All employees who retire are entitled to an indemnity defined by law. Collective agreements or contractual provisions specific to certain sectors may provide for a retirement indemnity more favorable to the employee than that provided by the legislator.
This indemnity is calculated differently depending on whether the employee voluntarily retires or if he is retired by his employer. Let's see how this compensation works and how it is calculated, depending on the case
In the event of voluntary retirement of an employee, the latter benefits from a legal retirement indemnity if he can prove that he has worked for his company for at least 10 years. The amount of this indemnity then varies according to his seniority:
To calculate the retirement indemnity, the remunerations taken into account are those which are the most advantageous for the employee. That is to say either 1/12th of the gross remuneration of the last 12 months preceding retirement or either 1/3 of the last 3 months. In the latter case, the bonuses or all other exceptional salary elements paid to the employee are recalculated over this 3-month period.
If the employee who voluntarily retires has worked part-time and full-time during his professional career, his compensation is calculated in proportion to the duration during which he actually worked during the period taken into account.
To know: voluntary retirement benefits are subject to income tax.
In the event of the retirement of an employee by his employer, two scenarios exist for calculating the retirement indemnity according to the employee's seniority in the company. The latter starts on the effective date of termination of the employee's employment contract, that is to say at the end of the notice, even if it is not executed.
The legal indemnity for retirement of an employee whose seniority is more than 10 years in his company cannot be less than 1/4 of a month's salary per year of seniority for the first 10 years and 1/3 of a month's salary per year of seniority from the 11th year.
The indemnity is calculated on the basis of the gross remuneration received by the employee before the termination of his employment contract. The reference salary for this calculation must be the most advantageous for the employee. That is to say either the monthly average of the last 12 months preceding the termination of the contract or either 1/3 of the last 3 months. In this case, the bonuses and exceptional or annual gratuities are taken into account in the calculation of the retirement indemnity in proportion to the time worked.
As for the voluntary retirement indemnity, the employee's indemnity is calculated in proportion to the duration during which he actually worked during the period taken into account if he had periods of full-time and full-time work. partial.
The legal retirement allowance for an employee who has worked for less than 10 years in his company cannot be less than 1/4 of a month's salary per year of seniority. In the event of an incomplete year, the retirement indemnity is calculated in proportion to the number of full months worked.
The reference salary taken into account for the calculation of the retirement indemnity is determined according to the most advantageous formula for the employee. This is either the monthly average of the last 12 months of salary preceding the termination of the contract or, when the employee's seniority is less than 12 months, the monthly average of the remuneration for the months preceding the termination of the contract. Or either 1/3 of the last 3 months of salary. In this case, bonuses and exceptional or annual gratuities are taken into account in proportion to the time worked.
To know: compensation for retirement by the employer is not taxable within the limit of an amount provided for by law, by a branch collective agreement or by a professional or interprofessional agreement. Beyond this amount, the retirement indemnity is exempt either within the limit of 50% of the total indemnity, or within the limit of twice the previous gross annual civil compensation and without exceeding 198,660 euros ( given for the year 2018).
