Change in the social regime for conventional termination compensation
Please note, from September 1, 2023, change in the social system for conventional termination compensation
The social system for conventional termination compensation is unified from September 1, 2013, in order to promote the employment of seniors.
As a reminder: before September 1, 2023
The social regime of conventional termination compensation is different depending on whether or not the employee was able to collect a retirement pension from a legally obligatory regime.
Employee eligible for a compulsory retirement pension
→ compensation fully subject to social security contributions
Ineligible employee
→ compensation exempt from social contributions up to twice the annual social security ceiling, i.e. €87,984 in 2023, up to the highest of the following 3 amounts:
- Amount of compensation provided for by the sectoral collective agreement, by the professional or interprofessional agreement or failing that by the law,
- 2 times the amount of the employee’s gross annual remuneration during the calendar year preceding the termination,
- 50% of the amount of compensation paid
The portion of the termination compensation exempt from social security contributions is subject to a social security flat rate of 20% payable by the employer.
From September 1, 2023:
The social compensation system will be the same regardless of the age of the employee and their possibility of receiving a retirement pension.
The termination compensation will always be exempt from social security contributions under the same conditions but will be subject to an employer contribution of 30% for its portion exempt from social security contributions. This 30% employer contribution replaces the 20% social package.
In summary, for all conventional terminations taking effect from September 1, 2023, the employer cost will be higher if the amount of the conventional termination compensation is below the social exemption ceilings.
Note: the amount of the employer’s contribution to retirement compensation decreases from 50% to 30%.
