All retiring employees are entitled to a statutory retirement indemnity. Collective agreements or sector-specific contracts may offer more generous terms than the legal minimum.
This indemnity varies based on whether the employee retires voluntarily or is retired by their employer. As experienced employment law specialists, we'll break down how it works and how it's calculated in each case.
Employees opting for voluntary retirement qualify for the legal indemnity after at least 10 years of service. The amount scales with seniority:
The reference salary is the most favorable to the employee: either 1/12th of gross pay over the last 12 months before retirement or 1/3rd of the last 3 months (with bonuses prorated over that period).
For careers mixing full-time and part-time work, the indemnity is prorated based on actual time worked in the reference period.
Key note: Voluntary retirement indemnities are subject to income tax.
When an employer retires an employee, seniority is measured from the contract's effective end date (post-notice period, even if waived). Calculation depends on years of service.
The legal minimum is 1/4 month's salary per year for the first 10 years, plus 1/3 month's salary per year thereafter.
Use the most advantageous reference salary: average gross pay over the last 12 months or 1/3rd of the last 3 months before termination (bonuses prorated).
Mixed full-time/part-time periods are prorated by actual work time.
The minimum is 1/4 month's salary per full year. For partial years, prorate by full months worked.
Reference salary: average of last 12 months (or all months if under 12), or 1/3rd of last 3 months—whichever benefits the employee most (bonuses prorated).
Key note: Employer-initiated indemnities are tax-exempt up to legal, collective agreement, or professional limits. Excess is exempt up to 50% of the total or twice the prior gross annual pay (capped at €198,660 for 2018).
