Introduction: Sick Leave and Subrogation, Complex but Essential Mechanisms

Managing sick leave in payroll is one of the most complex tasks for payroll managers. It requires mastering both the calculation of indemnités journalières de sécurité sociale (IJSS) (daily social security benefits), the mechanism of subrogation, employer’s salary maintenance (legal or conventional), and the impacts on social contributions and the social security ceiling.

The BOSS (Bulletin Officiel de la Sécurité Sociale) provides crucial clarifications on these issues, particularly concerning the reduction of the ceiling in case of subrogation and the maintenance of complementary social protection (PSC) during the suspension of the employment contract. This guide will assist you in the comprehensive management of sick leave in payroll for 2025.

The Waiting Period and Calculation of IJSS

The 3-Day Waiting Period

In the case of ordinary sick leave, social security applies a 3-day waiting period during which no IJSS is paid. This period starts from the first day of leave prescribed by the doctor. IJSS are paid starting from the 4th day of absence.

Exceptions to the waiting period:

Sick leave for long-term illness (ALD): the waiting period applies only to the first leave.
Work-related accidents and occupational diseases: no waiting period, IJSS are paid from the day after the leave.
Maternity: no waiting period.

The employer may be required to compensate for this waiting period depending on the provisions of the applicable collective agreement. Many agreements provide for the continuation of salary from the first day of absence, thereby eliminating the effect of the waiting period for the employee.

Calculation of IJSS for Sickness

IJSS for sickness are calculated using the following formula:

IJSS = 50% of the basic daily salary (SJB)

The basic daily salary is calculated based on the last 3 months of gross salary leading up to the leave, capped at 1.8 times the monthly minimum wage (SMIC).

In 2025, with a gross monthly SMIC of €1,801.80 (based on 35 hours), the ceiling is:

1,801.80 x 1.8 = €3,243.24

The SJB is calculated as follows: salary of the last 3 months (capped) / 91.25 days.

Concrete Example:

Employee with a gross monthly salary of €2,800 (below the ceiling of €3,243.24)
SJB = (2,800 x 3) / 91.25 = €92.05
IJSS = €92.05 x 50% = €46.03 per day

For an employee with a salary of €4,000 (above the ceiling):

SJB = (3,243.24 x 3) / 91.25 = €106.63
IJSS = €106.63 x 50% = €53.31 per day (maximum IJSS)

Subrogation: The Employer Receives IJSS Instead of the Employee

Definition and Principle of Subrogation

Subrogation is the mechanism by which the employer substitutes the employee to receive IJSS directly from social security. In return, the employer advances the corresponding salary maintenance for the period of absence.

The BOSS specifies that subrogation is possible when two conditions are met:

The employer maintains all or part of the salary during the leave (legal, contractual, or voluntary obligation).
The salary maintenance is at least equal to the amount of IJSS for the same period.

Subrogation is not mandatory, but it is widely practiced as it simplifies management for the employee, who receives regular pay without interruption.

Total Subrogation vs. Partial Subrogation

Two situations are distinguished:

Total Subrogation: the employer maintains the entire salary (100% of gross salary) and receives IJSS as reimbursement. The employee suffers no loss of salary.
Partial Subrogation: the employer maintains only part of the salary (e.g., 90% or 66.66%) and receives the corresponding IJSS.

This distinction is important because it has implications for the applicable social security ceiling.

The Ceiling Reduction Rule

The BOSS provides essential clarifications on managing the social security ceiling in case of subrogation:

If the employer fully maintains the salary (total subrogation with supplement), the ceiling is not reduced. The employee is treated as if they were actively working.
If the employer only pays IJSS through subrogation (without employer supplement), the ceiling is reduced proportionately to the period of absence. The subrogated IJSS are only subject to CSG/CRDS at the reduced rate.

This distinction is crucial for calculating capped contributions (basic retirement, Agirc-Arrco tranche 1) during the sick leave period.

Example of Ceiling Reduction

Consider an employee absent for the entire month of March 2025 (31 calendar days) with a usual gross salary of €3,500.

Case 1: Full Salary Maintenance

The employer pays €3,500 gross.
They receive IJSS through subrogation (approximately €1,380).
The social security ceiling remains at €3,925 (no reduction).
Contributions are calculated normally on €3,500.

Case 2: Subrogation of IJSS Only (without supplementary maintenance)

The employer only pays the subrogated IJSS (approximately €1,380).
The ceiling is reduced to: €0 (total absence for the month, no active salary).
The IJSS are only subject to CSG/CRDS at the reduced rate (6.20% CSG + 0.50% CRDS).

Employer Salary Maintenance: Legal and Conventional Obligations

Legal Maintenance (Monthlyization Law)

Pursuant to Article L.1226-1 of the Labour Code, employers are required to supplement IJSS for employees with at least 1 year of seniority in the company. The maintenance is as follows:

From day 1 to day 30: 90% of the gross remuneration the employee would have received if they had worked.
From day 31 to day 60: 66.66% (two-thirds) of the same remuneration.

These durations are increased by 10 days for every 5 years of seniority, capped at 90 days at 90% and 90 days at 66.66%.

Salary maintenance means after deducting IJSS: the employer only pays the difference between IJSS and the guaranteed maintenance level.

