Redundancy Pay in 2024: Calculation and Precise Amounts

Facing redundancy for economic reasons? You are entitled to redundancy pay, but its calculation can seem complex. In 2024, legal rules and the specifics of collective bargaining agreements are evolving to better protect employees. This article explains how to calculate your redundancy pay precisely, which salaries to consider, and what increases apply based on your length of service or sector. Follow this guide to avoid unpleasant surprises and assert your rights with confidence.

Understanding the Basics of Redundancy

Redundancy occurs when an employer must eliminate positions for reasons unrelated to the employee’s conduct: financial difficulties, technological changes, reorganisation necessary to safeguard competitiveness, or cessation of activity. Unlike dismissal for misconduct, an employee made redundant for economic reasons is entitled to redundancy pay, the minimum amount of which is regulated by the Labour Code.

Conditions for Entitlement to Redundancy Pay

To be eligible for redundancy pay, you must:

• Be on a permanent contract (CDI).
• Have at least 8 months of uninterrupted service with the company (unless more favourable provisions exist in your collective bargaining agreement, such as in the air transport sector where the threshold is 8 months [S9]).
• Be made redundant for a genuine and serious economic reason, recognised by the employment tribunal (conseil de prud’hommes) in case of dispute.

Calculating the Statutory Redundancy Pay in 2024

The Labour Code sets a legal minimum for redundancy pay, but some collective bargaining agreements provide more favourable amounts. Here is how to calculate redundancy pay according to the legal rules.

1. Determining Your Length of Service

Length of service is calculated from the date of hire to the effective date of contract termination (end of the notice period, whether served or not).

Example:

• You were hired on 15 March 2018 and made redundant on 30 June 2024.
• Your length of service is 6 years and 3.5 months (or 6.29 years).

2. Choosing the Reference Salary

The salary to be considered for the calculation is the most advantageous for you between two formulas (article R1234-4 of the Labour Code [S2]):

1. The monthly average of the last 12 months preceding the redundancy.

• If you have less than 12 months of service, the average of all months worked is taken.
• Annual or exceptional bonuses are included on a pro-rata basis.

2. One-third of the last 3 months.

• Annual or exceptional bonuses are only included up to a pro-rata amount.

Example:

• Your gross monthly salary is €2,500.
• You received an annual bonus of €1,200 in December 2023.
• Option 1: Average of the last 12 months = (€2,500 × 11 + €3,700) / 12 = €2,600.
• Option 2: One-third of the last 3 months = (€2,500 × 3) / 3 = €2,500.
• The most advantageous: €2,600.

3. Applying the Legal Scale

The Labour Code provides a minimum scale (article R1234-2 [S7]):

• 1/4 of a month’s salary per year of service for the first 10 years.
• 1/3 of a month’s salary per year of service from the 11th year onwards.

Example calculation for 6 years and 3 months of service (reference salary: €2,600):

• For the first 6 years: 6 × (1/4 × €2,600) = €3,900.
• For the remaining 3 months: (3/12) × (1/4 × €2,600) = €162.50.
• Total statutory amount: €4,062.50 gross.

For 12 years of service (reference salary: €2,600):

• For the first 10 years: 10 × (1/4 × €2,600) = €6,500.
• For the next 2 years: 2 × (1/3 × €2,600) = €1,733.33.
• Total statutory amount: €8,233.33 gross.

Specifics of Collective Bargaining Agreements

Some collective bargaining agreements provide more favourable redundancy pay than the legal minimum. Here are a few examples:

1. Retail Trade of Clothing and Textile Articles (IDCC 1483)

In this agreement (article 18 [S6]), redundancy pay is calculated as follows:

• 1/5 of a month’s salary per year of service for the first 10 years.
• 1/3 of a month’s salary per year of service from the 11th year onwards.

Example for 6 years of service (reference salary: €2,600):

• 6 × (1/5 × €2,600) = €3,120 gross.
• €982.50 less than the legal minimum (since 1/5 < 1/4).

⚠️ Warning: This agreement is less favourable than the Labour Code. In this case, the legal minimum applies.

2. Air Transport: Ground Staff (IDCC 0275)

For managers, supervisors, and technicians (article 20 [S9]):

• 1/4 of a month’s salary per year of service from 8 months of service (compared to 1 year in the Labour Code).
• No increase from 10 years onwards.

Example for 5 years of service (reference salary: €2,600):

• 5 × (1/4 × €2,600) = €3,250 gross.

3. Metalworking Industry (IDCC 3248)

The metalworking agreement (article 3 [S5] and [S12]) provides for a holiday bonus paid on a pro-rata basis in case of redundancy. This bonus is added to the redundancy pay, but its amount depends on local agreements.

4. French Development Agency (AFD)

The AFD staff regulations (article 5.1.3 [S11]) provide for an increase in the statutory redundancy pay:

• +1 month’s salary for service between 4 and 10 years.
• +2 months’ salary for service over 10 years.

Example for 6 years of service (reference salary: €2,600):

• Statutory redundancy pay: 6 × (1/4 × €2,600) = €3,900.
• Increase: €2,600.
• Total: €6,500 gross.

