Severance Pay in France: Social Security Treatment Employers Must Apply (BOSS Rules)

The official French Social Security Bulletin (Bulletin officiel de la Sécurité sociale, or “BOSS”) sets out the social security treatment of the severance payments you make: exemption from contributions within certain limits, liability to CSG/CRDS (French social levies), and reintegration into the contribution base above thresholds indexed on the annual Social Security ceiling (Plafond annuel de la Sécurité sociale, or “PASS”). In practice, statutory severance pay (indemnité de licenciement) is exempt from social security contributions up to 2 PASS (i.e. €94,200 for 2025), subject to conditions, but becomes fully liable to contributions where the amount exceeds 10 PASS.

This article is intended for HR directors and executives managing severance payroll. The BOSS has been binding on the administration since 1 April 2021: you may rely on it, but the URSSAF (the French social security collection agency) also relies on it during an audit. Mastering these rules is essential to the security of your employer account.

What the BOSS Governs for Severance Payments

In its section dedicated to severance payments, the BOSS consolidates the administrative doctrine applicable to the social security treatment of sums paid on termination of the employment contract. It is built around the French Social Security Code, in particular Article L.242-1, which establishes the principle that all remuneration paid in consideration for, or in connection with, work is subject to contributions, together with the applicable exceptions.

The analysis to be carried out for each payment involves three steps:

Characterising the payment: statutory or contractual severance pay, mutually agreed termination payment (rupture conventionnelle), settlement payment, mandatory retirement payment, damages for dismissal without real and serious cause, etc. Each type follows its own regime.
Checking the indemnity or salary nature: sums that constitute salary (payment in lieu of notice, payment in lieu of paid leave, back pay) are always subject to contributions, with no exemption limit.
Applying the exemption thresholds in respect of contributions, CSG/CRDS and, where applicable, the social package levy (forfait social).

The BOSS specifies that, for CSG/CRDS purposes, these rules are assessed payment by payment, but that the 2 PASS ceiling for contributions is assessed on the aggregate amount of severance payments made to a single employee for a single termination.

The Contribution Exemption Thresholds You Must Comply With

The social security treatment depends on the nature of the payment. Below are the operational rules to build into your payroll configuration.

Severance Pay (Outside a Collective Redundancy Plan)

The portion exempt from social security contributions corresponds to the highest of the following amounts, up to a limit of 2 PASS:

the amount of the statutory or contractual severance pay;
50% of the total payment made;
twice the gross annual remuneration received during the calendar year preceding the termination.

Caution: if the total payment exceeds 10 PASS (€471,000 in 2025), it is fully subject to contributions from the first euro. This “cliff-edge threshold” mechanism is a frequent source of reassessment.

Mutually Agreed Termination Payment (Rupture Conventionnelle)

For an employee who cannot claim a pension under a legally mandatory scheme, the approved mutually agreed termination payment follows the same exemption regime as severance pay (2 PASS limit, 10 PASS threshold). Since the Social Security Financing Act for 2023, the employer is liable for a single 30% contribution on the portion exempt from social security contributions, which replaces the former 20% social package levy (forfait social).

Mandatory Retirement Payment

It is exempt up to 2 PASS under the same terms, but remains subject to a specific 50% employer contribution on its entire amount, provided for by Article L.137-12 of the French Social Security Code.

Settlement Payment

The BOSS provides that the indemnity portion of a settlement — the portion compensating for a loss rather than a salary component — follows the regime of the severance payment to which it relates. You must therefore be able to demonstrate, with supporting evidence, the compensatory nature of the sums paid. Failing this, the URSSAF will reclassify them as salary.

Even when exempt from contributions, a severance payment does not necessarily escape CSG and CRDS. This regime, which is stricter, follows its own rules.

CSG/CRDS base of assessment: severance payments are subject to CSG (9.20%) and CRDS (0.50%) on the portion exceeding the statutory or contractual severance pay. In other words, the contractual amount is exempt from CSG/CRDS, but the portion above it is subject to these levies. This portion subject to CSG/CRDS does not benefit from the deduction for professional expenses.

A key point of vigilance for your payroll: the payment can never be exempt from CSG/CRDS for an amount greater than the amount exempt from contributions. The BOSS requires you to apply the limit that is most favourable to collection.

Social package levy and the 30% contribution: for mutually agreed terminations, the 30% employer contribution applies to the portion exempt from contributions. You must declare it on the DSN (the French unified social declaration) under the correct staff category code to avoid any reassessment.

The URSSAF Audit Checkpoints to Secure Within Your Company

Severance payments are among the most frequently audited items. To secure your employer account, DAIRIA Avocats recommends systematically checking:

The exact characterisation of each sum: rigorously distinguish salary-based components (notice, paid leave, bonuses) from compensatory payments. Any confusion results in a contribution reassessment together with surcharges.
The calculation of the three exemption limbs: keep the detail of the calculation (contractual severance, 50% of the payment, twice the remuneration) to justify the exempt portion applied.
Compliance with the 10 PASS threshold: beyond this, no exemption is possible. This point is decisive for senior executives.
The treatment of settlements: document the compensatory nature of the sums in the settlement agreement. A poorly drafted agreement undermines the exemption.
Consistency between CSG/CRDS and contributions: always apply the lower limit of the two regimes.

A poorly configured termination exposes your company to a reassessment covering three years, including surcharges and penalties. The firm intervenes upstream to audit your calculations and secure the configuration of your payroll software.

Frequently Asked Questions

What exactly does the BOSS say about the mutually agreed termination payment?

The BOSS confirms that a mutually agreed termination payment (rupture conventionnelle) made to an employee who cannot draw a pension is exempt from contributions up to 2 PASS, under the same rules as severance pay. The exempt portion, however, bears the 30% employer contribution. If the employee is entitled to a pension, the payment is fully subject to contributions.

Is the 2 PASS ceiling assessed per payment or in aggregate?

For social security contributions, the 2 PASS limit is assessed on the aggregate amount of all severance payments made to a single employee in respect of a single termination. You therefore cannot combine several 2 PASS ceilings for separate payments linked to the same termination.

Is payment in lieu of notice exempt?

No. Payment in lieu of notice, like payment in lieu of paid leave, constitutes salary. It is fully subject to contributions, CSG and CRDS, without benefiting from any exemption threshold. It must never be included in the calculation of the exempt portion.

How should a settlement payment be treated in payroll?

Only the portion compensating for a loss follows the social security regime for severance payments. The portion corresponding to salary components is subject to contributions. You must document the breakdown in the settlement agreement. In the event of an audit, the burden of proving the indemnity nature lies with the employer.

What happens if the payment exceeds 10 PASS?

Where the total amount of severance payments exceeds 10 times the PASS (€471,000 in 2025), the exemption disappears entirely: the payment is subject to contributions, CSG and CRDS on its entire amount, from the first euro. This mechanism mainly concerns payments to executives and high-earning senior staff.

The social security regime for severance payments combines several PASS-indexed thresholds, distinct rules according to the nature of each sum, and a binding but evolving BOSS doctrine. A single characterisation or calculation error is enough to trigger a URSSAF reassessment over three years.

DAIRIA Avocats assists HR directors and executives of mid-sized companies in auditing and securing their terminations: verification of the calculation of exempt portions, drafting of enforceable settlement agreements, payroll configuration and assistance in the event of a URSSAF audit. Contact us to make the social security treatment of your upcoming terminations reliable.