Managing Sick Leave and Payroll Subrogation in France in 2026: A Complete Employer’s Guide

Introduction: Sick Leave and Subrogation, Complex but Essential Mechanisms

Processing sick leave in payroll is one of the most complex tasks payroll administrators face. It requires simultaneously mastering the calculation of daily social security allowances (indemnités journalières de sécurité sociale, or IJSS), the subrogation mechanism (whereby the employer collects the allowances directly), employer salary continuation (whether statutory or provided for by a collective bargaining agreement), and the impact on social security contributions and the social security ceiling.

The BOSS (Bulletin Officiel de la Sécurité Sociale, the official social security bulletin) provides decisive guidance on these topics, in particular on the reduction of the ceiling in the event of subrogation and the continuation of supplementary social protection (protection sociale complémentaire, or PSC) during the suspension of the employment contract. This guide walks you through the complete handling of a sick leave in payroll in 2026.

The Waiting Period and the Calculation of IJSS

The 3-Day Waiting Period

For ordinary sick leave, social security applies a 3-day waiting period (délai de carence) during which no IJSS are paid. This period runs from the first day of leave prescribed by the doctor. The IJSS are paid from the 4th day of leave onward.

Exceptions to the waiting period:

Sick leave for a long-term illness (affection de longue durée, or ALD): the waiting period applies only to the first leave
Workplace accidents and occupational illnesses: no waiting period; the IJSS are paid from the day after the leave begins
Maternity: no waiting period

The employer may be required to compensate for this waiting period depending on the provisions of the applicable collective bargaining agreement. Many agreements provide for salary continuation from the 1st day of leave, thereby eliminating the effect of the waiting period for the employee.

Calculating Sick-Leave IJSS

Sick-leave IJSS are calculated according to the following formula:

IJSS = 50% of the base daily wage (salaire journalier de base, or SJB)

The base daily wage is calculated on the basis of the last 3 months of gross salary preceding the leave, up to a limit of 1.4 times the monthly SMIC (the French statutory minimum wage). This ceiling was lowered from 1.8 to 1.4 times the SMIC by Decree No. 2025-160 of 20 February 2025, for periods of leave beginning on or after 1 April 2025.

In 2026, with a gross monthly SMIC of €1,867.02 (as of 1 June 2026, based on 35 hours), the ceiling is:

1,867.02 x 1.4 = €2,613.83

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

Practical example:

Employee with a gross monthly salary of €2,400 (below the ceiling of €2,613.83)
SJB = (2,400 x 3) / 91.25 = €78.90
IJSS = 78.90 x 50% = €39.45 per day

For an employee with a salary of €4,000 (above the ceiling of €2,613.83), the salary taken into account is capped:

SJB = (2,613.83 x 3) / 91.25 = €85.93
IJSS = 85.93 x 50% = €42.97 per day (maximum IJSS for leave beginning on or after 1 July 2026)

Subrogation: The Employer Receives the IJSS in Place of the Employee

Definition and Principle of Subrogation

Subrogation is the mechanism whereby the employer takes the place of the employee to receive the social security IJSS directly. In return, the employer advances to the employee the salary continuation corresponding to the period of leave.

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

The employer maintains all or part of the remuneration during the leave (whether a statutory, contractual/collective-agreement, or voluntary obligation)
The salary continuation is at least equal to the amount of the IJSS over the same period

Subrogation is not mandatory, but it is very widely used because it simplifies matters for the employee, who receives a regular salary without interruption.

Full Subrogation vs. Partial Subrogation

Two situations must be distinguished:

Full subrogation: the employer maintains the entire remuneration (100% of gross salary) and receives the IJSS as reimbursement. The employee suffers no loss of pay.
Partial subrogation: the employer maintains only part of the remuneration (for example 90% or 66.66%) and receives the corresponding IJSS.

This distinction matters because it affects the applicable social security ceiling.

The Ceiling Reduction Rule

The BOSS provides essential guidance on managing the social security ceiling in the event of subrogation:

If the employer maintains the remuneration in full (full subrogation with a top-up), the ceiling is not reduced. The employee is treated as if in normal active employment.
If the employer pays only the IJSS by subrogation (with no employer top-up), the ceiling is reduced on a pro rata basis for the period of absence. The subrogated IJSS are subject only to the CSG/CRDS at the reduced rate.

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

Example of a 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 continuation

The employer pays €3,500 gross
It receives the IJSS by subrogation (approximately €1,380)
The social security ceiling remains at €4,005 (no reduction)
Contributions are calculated normally on €3,500

Case 2: Subrogation of the IJSS alone (no supplementary continuation)

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

Employer Salary Continuation: Statutory and Collective-Agreement Obligations

Statutory Continuation (the Monthly-Payment Act)

Under Article L.1226-1 of the French Labour Code, the employer is required to top up the IJSS for employees with at least 1 year of seniority in the company. The continuation is provided as follows:

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

These durations are increased by 10 days per 5-year period of seniority, up to a limit of 90 days at 90% and 90 days at 66.66%.

Salary continuation is understood to be net of the IJSS: the employer pays only the difference between the IJSS and the guaranteed continuation level.

