News concerning the social system of conventional termination compensation

The Law n°2023-270 of April 14, 2023 on corrective financing of security social security for 2023 (JO 15) brings new features concerning the social system of conventional termination compensation 1 – It creates a new contribution at the expense of the employer at the rate of 30%, on the portion of the conventional termination compensation exempt from social security contributions (article L. 137-12 of the modified CSS). This contribution will be due whether or not the employee is entitled to a retirement pension. 2 – At the same time, it exempts from the social package, the conventional termination compensation paid to an employee who cannot claim a retirement pension from a legally obligatory scheme (article L. 137-15 of the modified CSS). To date, in such a situation, a social package at the rate of 20% is due by the employer, on the part of the conventional termination compensation exempt from social security contributions. 3 – It unifies the social system of conventional termination compensation, whatever the employee's retirement situation (article L. 242-1 of the modified CSS). To date, when the employee is entitled to benefit from a retirement pension from a legally obligatory scheme, the conventional termination compensation paid to him is entirely subject to social security contributions, as well as at the CSG – CRDS. The Law excludes this compensation from the base of social security contributions, under the following conditions: exemption within the limit of 2 PASS ( €87,984 for 2023), and up to the highest of the following amounts: either the amount of compensation provided for by the sectoral collective agreement, by the professional or interprofessional agreement, or, failing that, by law; i.e. twice the amount of gross annual remuneration received by the employee during the calendar year preceding the termination of their employment contract; i.e. 50% of the amount of compensation paid. On the other hand, if the amount of compensation exceeds 10 times the PASS (i.e. €439,920 in 2023), it is fully subject to social security contributions. The Law also exempts this compensation from CGS – CRDS, up to the smallest of the following amounts: either the amount of compensation provided for by the sectoral collective agreement, the professional or interprofessional agreement, or, failing that, by the Law if the latter is the highest; or the exemption amount retained for social security contributions. Attention: conventional termination compensation paid to an employee entitled to a pension of retirement from a legally obligatory plan remains subject to income tax in its entirety.