Severance Pay in France: Social Security Treatment Under the BOSS for Employers

The French Social Security Official Bulletin (Bulletin officiel de la Sécurité sociale – BOSS) sets the social security treatment of the severance payments you make: exemption from social security contributions within certain limits, liability to CSG/CRDS (the general social contribution and the social debt repayment contribution), and reinstatement into the contribution base above thresholds indexed to the annual Social Security ceiling (Plafond annuel de la Sécurité sociale – PASS). In practice, statutory dismissal indemnities are exempt from social security contributions up to 2 PASS (i.e. €94,200 for 2025), subject to conditions, but become fully subject to contributions where the amount exceeds 10 PASS.

This article is intended for HR directors and executives who manage the payroll aspects of terminations. The BOSS has been binding on the administration since 1 April 2021: you can rely on it, but 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 sets out the principle that any remuneration paid in consideration of, 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:

Characterise the payment: statutory or collectively-agreed dismissal indemnity, mutually-agreed termination indemnity (rupture conventionnelle), settlement indemnity (indemnité transactionnelle), compulsory-retirement indemnity, indemnity for dismissal without real and serious cause, etc. Each type is governed by its own regime.
Check whether the sum is indemnity or salary in nature: sums that have the nature of salary (payment in lieu of notice, payment in lieu of accrued paid leave, back pay) are always subject to contributions, with no exemption ceiling.
Apply the exemption thresholds for contributions, for CSG/CRDS and, where applicable, for the forfait social (social flat-rate levy).

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

The 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.

Dismissal Indemnity (Excluding Collective Redundancy Plans)

The fraction 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 collectively-agreed dismissal indemnity;
50% of the total indemnity paid;
twice the gross annual remuneration received during the calendar year preceding the termination.

Caution: if the total indemnity 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 Indemnity (Rupture Conventionnelle)

For an employee who is not eligible for a pension under a legally mandatory scheme, the approved mutually-agreed termination indemnity follows the same exemption regime as the dismissal indemnity (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, replacing the former 20% forfait social.

Compulsory-Retirement Indemnity

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

Settlement Indemnity (Indemnité Transactionnelle)

The BOSS provides that the indemnity portion of a settlement — the portion that compensates for a loss and not a component of salary — follows the regime of the severance indemnity to which it relates. You must therefore be able to demonstrate, with supporting evidence, the compensatory nature of the sums paid. Failing this, URSSAF will re-characterise them as salary.

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

CSG/CRDS base: severance payments are subject to CSG (9.20%) and CRDS (0.50%) on the portion exceeding the statutory or collectively-agreed dismissal indemnity amount. In other words, the collectively-agreed amount is exempt from CSG/CRDS, but the portion above it is subject to it. This portion subject to CSG/CRDS does not benefit from the professional-expenses allowance.

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

Social flat-rate 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 (nominative social declaration) under the correct staff-category code to avoid any reassessment.

URSSAF Audit Points to Secure Within Your Company

Severance payments are among the most heavily audited items. To secure your employer account, DAIRIA Law recommends systematically verifying:

The exact characterisation of each sum: rigorously distinguish salary-type elements (notice, paid leave, bonuses) from compensatory indemnities. Any confusion results in a reassessment of contributions together with surcharges.
The calculation of the three exemption branches: keep the details of the calculation (collectively-agreed indemnity, 50% of the indemnity, twice the remuneration) to justify the exempt fraction applied.
Compliance with the 10 PASS threshold: beyond it, 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 of the two limits.

A poorly-configured termination exposes your company to a reassessment covering three years, including surcharges and penalties. The firm assists 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 indemnity?

The BOSS confirms that the mutually-agreed termination indemnity paid to an employee who cannot claim a pension is exempt from contributions up to 2 PASS, under the same rules as the dismissal indemnity. The exempt portion, however, is subject to the 30% employer contribution. If the employee is eligible for a pension, the indemnity 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 the same employee in respect of the same termination. You therefore cannot combine several 2 PASS ceilings for separate payments relating to the same end of contract.

Is payment in lieu of notice exempt?

No. Payment in lieu of notice, like payment in lieu of accrued paid leave, has the nature of 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 fraction.

How should a settlement indemnity be treated in payroll?

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

What happens if the indemnity exceeds 10 PASS?

Where the total amount of severance payments exceeds 10 times the PASS (€471,000 in 2025), the exemption disappears entirely: the indemnity is subject to contributions, CSG and CRDS on its entirety, from the first euro. This mechanism mainly affects the indemnities of executives and highly-paid managers.

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

DAIRIA Law assists HR directors and executives of mid-sized companies in auditing and securing their terminations: reviewing the calculation of exempt fractions, drafting enforceable settlement agreements, configuring payroll and providing support during URSSAF audits. Contact us to ensure the reliability of the social security treatment of your upcoming terminations.