France - New rules around amicable termination of employment contracts
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Senior Associate
France
As an associate in our HR Services Group in Paris, I advise, assist and support clients in all their labour and employment law issues.
Partner
France
I am a partner in our international Emplyment Group, which I co-head, based in France. I advise our multinational corporate clients on French employment law matters.
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As per the amended Social Security Financing Act for 2023, the social security taxes applicable to mutual termination severance will be modified.
- Elimination of the 20% employer contribution called “forfait social”
- Implementation of a new 30% tax called "contribution on the compensation paid in case of mutual termination agreement and retirement”, of the part not subject to social security contributions (so instead of 20%, companies will pay 30% of employer's contributions on the mutual termination severance from now on)
Please note that when the employee who signs a mutual termination is entitled to a retirement pension from a legally compulsory scheme, the tax and social contributions rules remain unchanged (i.e. the indemnity is subject to full income tax and contributions from the first euro in this case).
