Understanding and Calculating Paid Leave Indemnities in 2026
Paid leave indemnities represent an essential financial compensation for employees in the event of contract termination or unused leave. In 2026, their calculation remains governed by the Labour Code, but it is crucial to understand the methods to ensure fair remuneration. This comprehensive guide explains how to determine these indemnities, which rules to apply and which elements to consider.
What are paid leave indemnities?
Paid leave indemnities are paid to an employee when they cannot take all of their accrued leave, usually due to a contract termination (resignation, dismissal, end of a fixed-term contract, etc.). They financially compensate unused leave days. According to Article L3141-1 of the Labour Code, every employee, regardless of contract type (permanent contract (CDI), fixed-term contract (CDD), part-time, etc.), is entitled to these indemnities.
In 2026, two main methods are used to calculate these indemnities: the 1/10 rule and the salary maintenance method. The employer must apply the one most favorable to the employee.
Method 1: Calculating paid leave indemnities with the 1/10 rule
The 1/10 rule is one of the most commonly used methods to determine the amount of paid leave indemnities. It is based on the gross remuneration received by the employee during the reference period, which generally runs from June 1 of year N to May 31 of year N+1.
What is the tenth of paid leave?
The tenth of paid leave corresponds to 10% of the employee’s annual gross remuneration. This base includes not only the basic salary but also various additional elements such as:
- Seniority bonuses
- Overtime hours
- Sales or performance bonuses
- Gratuities and allowances paid during periods assimilated to actual work
How to calculate the tenth of paid leave?
To apply this method, follow these steps:
- Calculate the employee’s total gross remuneration received during the reference period.
- Apply the formula: Annual gross remuneration × 1/10.
- Divide the result by the number of leave days accrued to obtain the daily rate.
- Multiply this rate by the number of leave days to be settled to obtain the final indemnity amount.
Concrete calculation example
Take the example of an employee whose annual gross remuneration amounts to €19,500, including all bonuses. This employee has accrued 30 days of paid leave during the reference period.
The calculation proceeds as follows:
- €19,500 × 1/10 = €1,950 (total amount for 30 days)
- €1,950 ÷ 30 days = €65 per day
If the employee did not take 10 days of leave, the compensatory indemnity will be €65 × 10 = €650.
Method 2: Calculating paid leave indemnities by salary maintenance
The salary maintenance method is an alternative to the 1/10 rule. It consists of calculating the paid leave indemnities based on the salary the employee would have received if they had worked during their leave days. This method is particularly useful for employees whose remuneration varies according to hours worked.
How to apply this method?
To calculate indemnities using this method, follow these steps:
- Determine the employee’s gross monthly salary, including all remuneration elements (bonuses, overtime, etc.).
- Calculate the number of actual working hours the employee would have performed had they not taken leave (normal hours + overtime).
- Apply the following formula: Monthly salary × (Number of hours not worked ÷ Total hours in the month).
Calculation example with salary maintenance
Imagine an employee whose gross monthly salary is €1,600 for 152 hours of work per month. This employee takes 10 days of leave in a month with 21 working days (i.e., 70 hours not worked).
The calculation is as follows:
- €1,600 × (70 hours ÷ 152 hours) = €736.84
The amount of paid leave indemnities for these 10 days will therefore be €736.84.
Which method to choose for calculating paid leave indemnities?
According to the Labour Code, the employer must apply the method most favorable to the employee. Here is how to proceed:
- Calculate the paid leave indemnities using both methods (1/10 and salary maintenance).
- Compare the results obtained.
- Choose the higher amount for the employee.
This approach ensures that the employee receives fair compensation, in accordance with the legislation in force in 2026.
Special cases: CDD, part-time and additional leave
Paid leave indemnities for employees on fixed-term contracts
Employees on a fixed-term contract (CDD) are also entitled to paid leave indemnities, even if their contract is short. If the employee cannot take their leave before the end of their contract, the employer must pay a compensatory indemnity. The calculation is performed using the same methods as for a permanent contract (CDI).
Part-time employees
For part-time employees, the calculation of paid leave indemnities follows the same rules as for full-time employees. The only difference lies in the number of hours worked, which must be taken into account to determine the indemnity amount.
Additional leave and split leave days
Certain collective agreements or company agreements provide for additional leave, notably for employees with a certain length of service. These days can affect the calculation of indemnities. For example, an employee may benefit from 2 days of split leave if they take part of their leave outside the legal period (from May 1 to October 31).
Elements to include in the calculation of paid leave indemnities
For an accurate calculation of paid leave indemnities, several elements must be taken into account:
- Base salary: fixed amount received by the employee.
- Overtime hours: payment for hours worked beyond the legal duration.
- Bonuses and gratuities: seniority bonuses, performance bonuses, 13th-month pay, etc.
- Transport or meal allowances: if they are paid regularly.
- Benefits in kind: housing, company car, etc., if their value is included in the gross remuneration.
Conversely, some allowances are not taken into account, such as reimbursement of professional expenses or severance payments.
Key takeaways on paid leave indemnities in 2026
In 2026, paid leave indemnities remain a fundamental right for all employees, regardless of contract type. Here are the key points to remember:
- Every employee accrues 2.5 working days of paid leave per month of actual work, i.e., 30 days per year.
- Two calculation methods coexist: the 1/10 rule and the salary maintenance method.
- The employer must always apply the method most favorable to the employee.
- Paid leave indemnities include various elements of remuneration (bonuses, overtime, etc.).
- Employees on CDDs or part-time contracts have the same rights as other employees.
To avoid any dispute, it is recommended to document calculations carefully and refer to collective agreements or company agreements, which may provide specific provisions.
Frequently asked questions about paid leave indemnities
1. Are paid leave indemnities taxable?
Yes, paid leave indemnities are subject to income tax, like any other element of remuneration. They are also subject to social security contributions.
2. What happens in the event of resignation or dismissal?
In the event of contract termination, the employer must pay a compensatory indemnity for paid leave for unused leave days. The calculation is performed using the same methods as for an active employee.
3. Can paid leave be carried over from one year to the next?
In principle, paid leave must be taken within the year. However, certain collective agreements or company agreements allow carrying over part of unused leave to the following year, within the limit of 6 working days.
4. How are paid leave indemnities calculated for an employee on sick leave?
Periods of sick leave are treated as actual work for the calculation of paid leave indemnities, within the duration set by the collective agreement or the Labour Code.
5. Are interns entitled to paid leave indemnities?
No, interns are not considered employees and therefore are not entitled to paid leave indemnities. However, some companies grant days off to their interns, but that is part of their internal policy.
