French employment law - Conventional termination (rupture conventionnelle): the new social regime applicable from September 1st , 2023
II- Regime applicable to conventional terminations (ruptures conventionnelles) of employment contracts occurring from September 1st, 2023
From September 1st, 2023, for employees who can benefit from a retirement pension as well as those who cannot benefit from it, the conventional termination compensation is exempt, within a certain limit, from income taxes, contributions social security, and CSG-CRDS but is subject to a specific employer contribution of 30% (for the portion excluded from social security contributions).
. Unless there is a subsequent legislative or regulatory modification, the current tax regime remains applicable even from September 1st, 2023;
. The conventional termination compensation paid to the employee will be exempt from social security contributions, up to twice the annual Social Security ceiling, up to the highest of the following amounts:
- The amount of legal or conventional compensation;
- Twice the amount of gross annual remuneration received by the employee during the calendar year preceding the termination of the employment contract;
- Half of the compensation paid.
However, as before, termination compensation greater than 10 times the annual Social Security ceiling is fully subject to social contributions and the CSG-CRDS.
The 20% social package, applicable for employees who cannot benefit from a retirement pension, is therefore abolished and replaced by a single contribution of 30% payable by the employer and for the benefit of the National Fund. old age insurance, whatever the employee's situation.
The retirement indemnity will, for its part, be subject to the single employer contribution of 30% for its portion excluded from contributions and no longer 50% on its entire amount.
In the event of a conventional termination, the social system is therefore unified for all employees, regardless of whether or not they can benefit from a retirement pension at the time of this termination.
This could, in particular, encourage companies to “leave” through a “conventional termination” (rather than through a dismissal procedure) senior employees who can benefit from a retirement pension (at full rate or not).
The latter must be vigilant (see Employees, executives, senior executives: how much to negotiate your conventional termination after the Macron orders?
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. Law No. 2023-270 of April 14, 2023 on corrective financing of social security for 2023
. L. 242-1 of the social security code https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000033712583/2017-01-01
. Lamyline, Everyday labor law, Part 1, Title 3 Termination of the employment contract, Theme 185 – Conventional termination
. Senior employees: do not confuse retirement compensation with retirement compensation https://www.village-justice.com/articles/salaries-seniors-pas-confondre-indemnite-depart-retraite-avec-indemnite-mise,44332.html
Frédéric CHHUM avocat et ancien membre du conseil de l’ordre des avocats de Paris (mandat 2019-2021)
CHHUM AVOCATS (Paris, Nantes, Lille)
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