality, entertainment, audiovisual, education, professional sports, etc.) are excluded from the precarious indemnity if the applicable collective agreement expressly provides for this.
Subsidized Contracts
Fixed-term contracts concluded as part of employment policy (subsidized contracts, skills development pathways, etc.) do not entitle the employee to the end-of-fixed-term contract indemnity.
Student Contracts during School Holidays
Fixed-term contracts concluded with young people during school or university holidays are excluded from the scheme, provided that the contract is executed entirely during the holiday period.
Early Termination by the Employee
When the employee terminates the contract early (resignation), the end-of-fixed-term contract indemnity is not owed. The same applies in cases of serious misconduct by the employee or force majeure.
Refusal of CDI by the Employee
Since the “Labour Market” law of December 2022, if the employee refuses a CDI offered by the employer at the end of the CDD, they lose the right to the precarious indemnity, provided that the CDI offer pertains to the same or a similar job and that the remuneration conditions are at least equivalent.
Social Regime of the End-of-Fixed-Term Contract Indemnity
Subject to Social Contributions
The end-of-fixed-term contract indemnity is subject to the same social regime as salaries. It counts towards the base for all social contributions (BOSS, boss.gouv.fr):
- Social security contributions (health, old age, family allowances, work accidents)
- Unemployment and AGS contributions
- Complementary retirement contributions AGIRC-ARRCO
- 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
The end-of-fixed-term contract indemnity being subject to contributions, it counts towards the capped base. For the calculation of capped contributions (basic old age, FNAL in some cases), it adds to the remuneration of the last month and may result in exceeding the monthly ceiling.
Example of Payroll Treatment
For an end-of-fixed-term contract indemnity of €1,837 paid on the last payslip:
- Contributions base for SS: salary of the month + €1,837
- CSG/CRDS: €1,837 × 98.25% = €1,804.84 × 9.70% = €175.07
- The entire indemnity is subject to income tax and counts towards taxable income
Tax Regime of the End-of-Fixed-Term Contract Indemnity
The end-of-fixed-term contract indemnity is fully subject to income tax. It counts towards the employee’s taxable 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 Fixed-Term Contracts
Renewal of the Fixed-Term Contract
A fixed-term contract can be renewed twice, within the limit of a maximum total duration (18 months in general). The end-of-fixed-term contract 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 Fixed-Term Contracts
In the case of successions of distinct CDDs (with compliance with the cooling-off period), each contract entitles the employee to their own end-of-fixed-term contract indemnity, calculated based on the gross remuneration of the respective contract. If the contracts are reclassified as CDIs by the judge, the end-of-fixed-term contract indemnity is no longer owed, but the employee may claim termination indemnities from the CDI.
Cooling-Off Period between Two CDDs
The cooling-off period between two CDDs on the same position equals one-third of the duration of the previous contract (including renewals) if the contract lasted 14 days or more, or half its length if the contract lasted less than 14 days. Non-compliance with the cooling-off period can lead to reclassification as a CDI.
Early Termination of the Fixed-Term Contract
Termination by the Employer
Except in cases of serious misconduct, force majeure, or incapacity, early termination of a CDD by the employer entitles the employee to damages at least equal to the remuneration due until the end of the contract, plus the end-of-fixed-term contract indemnity calculated on the total remuneration received (including damages).
Termination by the Employee
The employee can only terminate the CDD early in the following cases:
- Hiring into a CDI (proof required)
- Serious misconduct of the employer
- Force majeure
- Incapacity recognized by the occupational physician
In case 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), limited to 2 weeks. The end-of-fixed-term contract indemnity remains due in this case.
Mutual Agreement Termination
The parties can agree to mutually terminate the CDD. In this case, the end-of-fixed-term contract indemnity remains due unless the parties agree otherwise in the termination agreement (which is legally risky).
Fixed-Term Contracts with a Defined Purpose
Specificities
The fixed-term contracts with a defined purpose (or mission CDD), reserved for engineers and executives, have a duration between 18 and 36 months. They end with the completion of the purpose for which they were concluded, after a minimum notice period of 2 months.
Specific Indemnity
At the end of a fixed-term contract with a defined purpose, 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-fixed-term contract indemnity. It is not owed if the contract continues as a CDI.
Treatment in DSN
Declaration of the Indemnity
The end-of-fixed-term contract indemnity is declared in the DSN (Déclaration Sociale Nominative) 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 the End of the Contract
The end of the fixed-term contract gives rise to an event reporting (block S21.G00.62) with the appropriate reason for the end of the contract. The amount of the end-of-fixed-term contract indemnity must appear in the remuneration elements of the last month.
Points of Caution for the Payroll Manager
Systematic Verification of Entitlement to the 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, usage, subsidized, student)
- The existence or not of an offer for a CDI
- The circumstances of the contract’s end (normal term, early termination, reason)
- The applicable conventional provisions (rate of 6% or 10%)
Preservation of Justifications
The employer must keep the justifications for at least 3 years (statute of limitations for wages): employment contract, renewal amendments, letter of CDI offer if applicable, acknowledgment of receipt of the employee’s refusal.
Risks in Case of URSSAF Control
Non-payment of the end-of-fixed-term contract indemnity or its incorrect calculation may result in a URSSAF adjustment covering unpaid contributions, increased by penalties. In addition, the employee may refer the case to the labor court to claim payment of the indemnity, accompanied by damages.
FAQ: End-of-Fixed-Term Contract Indemnity in Payroll
Is the end-of-fixed-term contract indemnity owed if the CDD is converted into a CDI?
No. If the CDD is immediately followed by a CDI, the end-of-fixed-term contract indemnity is not owed. The continuation of the employment relationship as a CDI eliminates the precarious situation the indemnity aims to compensate. Note: there must be continuity in the employment relationship, without interruption.
Can the precarious indemnity be combined with the paid leave compensatory indemnity?
Yes, both indemnities are cumulative. The paid leave compensatory indemnity is even included in the calculation base for the end-of-fixed-term contract indemnity. The employee thus receives both at the time of the final settlement.
What is the statute of limitations for claiming the end-of-fixed-term contract indemnity?
The employee has a period of 3 years from the end of the contract to claim payment of the end-of-fixed-term contract indemnity before the labor court (Article L.3245-1 of the Labour Code, prescription of wage claims).
Does the end-of-fixed-term contract indemnity count towards unemployment benefits?
Yes. The end-of-fixed-term contract indemnity being subject to unemployment contributions, it counts towards the reference salary used for calculating unemployment benefits (ARE). It is taken into account in determining the daily reference salary (SJR).
Does a fixed-term contract terminated for serious misconduct qualify for the precarious indemnity?
No. Early termination of the CDD for serious misconduct by the employee deprives them of the benefit of the end-of-fixed-term contract indemnity, in accordance with Article L.1243-10 of the Labour Code. The employer must, however, prove the reality of the serious misconduct (an act attributable to the employee that makes it impossible to maintain the contract).