How is the reference salary calculated?
06 June 2025 · 4 min reading time
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See job offersThe reference salary is a crucial element for calculating various social benefits: severance pay, unemployment benefits, daily allowances in case of sick leave, and more. It's therefore essential to understand how it's calculated and what it includes. Let's explore these elements based on different situations.
What is the reference salary?
The reference salary corresponds to the average gross remuneration received by an employee over a specific period, which varies depending on the rights concerned. It generally includes base salary, regular bonuses, gratuities, commissions, and benefits in kind. However, certain indemnities (severance pay, compensatory leave pay, professional expense reimbursements) are not taken into account.
The calculation period for the reference salary
The calculation period for the reference salary varies depending on the context and the benefits targeted. For severance pay, it generally extends over the last 12 months of salary, or the last 3 months if that is more advantageous. For example, if an employee has worked 5 years in the same company, the average of their last 12 pay stubs will be used (or the last 3 if these salaries are higher due to recent bonuses).
For daily sickness benefits, the reference period is 3 full calendar months preceding the work stoppage. Concretely, an employee on leave as of April 15 will have their benefits calculated based on the average salaries for January, February, and March.
Finally, for unemployment benefits, the daily reference salary is calculated over the last 12 to 36 months, depending on the employee's age. For instance, a 52-year-old person who is unemployed will have their benefits based on the average of their income over the last 24 months. A 55-year-old employee, on the other hand, will be assessed over 36 months.
This reference period allows for determining a representative average of the income received and ensures a fair calculation of social rights.
The reference salary in case of sick leave
In case of a work stoppage due to illness, the reference salary is crucial for calculating the daily allowances paid by Social Security. This is the average gross salary received during the 3 calendar months preceding the work stoppage.
The calculation is done by adding up the gross salaries (including bonuses and benefits in kind) received over these 3 months, then dividing the total by 91.25, which corresponds to the average number of days in 3 months. This provides the basic daily salary.
Elements included in the reference salary: gross base salary, regular bonuses and gratuities, benefits in kind.
Elements excluded: severance pay or conventional termination indemnity, compensatory leave pay, professional expense reimbursements, and daily allowances already received for a previous work stoppage.
The daily allowance paid by Social Security is equal to 50% of this basic daily salary, up to an annual ceiling. In the event of a work accident or occupational disease, the amount may be higher.
The reference salary for unemployment benefits
The reference salary is also crucial for calculating the Back-to-Work Assistance Allowance (ARE). In this context, we refer to the daily reference salary (SJR).
The SJR is calculated from the average gross remuneration received during the reference calculation period (PRC):
- 12 months for those under 53 years old.
- 24 months for those aged 53-54.
- 36 months for those aged 55 and over.
This period is counted in calendar days (including working days, weekends, suspension periods, etc.). The salaries taken into account are those contributed to unemployment insurance: base salary, bonuses and gratuities, benefits in kind.
👉 Example:
A 50-year-old employee worked continuously for the 12 months preceding the end of their contract. Their average monthly gross salary was €2,000.
The total over 12 months is therefore: €2,000 × 12 = €24,000.
The period consists of 365 calendar days.
The SJR is calculated as follows:
€24,000 / 365 = €65.75 per day.
👉 Notice period cases:
If the employee did not work their notice period but was paid, the reference period ends at the end of the paid notice period.
If they neither worked nor received notice indemnity, the period stops on the day before the "fictitious" notice period.
👉 Reconstitution cases:
In case of suspension (e.g., illness, parental leave), France Travail (French unemployment agency) can reconstitute the salary that would have been paid in the absence of the event, to ensure a fairer calculation.
The daily amount of unemployment benefits is then based on this SJR, by applying the formulas provided by regulations.
The reference salary in case of dismissal
The reference salary is essential for determining the amount of the legal severance pay. Two calculation methods are considered; the most advantageous for the employee is retained:
- The monthly average of the 12 last months preceding the notification of dismissal.
- The monthly average of the 3 last months, with a pro-rata integration of annual or exceptional bonuses received during this period.
If the employee has less than 12 months of seniority, the average is calculated over all months worked preceding the dismissal.
Elements included: gross base salary, mandatory bonuses (seniority, 13th month, holiday, etc.), commissions and gratuities, benefits in kind, and overtime or complementary hours.
Elements excluded: severance pay or conventional termination indemnity, compensatory leave pay, professional expense reimbursements, and exceptional bonuses not provided for by the contract or collective agreement.
👉 Example:
An employee who received a gross monthly salary of €1,500 and an annual bonus of €1,200, the annual bonus is spread over 12 months (€100 per month), which gives an average salary of €1,600 per month. If their last 3 months are higher (€1,700 per month with exceptional bonuses), this latter amount will be retained.
Amount of legal indemnity: 1/4 of a month's salary per year of seniority for the first 10 years, then 1/3 of a month beyond 10 years. For example, for 12 years of seniority and a reference salary of €1,600: (€1,600 × 1/4 × 10) + (€1,600 × 1/3 × 2) = €5,066.67.
The reference salary and temporary work
For temporary workers, the reference salary is determined in the same way as for employees on standard contracts, taking into account the average gross remuneration received over the reference period. Successive temporary missions are included in the calculation, along with all remuneration elements (base salary, primes, benefits in kind). This ensures that rights to daily allowances, unemployment, or severance pay are equitably assessed, even in fragmented career paths. This specific consideration of temporary missions is essential to allow temporary workers to benefit from the same social rights as employees on permanent or fixed-term contracts.
👉 Example:
A 55-year-old temporary worker has completed several missions over 3 years, with varying salaries depending on the month. For the calculation of their unemployment benefit, the reference period will be 36 months (because they are over 55). All gross salaries received during these missions will be taken into account to determine their daily reference salary.
Why is it Important to Know Your Reference Salary?
Mastering the calculation of your reference salary allows you to:
- Better anticipate the amount of your indemnities in case of contract termination.
- Estimate your entitlement to unemployment benefits.
- Forecast the amount of your daily allowances in case of sick leave.
- Plan your retirement and budget with peace of mind.
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