Faced with the rapid growth in the number of “ruptures conventionnelles” (contractual severance agreements), the French government decided in last month’s rectifying finance law to adapt the social security system in order to eliminate their perverse effects.
“From now on, the 20% lump-sum social security contribution will be abolished and replaced by a single contribution of 30%, regardless of the employee’s retirement status. At the same time, the employer’s contribution on retirement indemnities has also been reduced to 30% (instead of the 50% paid to the CNAV). The CSG-CRDS regimes are aligned for all employees, whether or not they have reached retirement age, and the portion of severance pay exempt from social security contributions is limited to the legal or conventional severance pay. The financial cost of retiring an employee and terminating his or her contractual agreement will therefore be equivalent (subject to the provisions of the applicable collective agreement on retirement indemnity)”, explains Alexandra Stocki.