The retirement bonus, commonly known as a severance allowance, is a payment provided to private sector employees who retire after meeting all required conditions. As experienced employment law specialists, we've seen how the bonus amount and calculation vary based on whether the retirement is voluntary or initiated by the employer.
Employees can choose to retire at the legal age of 62 (for those born on or after January 1, 1955), even without full pension rights.
To qualify for the employer-paid bonus upon voluntary retirement, employees need at least 10 years of seniority. The bonus scales with tenure: half a month's salary for 10-15 years; one month's salary for 15-20 years; one and a half months for 20-30 years; two months for 30+ years.
The reference salary is the more favorable of: 1/12th of the gross salary over the last 12 months, or 1/3rd of the last 3 months (including prorated exceptional bonuses). Company collective agreements may offer even better terms.
Treated as salary, the bonus is subject to social security contributions, CSG, and CRDS. It's exempt under job protection plans (PSE) for economic layoffs. Income tax also applies.
Employers may retire eligible employees, providing notice periods and indemnity akin to dismissal rules.
Subject to social security contributions, CSG, and CRDS. Income tax-exempt up to legal or collective agreement amounts, or twice prior year's gross remuneration (up to €205,680 for 2020), or 50% of compensation (same limit).
