How to Calculate the End of Fixed-Term Contract Indemnity in Payroll in 2025: A Complete Guide
Introduction: The End of Fixed-Term Contract Indemnity, a Fundamental Right for Temporary Employees
The end of contract indemnity, commonly referred to as the “prime de précarité” (precariousness premium), is an essential component of the compensation 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 the employee faces at the end of their contract. In 2025, the rules for calculating this indemnity, the cases for exclusion, and the social regime governing it remain framed by the Official Bulletin of Social Security (BOSS, boss.gouv.fr) and the jurisprudence of the Court of Cassation.
This comprehensive guide is intended for payroll managers, HR directors, and HR managers. It covers the entire subject: calculation of the indemnity (basis, rate), cases for exclusion, social and fiscal regimes, renewal and succession of CDDs, early termination, and the specific case of CDDs for a defined purpose.
What is the End of Fixed-Term Contract Indemnity?
Legal Basis
The end of contract indemnity is provided for in Articles L.1243-8 to L.1243-10 of the 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 purpose is to compensate for the employment instability inherent in the CDD.
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 a reduced rate of 6% provided for by an extended branch agreement). Any contractual clause foreseeing the employee’s waiver of this indemnity is considered null and void.
Calculation of the End of Fixed-Term Contract Indemnity
General Rate: 10%
The rate of the end of CDD indemnity is set at 10% of the total gross remuneration received by the employee during the duration of the contract, including renewals. This 10% represents the legal minimum.
Reduced Conventional Rate: 6%
An extended branch agreement may provide for a reduced rate of 6%, provided it offers the employee counter-benefits in terms of professional training (privileged access to training actions, skills assessment, etc.). In the absence of effective counter-benefits, the rate of 10% applies by right.
Calculation Base
The base for calculating the end of CDD indemnity includes all gross remuneration received during the contract period, namely:
- Basic Salary
- Bonuses (seniority, performance, objectives, pro-rated 13th month, etc.)
- Benefits in Kind (housing, vehicle, food, etc.)
- Overtime and Complementary Hours
- Compensatory Indemnity for Paid Leave
- Various Premiums (night work, Sunday, public holidays)
Note: The end of CDD indemnity itself is not included in its own calculation base. Similarly, reimbursements for professional expenses are excluded.
Example of Complete Calculation
An employee on a 6-month CDD received the following gross remunerations:
- Basic 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): 18,370 × 6% = 1,102.20 €
Cases of Exclusion from the End of Fixed-Term Contract Indemnity
Proposal of 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 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 (grape harvests, tourism, ski resorts, etc.) are excluded from the benefit of the end of CDD indemnity, in accordance with Article L.1243-10 of the Labour Code. However, a convention or a collective agreement may provide for the payment of an indemnity in this case.
Usage CDD
Usage CDDs (sectors listed by decree: hospitality-restoration, performing arts, audiovisual, teaching, professional sports, etc.) are excluded from the precariousness indemnity if the applicable collective agreement expressly provides for it.
Aided Contracts
CDD concluded as part of employment policy (aided contracts, employment skills pathways, etc.) do not entitle the employee to the end of CDD indemnity.
Students During School Holidays
CDDs concluded with youths during school or university holidays are excluded from the system, provided the contract is fully executed during the holiday period.
Early Termination by the Employee
When the employee terminates the contract early (resignation), the end of CDD indemnity is not owed. This also 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, an employee’s refusal of a CDI proposed by the employer at the end of the CDD leads to the loss of the right to the precariousness indemnity, provided that the CDI offer pertains to the same job 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 Security Contributions
The end of CDD indemnity is subject to the same social regime as salary. It is included in the basis for calculating all social contributions and levies (BOSS, boss.gouv.fr):
- Social security contributions (sickness, old-age, family allowances, workplace accidents)
- Unemployment contributions and AGS
- 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
Since the end of CDD indemnity is subject to contributions, it is included in the capped basis. For calculating capped contributions (basic old-age, FNAL in certain cases), it is added to the remuneration of the last month and may lead to exceeding the monthly ceiling.