Collective-Agreement Continuation

Many collective bargaining agreements provide for terms more favourable than the statute:

Continuation at 100% from the 1st day of leave (no waiting period)
Longer continuation periods
Reduced seniority requirements (6 months, or even no requirement)

It is essential to check the applicable collective bargaining agreement to determine the exact continuation level. Where the agreement provides more favourable terms, these prevail over the statutory scheme.

Worked Example of Salary Continuation

An employee with 3 years of seniority, a gross salary of €2,800, on sick leave from 1 to 28 February 2026:

Calendar days of leave: 28 days
Social security waiting period: 3 days (IJSS from the 4th day)
Salary of €2,800 > ceiling of 1.4 SMIC (€2,613.83): the IJSS is capped
Daily IJSS: €42.97 (maximum amount)
Number of days paid by social security: 25 days
Total gross IJSS: 42.97 x 25 = €1,074.25
Continuation at 90%: 2,800 x 90% = €2,520
Employer top-up: 2,520 – 1,074.25 = €1,445.75

The payslip will show: the subrogated IJSS (€1,074.25) and the employer top-up (€1,445.75), for a reconstituted gross amount of €2,520.

Treatment of Subrogated IJSS

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

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

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

Treatment of the Employer Top-Up

The salary top-up paid by the employer is subject to all social security contributions under the general-law conditions (both employee and employer contributions). It falls within the contribution base in the same way as active-employment salary.

The BOSS specifies that supplementary social protection (health insurance and provident cover) must be maintained throughout the entire period of suspension of the employment contract on account of illness, provided the employee benefits from salary continuation (full or partial) or from IJSS.

Health-insurance and provident-cover contributions continue to be deducted on the payslip. The base for these contributions is generally calculated on the reconstituted remuneration (what the employee would have received had they worked).

This continuation is a condition of the mandatory and collective nature of the scheme, which is required to benefit from the social exemption on employer contributions. Interrupting the scheme during sick leave would jeopardise the exemptions for the entire workforce.

Practical Handling in Payroll Software

Step 1: Recording the Absence

The first step is to record the sick-leave absence in the payroll software with the exact start and end dates of the leave. The software automatically calculates:

The absence deduction (using the working-days, workable-days, or calendar-days method depending on the configuration)
The waiting period
The days paid

Step 2: Estimating and Recording the IJSS

Pending a response from the CPAM (a delay of 2 to 4 weeks is common), the employer must estimate the IJSS in order to draw up the payslip. Payroll software includes an estimating calculation engine. An adjustment will be made upon receipt of the CPAM’s final statement.

Step 3: Calculating Salary Continuation

The software applies the continuation rules (statutory or collective-agreement) and calculates the employer top-up by deducting the IJSS (estimated or actual) from the guaranteed amount.

Step 4: Adjustment

Upon receipt of the CPAM’s final statement, the payroll administrator adjusts any discrepancies between the estimate and the actual amount of the IJSS. This adjustment may be made on a subsequent payslip.

Long-Term Leave: Points Requiring Attention

For long-term leave (beyond 6 months), several points deserve attention:

End of employer continuation: beyond the collective-agreement continuation period, only the IJSS and possibly provident-cover benefits are paid
Portability of health insurance: in the event of termination of the contract, the employee benefits from portability for 12 months
Return-to-work medical examination: mandatory after leave of more than 60 days (non-occupational illness) or 30 days (workplace accident)
Employer counter-examination: the employer may have the leave verified by a mandated physician

FAQ: Your Questions on Sick Leave and Subrogation in Payroll

Is subrogation mandatory for the employer?

No, subrogation is not mandatory as such. However, it becomes automatic when the employer maintains salary at a level at least equal to the IJSS during the leave period. In practice, whenever the employer provides salary continuation (statutory or collective-agreement), it is in the employer’s interest to set up subrogation to recover the IJSS directly from the CPAM rather than have them pass through the employee. The subrogation request is made via the DSN (the nominative social declaration).

How is the employer top-up calculated when the employee is on a therapeutic part-time arrangement?

In the case of a therapeutic part-time arrangement (temps partiel thérapeutique), the employee receives both a salary for the time worked and IJSS for the time not worked. The employer top-up is calculated on the basis of the actual loss of remuneration. The employer compares the reconstituted remuneration (what the employee would have received full-time) with the sum of the part-time salary and the IJSS, and tops up the difference according to the guaranteed continuation level.

No, the ceiling is not reduced if the employer maintains the remuneration in full. The ceiling reduction applies only when the employer pays solely the subrogated IJSS without a top-up, or when the top-up does not restore the usual total remuneration. The BOSS specifies that full salary continuation neutralises the ceiling reduction.

Yes, IJSS paid by subrogation are taken into account in the calculation of the MNS. They form part of the total gross remuneration within the meaning of the order of 31 January 2023. By contrast, IJSS paid directly to the employee by the CPAM (without subrogation) are excluded from the MNS shown on the payslip, since they do not pass through the employer.

Must health insurance be maintained throughout the entire sick leave?

Yes, supplementary social protection (health insurance and provident cover) must be maintained throughout the entire period of suspension of the employment contract on account of illness, in accordance with the BOSS provisions. This continuation covers both the employer’s share and the employee’s share of the contributions. Interrupting the scheme during the leave could jeopardise the collective and mandatory nature of the arrangement, resulting in a URSSAF reassessment covering all the social exemptions on employer contributions.

Managing Sick Leave and Payroll Subrogation in France in 2026: A Complete Employer's Guide