Other Possible Compensations and Allowances

In addition to redundancy pay, you may be entitled to other compensations in case of redundancy.

1. Payment in Lieu of Notice

If your employer waives the notice period, they must pay you payment in lieu of notice equivalent to your salary for the duration of the unserved notice period. The length of the notice period depends on your length of service:

• Less than 6 months: duration set by agreement or custom (often 1 month).
• Between 6 months and 2 years: 1 month’s notice.
• 2 years and over: 2 months’ notice.

2. Payment in Lieu of Holiday

If you have not taken all your holiday entitlement before leaving, your employer must pay you payment in lieu of holiday for the untaken days.

3. Precariousness Premium (for Fixed-Term Contracts)

If you were on a fixed-term contract (CDD) and your contract is terminated for economic reasons, you are entitled to a precariousness premium of 10% of the total gross remuneration received during the contract.

4. Damages for Unfair Dismissal

If you challenge your redundancy before the employment tribunal and the judge finds it without genuine and serious cause, you may obtain damages. The amount depends on your length of service and the size of the company:

• Between 0 and 1 month’s salary for service of less than 2 years.
• Up to 20 months’ salary for service of 30 years or more in a company with more than 11 employees.

A ruling by the Court of Cassation (2017 [S3] and [S10]) also recognised damages for breach of re-employment priority (up to €11,000 in this case) or for failure to provide information (up to €3,104).

Special Cases and Exceptions

1. Redundancy and Gross Misconduct

If you are made redundant for economic reasons but your employer also alleges gross misconduct, you lose the right to redundancy pay. However, you retain your rights to payment in lieu of holiday and payment in lieu of notice (unless it is a case of serious misconduct).

2. Redundancy and Incapacity

If your redundancy follows a medical incapacity assessment, some collective bargaining agreements provide for specific increases. For example, the AFD staff regulations (article 5.1.3 [S11]) apply the same increases as for a standard economic redundancy.

3. Redundancy and Retirement

If you retire under a voluntary departure plan (PDV), the compensation received is often exempt from income tax (up to twice the annual social security ceiling, i.e., €87,984 in 2024).

4. Redundancy and Reduced Activity

If you were working reduced hours before your redundancy, the reference salary for calculating your unemployment benefits may be based on the last 6 months (article of the unemployment insurance agreement [S4]).

How to Verify and Challenge Your Redundancy Pay

1. Verify the Calculation

To ensure your redundancy pay is correctly calculated:

1. Check your length of service: date of hire vs. date of termination.
2. Calculate your reference salary using both methods (average of the last 12 months or one-third of the last 3 months) and choose the most advantageous.
3. Apply the scale from your collective bargaining agreement or, failing that, the legal scale.
4. Compare with the amount proposed by your employer.

2. Request an Explanation from Your Employer

If the amount seems too low, ask your employer to provide a detailed written calculation. You can also seek help from an employment law advisor (labour inspector, trade union, solicitor).

3. Refer the Matter to the Employment Tribunal in Case of Disagreement

If your employer refuses to reconsider their position, you can refer the matter to the employment tribunal (conseil de prud’hommes) within 12 months from the date of termination of your contract. The tribunal may:

• Order the payment of the redundancy pay if the calculation is incorrect.
• Award damages in case of unfair dismissal.

A ruling by the Court of Cassation (2017 [S3]) states that the employee may obtain damages for faulty conduct by the employer during the termination, even if the economic reason is genuine.

Frequently Asked Questions

What is the difference between redundancy and dismissal for misconduct?

Redundancy is motivated by reasons external to the employee (financial difficulties, reorganisation, etc.), whereas dismissal for misconduct is linked to employee misconduct (minor, serious, or gross misconduct). In case of redundancy, you are entitled to redundancy pay, unlike in cases of gross or serious misconduct.

Can my employer make me redundant for economic reasons without offering redeployment?

No. Before proceeding with redundancy, the employer has a duty to seek redeployment within the company or group. If they fail to do so, the redundancy may be deemed without genuine and serious cause, and you could obtain damages (up to €35,000 for discrimination, as in the 2017 ruling [S3]).

Can I combine redundancy pay and unemployment benefits?

Yes. Redundancy pay is not deducted from unemployment benefits. However, if you receive enhanced redundancy pay (higher than the legal minimum), part of it may be deferred (postponement of the start of your unemployment rights). The reference salary for calculating your benefits is based on the last 6 months (unemployment insurance agreement [S4]).

How is redundancy pay calculated for a part-time employee?

Redundancy pay for a part-time employee is calculated pro-rata to their working hours. For example, if you work 80%, your reference salary will be reduced accordingly. Some collective bargaining agreements (such as the metalworking industry [S5]) provide specific rules for calculating bonuses.

What should I do if my employer does not pay my redundancy pay?

If your employer does not pay your redundancy pay, you can:

1. Send them a formal demand by recorded delivery with acknowledgement of receipt.
2. Refer the matter to the employment tribunal within 12 months to claim payment.
3. Seek help from a trade union or a solicitor specialising in employment law.

In case of a ruling against the employer, they will have to pay the redundancy pay plus statutory interest (as in the 2017 ruling [S10]).