Example of Payroll Treatment
For an end of CDD indemnity of 1,837 € paid on the last payslip:
- Basis for SS contributions: salary for the month + 1,837 €
- CSG/CRDS: 1,837 × 98.25% = 1,804.84 € × 9.70% = 175.07 €
- The entirety of the indemnity is subject to income tax and is included in the taxable net amount.
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 amount and is subject to withholding tax (PAS) at the rate applicable to the employee. There is no tax exemption for this indemnity.
Renewal and Succession of CDD
Renewal of CDD
A CDD may be renewed twice, within the limit of the total maximum duration (generally 18 months). The end of CDD indemnity is calculated on the entirety of the contract’s duration, including renewals. It is only paid at the end of the last renewal.
Succession of Distinct CDDs
In the case of the succession of distinct CDDs (with respect to the notice period), each contract gives rise to its own end of CDD indemnity, calculated on the gross remuneration of the contract concerned. If the contracts are requalified as CDI by the judge, the end of CDD indemnity is no longer owed, but the employee may claim the severance indemnities of the CDI.
Notice Period Between Two CDDs
The notice 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 to half the duration if the contract lasted less than 14 days. Failure to respect the notice period may lead to requalification as a CDI.
Early Termination of the CDD
Termination at the Initiative of the Employer
Except in cases of serious misconduct, force majeure, or incapacity, the early termination of a CDD by the employer entitles the employee to damages amounting to at least the remuneration remaining due until the end of the contract, to which the end of CDD indemnity calculated on the entirety of the remuneration received (including damages) is added.
Termination at the Initiative of the Employee
The employee may only terminate the CDD early in the following cases:
- Hiring under a CDI (proof required)
- Serious misconduct by the employer
- Force majeure
- Inability confirmed by the occupational physician
In the case of early termination for hiring under a CDI, the employee must adhere to a notice period calculated at the rate of one day for each week of the contract’s 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 otherwise agreed in the termination agreement (which is, however, 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 ends with the completion of the purpose for which it was concluded, after a minimum notice period of 2 months.
Specific Indemnity
At the end of the CDD for 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 CDD indemnity and is not owed if the contract continues as a CDI.
Treatment in DSN
Declaration of the Indemnity
The end of CDD indemnity is declared in 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 Completion
The end of the CDD gives rise to an event notification (block S21.G00.62) with the appropriate reason for termination. The amount of the end of CDD indemnity must appear in the remuneration elements of the last month.
Points of Vigilance for the Payroll Manager
Systematic Verification of Right to Indemnity
Before each end of CDD, the payroll manager must verify whether the employee has the right to the precariousness indemnity by checking:
- The type of CDD (classic, seasonal, usage, aided, student)
- The existence or not of a CDI proposal
- The circumstances of the end of the contract (normal term, early termination, reason)
- The applicable collective provisions (rates of 6% or 10%)
Preservation of Justifying Documents
The employer must retain justifying documents for at least 3 years (statute of limitations for wages): employment contract, renewal addendums, CDI proposal letter if applicable, acknowledgment of the employee’s refusal.
Risks in Case of URSSAF Control
The non-payment of the end of CDD indemnity or its incorrect calculation may lead to a URSSAF audit concerning non-paid contributions, increased by penalties. Furthermore, the employee may file a claim with the labor court for the 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 under a CDI eliminates the precarious situation that the indemnity aims to compensate. Note: there must be continuity in the employment relationship without interruption.
Is the precariousness indemnity cumulative with the compensatory indemnity for paid leave?
Yes, the two indemnities are cumulative. The compensatory indemnity for paid leave is even included in the calculation base for the end of CDD indemnity. The employee thus receives both at the time of 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 labor court (Article L.3245-1 of the Labour Code, statute of limitations for wage claims).
Does the end of CDD indemnity count toward unemployment rights?
Yes. Since the end of CDD indemnity is subject to unemployment contributions, it counts toward the reference salary used to calculate the unemployment benefit (ARE). It is included in determining the daily reference salary (SJR).
Does a CDD terminated for serious misconduct entitle the employee to a precariousness indemnity?
No. Early termination of the CDD for the employee’s serious misconduct deprives them of the benefit of the end of CDD 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 rendering it impossible to maintain the contract).