Supra-legal indemnity: what it is and how to negotiate it

The "supra-legal" indemnity refers to everything paid to the employee over and above the minimum set by law or the collective bargaining agreement. It is often the largest part of a PSE package — and it is also the most negotiable. Here is how it is calculated, what it costs you in tax, and how to maximise it.

Reminder: what does the legal minimum provide?

The statutory severance indemnity (article L1234-9 of the French Labour Code) is calculated as follows:

• 1/4 of a month's salary per year of seniority up to 10 years;
• 1/3 of a month's salary per year beyond 10 years.

The reference salary is the higher of:

• the average of the last 12 months of salary;
• 1/3 of the last 3 months (with annual bonuses prorated).

Your company's collective bargaining agreement may provide for a higher indemnity — for example, the Syntec agreement provides for 1/3 of a month per year from the 1^st year for managers (cadres) with more than 2 years of seniority.

What is the supra-legal portion?

The "supra-legal" portion is any additional amount paid above the higher of the statutory indemnity and the contractual (collective agreement) indemnity. It can take several forms:

• A fixed lump sum (e.g. €40,000 at Bridgestone Béthune 2021);
• A multiplier of months per year of seniority (e.g. +2 months/year at ING Bank France 2021);
• An announced average per employee (e.g. €190,000 average at Ford Blanquefort 2019);
• A hybrid combination of months OR lump sum, whichever is more favourable (e.g. 1/2 month OR €1,000/year at Vivarte / La Halle 2015).

In a PSE: who decides the supra-legal portion?

The supra-legal portion is negotiated, never imposed. Three actors shape the outcome:

• The representative trade unions, which negotiate the financial component of the PSE;
• The DREETS, which checks, in the case of a unilateral document, the proportionality of the measures to the company's financial means;
• The employer, which proposes the initial framework.

For large, profitable companies, the DREETS is demanding: the Ford Blanquefort 2019 PSE was rejected in January before being approved in March, after the administration required measures proportionate to the group's financial strength.

Taxation of the supra-legal portion in 2026: the issue that changes everything

This is often where many employees lose the most money — through a lack of awareness of the thresholds. Here are the key figures for 2026:

2026 threshold	Value	Effect
PASS 2026 (Annual Social Security Ceiling)	€48,060	Reference for social thresholds
2 PASS	€96,120	Full exemption threshold for social contributions
10 PASS	€480,600	Partial exemption threshold for social contributions
Income tax threshold (economic dismissal)	€282,600	Above this: subject to income tax

Social contributions

• Total indemnities ≤ 2 PASS (€96,120) → full exemption;
• Indemnities between 2 and 10 PASS → exemption up to the statutory/contractual minimum; the remainder is subject to contributions;
• Indemnities ≥ 10 PASS (€480,600) → contributions from the first euro ("golden parachutes").

Income tax

The statutory or contractual portion is exempt from income tax with no ceiling. The supra-legal portion is exempt up to €282,600 (2026 reference). Above this, it is included in taxable income, with the possibility of spreading it over several years.

CSG / CRDS

Exempt up to the amount of the statutory/contractual indemnity. The supra-legal portion is subject to them at 9.7% (CSG + CRDS).

Room for negotiation: 4 concrete levers

1. The sector benchmark — show the standards of your sector. A bank employee can rely on the Société Générale PDV 2018 ceiling (30 months OR 10 PASS / €405k). An industrial worker on Ford Blanquefort (€190k average).
2. Tax optimisation — ask for the contractual indemnity vs. the supra-legal portion to be allocated in a way that maximises the income-tax-exempt share.
3. The settlement agreement — signing a settlement agreement (transaction) after dismissal can increase your supra-legal portion, BUT beware: you waive any subsequent action before the labour court (prud'hommes). Only sign with a lawyer.
4. Non-monetary considerations — enhanced outplacement (€3,000 to €15,000 in value), funded training, exemption from the notice period without loss of salary, continued health insurance (mutuelle) beyond the legal portability period (12 months).

The trap to avoid: the conditional settlement

"Management and social partners cannot make the payment of additional indemnities conditional upon the employee's signature of a settlement agreement entailing a waiver of actions and claims." — Cadre Averti

In practical terms: you are entitled to your supra-legal portion WITHOUT signing a settlement agreement. If the employer makes payment conditional on a waiver, this is illegal.

In summary

• The supra-legal portion is the bulk of the package in most well-funded PSEs;
• It is negotiable — at the collective level (by the unions) and the individual level (by you, sometimes with legal assistance);
• Its 2026 taxation is very favourable up to €96,120 (2 PASS);
• Above €282,600, it gets complicated — consult a tax lawyer.