How to calculate severance pay?

Gross salary is the amount used to calculate any recognized right. In addition to seniority bonus, all cash benefits are taken into account for salary calculation. The right of termination, like all rights, must be exercised without abuse.

Severance pay is calculated based on the salary received during the last 52 weeks and the duration of work for the employer. Is it gross or net salary? Do bonuses, gratuities, provision of a car, accommodation, etc., count towards the salary calculation? And how to calculate the duration of work? Must the work be effective? If so, are periods of rest for women in confinement, annual leave, sick leave, etc., excluded? Explanations.


1-What does the salary include?
The employee receives, in return for the work provided, remuneration called salary. This is not without ambiguity and everything seems designed to confuse the analysis: labor law, tax law and social security law use concepts that sometimes reserve different treatment, and this is why the labor code avoided giving any definition of salary, it focused more on the principle of fixing its amount. Indeed, Article 345 of the code stipulates that the salary is freely fixed by direct agreement between the parties or by collective work agreement, but its amount is, most often, determined by the employer according to the qualification recognized to the employee upon hiring.
The salary used as a basis for calculating all rights recognized to the employee is the gross salary, which includes the seniority bonus and all other bonuses, gratuities, benefits in kind and cash.

2- Seniority bonus
The salary includes several elements including the seniority bonus. This is fixed at 5%, 10%, 15%, 20% and 25% after 2, 10, 15, 20 and 25 years of service respectively. It is calculated on both the salary itself and the surcharges for overtime and on salary accessories.
However, the following accessories are, by virtue of Article 353 of the code, excluded from the calculation of the amount of the bonus:

• Family benefits;
• Tips, except for personnel exclusively paid in tips;
• Gratuities granted either in the form of fractional payments, or in the form of a single payment at the end of the year or at the end of the financial year, including gratuities calculated as percentages of profits or turnover of the company;
• Profit sharing, the remuneration supplement granted in the so-called "proportional salary" system and, generally, any random and unpredictable generosity;
• Allowances for temporary replacement in a position of a higher category than that of the employee and for work temporarily performed in a position where the employee performs exceptional work;
• Allowances or bonuses that constitute a reimbursement or compensation for expenses or costs, of a liability, of an unfavorable situation, or of the performance of dangerous or arduous work.
• Concerning the calculation of the duration of the effective work of each period, the following are considered as periods of effective work and cannot be deducted from the duration of the services taken into account for the allocation of the seniority bonus:
• The temporary suspension of work resulting from an industrial accident or an occupational disease;
• Sick leave days;
• Legal rest for women in confinement;
• Annual leave periods;
• Authorized absences;
• Temporary interruption of work due to a shutdown of all or part of the company resulting from force majeure such as disaster, breakdown or contract reduction, shortage of raw materials.

Periods of service, continuous or not, are not taken into account for the calculation of the seniority bonus if they have already been taken into account for the calculation of the severance pay granted previously.
When the employee is remunerated, in whole or in part, by percentage, commission, performance or piece, the bonus is calculated on the basis of the average net remuneration received during the three months preceding the due date of said bonus.

3- Cash benefits
In addition to the seniority bonus, all cash benefits are taken into account for the calculation of the salary. Bonuses, gratuities and benefits in kind are due when they are provided for by law (seniority bonus, bonus for dangerous work), by the staff regulations (employees of public companies with an industrial or commercial vocation), by the individual employment contract, by the collective agreement, by the unilateral commitment of the employer or by constant, general and fixed usage.
A bonus can meet one of three objectives:

• Remunerate the stability of the employee in the company (seniority bonus, attendance bonus...);
• Remunerate a particular effort imposed by the nature of the work (bonus for dangerous, arduous, dirty work...);
• Remunerate a particular effort in the performance of the work (performance bonus, responsibility bonus...).

In the absence of legal, conventional or unilateral provision, jurisprudence uses the notion of usage attested by the generality, constancy and fixity of the payment. The courts consider that one or even two payments do not characterize a usage.
Similarly, payments that do not obey a precise and objective rule allowing employees to know approximately the amount in advance do not characterize a usage since the amount varies significantly from one time to another.
In any case, the combination of the three criteria (generality, constancy and fixity) is necessary for the bonus or gratuity to have the character of a salary.
A gratuity, generally inspired by a generous intention, takes the form allocated to the employee by virtue of his or her sole status as an employee without any necessary correlation with the provision of work. The gratuity also originates in the employer's desire to express his or her satisfaction after a satisfactory performance (results bonus, 13th month...).
Family events provide the occasion for its payment (birth, marriage, schooling bonus, departure on holiday...).