Conventional Maintenance

Many collective agreements provide for more favorable provisions than the law:

Maintenance at 100% from day 1 of absence (without waiting period).
Longer maintenance durations.
Reduced seniority conditions (6 months, or even no condition).

It is essential to verify the applicable collective agreement to determine the exact level of maintenance. If the collective agreement has more favorable provisions, those take precedence over the legal framework.

Numerical Example of Salary Maintenance

An employee with 3 years of seniority, a gross salary of €2,800, on sick leave from February 1 to February 28, 2025:

Calendar days of absence: 28 days.
Social security waiting period: 3 days (IJSS from the 4th day).
Daily IJSS: €46.03.
Number of days compensated by social security: 25 days.
Total gross IJSS: €46.03 x 25 = €1,150.75.
Maintenance at 90%: €2,800 x 90% = €2,520.
Employer supplement: €2,520 - €1,150.75 = €1,369.25.

On the payslip, the following will appear: subrogated IJSS (€1,150.75), employer supplement (€1,369.25), for a reconstructed gross of €2,520.

Treatment of Subrogated IJSS

Subrogated IJSS are not subject to standard social contributions. They are only subject to:

CSG at the reduced rate of 6.20% (instead of 9.20% for employment income).
CRDS of 0.50%.

The base for CSG/CRDS on IJSS is 100% of the amount of IJSS (no deduction of 1.75%).

Treatment of Employer Supplement

The salary supplement paid by the employer is subject to all social contributions under common law conditions (employee and employer contributions). It is included in the contribution base just like an active salary.

The BOSS specifies that the complementary social protection (mutuelle and prévoyance) must be maintained throughout the suspension of the employment contract for reasons of illness, provided that the employee benefits from salary maintenance (total or partial) or IJSS.

Mutuelle and prévoyance contributions continue to be deducted from the payslip. The base for these contributions is generally calculated based on the reconstructed remuneration (what the employee would have received if they had worked).

This maintenance is a condition for the mandatory and collective nature of the scheme, necessary for the benefit of the social exemptions for employer contributions. Interrupting the scheme during sick leave would jeopardize exemptions for all employees.

Practical Management in Payroll Software

Step 1: Entering the Absence

The first step is to enter the sick leave in the payroll software with the precise start and end dates. The software automatically calculates:

The deduction for absence (by working days, business days, or calendar days depending on settings).
The waiting period.
The compensated days.

Step 2: Estimation and Entry of IJSS

In the absence of a response from the CPAM (typically a delay of 2 to 4 weeks), the employer must estimate IJSS to prepare the payslip. Payroll software includes an estimating calculation engine. A regularization will take place upon receipt of the final statement from CPAM.

Step 3: Salary Maintenance Calculation

The software applies the maintenance rules (legal or conventional) and calculates the employer supplement by deducting IJSS (estimated or real) from the guaranteed amount.

Step 4: Regularization

Upon receipt of the final statement from CPAM, the payroll manager regularizes any discrepancies between the estimate and the actual amount of IJSS. This regularization may occur on a subsequent payslip.

Long-Term Absences: Points of Caution

For long-term absences (over 6 months), several points deserve attention:

End of employer maintenance: beyond the conventional maintenance duration, only IJSS and possibly pre-emptive allowances are paid.
Portability of the mutuelle: in case of contract termination, the employee benefits from portability for 12 months.
Return-to-work visit: mandatory after an absence of over 60 days (non-professional illness) or 30 days (work-related accident).
Employer-ordered medical examination: the employer can have the leave checked by a mandated physician.

FAQ: Your Questions on Sick Leave and Payroll Subrogation

Is subrogation mandatory for the employer?

No, subrogation is not mandatory as such. However, it becomes automatic when the employer maintains salary at least equal to IJSS during the leave period. In practice, once the employer practices salary maintenance (legal or conventional), it is advisable to implement subrogation to directly recover IJSS from CPAM rather than routing it through the employee. The subrogation request is made via the DSN.

How to calculate the employer supplement when the employee is on therapeutic part-time?

In the case of therapeutic part-time, the employee receives both a salary for the time worked and IJSS for the time not worked. The calculation of the employer supplement is based on the real loss of remuneration. The employer compares the reconstructed remuneration (what the employee would have received full-time) with the sum of the part-time salary and IJSS, and supplements the difference according to the level of guaranteed maintenance.

No, the ceiling is not reduced if the employer fully maintains the remuneration. The reduction of the ceiling only occurs when the employer pays only the subrogated IJSS without any supplement, or when the supplement does not allow the total usual remuneration to be reconstructed. The BOSS specifies that the full maintenance of remuneration neutralizes the ceiling reduction.

Yes, IJSS paid by subrogation are included in the calculation of MNS. They are part of the total gross remuneration as per the decree of January 31, 2023. Conversely, IJSS paid directly to the employee by CPAM (without subrogation) are excluded from the MNS shown on the payslip, as they do not pass through the employer.

Must complementary insurance be maintained during the entire sick leave?

Yes, complementary social protection (mutuelle and prévoyance) must be maintained throughout the duration of the employment contract suspension due to sickness, as per the BOSS provisions. This maintenance includes both the employer and employee contributions. An interruption of the scheme during the leave could jeopardize the collective and mandatory nature of the system, leading to a URSSAF audit concerning all social exemptions of employer contributions.

Managing Sick Leave and Payroll Subrogation in France for 2025: A Comprehensive Guide