Get Live Quote 
Effective January 1, 2026, France's Social Security Financing Act for 2026 raises the employer contribution rate on the exempt portion of termination indemnities from 30% to 40%. This applies to individual mutual terminations (rupture conventionnelle) and employer-initiated retirements (mise à la retraite). The increase affects terminations with an effective date on or after January 1, 2026, regardless of when the agreement was signed. The contribution applies to the exempt portion of indemnities, generally capped at 2 times the Annual Social Security Ceiling (approximately EUR 96,120 in 2026). This reform increases employer costs for qualifying terminations and aims to consolidate social security resources.
Effective January 1, 2026, France's Social Security Financing Act for 2026 raises the employer contribution rate on the exempt portion of termination indemnities from 30% to 40%. This increase applies to individual mutual terminations (rupture conventionnelle) and employer-initiated retirements (mise à la retraite), affecting all terminations with an effective date on or after January 1, 2026, regardless of when the agreement was signed.
Who is affected
This change affects all French employers who terminate employment contracts through individual mutual termination agreements or initiate employee retirements. The increase does not apply to collective mutual terminations (rupture conventionnelle collective) or public sector mutual terminations. Employers across all industries and company sizes are impacted when using these termination methods.
What's changing
The employer contribution on the exempt portion of qualifying termination indemnities increases by 10 percentage points:
| Element | Before (2025) | After (Jan 1, 2026) |
|---|---|---|
| Employer contribution rate | 30% | 40% |
| Exemption cap | 2× Annual Social Security Ceiling (~EUR 96,120) | 2× Annual Social Security Ceiling (~EUR 96,120) |
| Contribution on EUR 96,120 exempt indemnity | EUR 28,836 | EUR 38,448 |
The contribution applies only to the portion of the indemnity exempt from standard social security contributions, generally capped at two times the Annual Social Security Ceiling (approximately EUR 96,120 in 2026). The applicable rate is determined by the contract termination date, not the date the agreement was signed. Agreements signed in 2025 but with termination dates on or after January 1, 2026 are subject to the 40% rate.
What NEO partners and clients should do
- Budget for increased termination costs: Factor the additional 10 percentage points into severance cost projections for any mutual terminations or employer-initiated retirements effective January 1, 2026 or later.
- Review pending terminations: For agreements already negotiated but not yet effective, confirm the termination date and recalculate employer contribution liability at 40% if the effective date falls on or after January 1, 2026.
- Update payroll systems: Ensure payroll and HR systems apply the 40% rate to qualifying terminations with effective dates from January 1, 2026 forward.
- Consult on complex cases: Engage legal counsel early for terminations involving protected employees or high-value indemnities to ensure compliance with the new contribution structure.