4- Benefits in kind
The granting of benefits in kind takes various forms: food, accommodation, company car, etc. It reflects the employer's desire to remunerate in this way part of the service performed by the employee. It should not be confused with a simple faculty or tolerance granted on the occasion of the exercise of the functions, such as a car placed at the disposal of the employee for the needs of the service.
Benefits in kind are most often constituted by the provision of food or accommodation or a company car or all these benefits at once. But they can also take other forms. The representative value of benefits in kind is to be added to cash remuneration for the calculation of salary.
In principle, food is retained for its real value. However, in hotels, restaurants and similar establishments, the value of food is calculated from the minimum legal hourly wage with a coefficient ranging from 1 to 2.5 according to the level of the real cash wage served to employees, excluding all bonuses or allowances. For employees paid by the day, week or month, the value of a meal is represented on a flat-rate basis, as the case may be, by: 1/8th of the daily wage (8 working hours), 1/48th of the weekly wage (6 working days), 1/192nd of the monthly wage (26 working days). The value of a breakfast is fixed at 1/4 of the value of a meal.
The value of the accommodation is equal to the real rental value of the accommodation plus the other benefits associated with it such as water, lighting, heating, telephone, as well as domesticity and security (when those who provide them are not already declared to the CNSS in the same way as all the company's personnel).
In the absence of a real rental value, it is estimated from the value determined for the assessment of the urban tax plus the estimation of other benefits.
The provision of a company car by the company also implies the assumption of insurance costs, registration, maintenance, repair, garage, etc.
It is in the interest of both parties that the provision and the associated costs are assessed, the amount of the assessment must be added to the salary received by the beneficiary employee.

5- How to calculate holiday pay?
In the event of termination of the employment contract, compensatory holiday pay is due to the employee whatever the reasons for termination. This allowance is calculated on the basis of 1.5 days for each period of 26 days, even when the minimum period of 6 months of service is not reached, provided, however, that the employee proves to have been employed by the same employer for a period of time equivalent to a minimum of one month's work.
The effective working time used to determine the duration of the leave includes not only the periods during which the employee actually worked, but also those not worked and expressly assimilated by law to effective work. Thus, according to Article 239 of the code, the following are considered as periods of effective work:
- The duration of paid leave from the previous year;
- The duration of the notice period in case of termination or expiry of the employment contract;
- The periods during which the performance of the employment contract was suspended, that is to say: during the duration of the worker's absence due to illness or accident duly attested by a doctor, for a period not exceeding 180 consecutive days; during the period preceding and following childbirth under the conditions provided for by the code; during the period of temporary incapacity of the worker resulting from an industrial accident or an occupational disease; during the duration of various absences of the worker provided for by the code; during the duration of the strike or the voluntary closure by the employer known as "lock-out"; during the periods during which the performance of the employment contract was suspended due to unemployment, authorized absence not exceeding ten days per year, or temporary closure of the establishment by administrative decision or force majeure.

How to calculate the notice period indemnity?

The calculation of the notice period indemnity does not pose any particular problem. It is made on the basis of the employee's working time in the company, i.e., during the first year, at the rate of 8 days for workers and employees and 1 month for executives. During the period from 1 to 5 years, the duration is 1 month for the former and 2 months for the latter. Beyond that, the duration is 2 months for the former and 3 months for the latter.
The employee, dismissed or resigning, owes notice to the employer. When he refuses to provide his work during the notice period while he has not been exempted from fulfilling his obligation, he will be ordered to pay the employer an indemnity equal to the wages he would have received if he had continued to work until the expiry of the notice period.
On the other hand, the employer who opposes the employee continuing to provide his work during the notice period resulting from dismissal or resignation, and who refuses to pay the employee the wages and benefits he would have received if he had continued to work, will be ordered to pay the compensatory notice period indemnity.

6-How to calculate severance pay?
When an employee is dismissed, having at least six months of effective service in the same establishment or company, he may claim severance pay. The seniority taken into account for the calculation of the indemnity runs from the date of entry into service in the company until the expiry of the notice period, even if the notice period has not been worked.
Under Article 54 of the code, the following are considered periods of effective work:

• Periods of paid leave;
• Rest periods for women in confinement;
• The duration of temporary incapacity for work when the employee has been the victim of an industrial accident or has suffered an occupational disease;
• Periods of work during which the performance of the employment contract has been suspended, without the contract having been terminated, in particular due to authorized absence, illness other than occupational, temporary closure of the establishment by administrative decision or force majeure.

7-Salary used as a basis for calculating the indemnity
The salary used as a basis for calculating the indemnity includes the salary itself and the following accessories received during the last 52 weeks:
- Benefits in kind;
- Commissions and tips;
- Bonuses and allowances related to work, with the exception of allowances constituting a reimbursement or compensation for expenses or costs; allowances constituting compensation for liability except for allowances such as team leader or group bonuses, allowances for arduous or dangerous work; allowances constituting compensation for work performed in an unfavorable geographical area; allowances for temporary replacement of an agent of a higher category or for work performed temporarily or exceptionally, except for overtime allowances.
The "legal" severance pay has no salary character, it is therefore not subject to any deduction and is not subject to any tax under Article 76 of the labor code.

8-Calculation of the indemnity
The amount of severance pay corresponds for each year, or part of the year of effective work to:

• 96 hours of salary for the first 5-year period of seniority;
• 144 hours of salary for the seniority period from 6 to 10 years;
• 92 hours of salary for the seniority period from 11 to 15 years;
• 240 hours of salary for the seniority period exceeding 15 years.

9- How to calculate damages related to the abusive termination of the contract?
As the termination of the employment contract is subject to judicial control, the courts, when seized of the matter, decide whether the right of termination thus exercised has been tainted with abuse resulting in material damage, in which case the injured party will be entitled to compensation for said damage.
The abusive nature of the dismissal is demonstrated during the investigation ordered by the social courts
The compensation for damages corresponds to one and a half months' salary for each year of seniority, or part of a year. The total amount, which cannot exceed 36 months' salary, is determined according to the gross salary and the duration of work as calculated above.

Lavieeco.com