Creation of the negotiated termination and tax exemption of the severance payment

Article 5 of the law of 25 June 2008 modernising the labour market created the negotiated termination of permanent employment contracts, approved by the labour administration, which gives access to unemployment insurance. The specific payment, at least equal to the statutory severance pay, is exempt from income tax (Article 80 duodecies of the General Tax Code) when the employee cannot draw a retirement pension, up to the highest of: the contractual or statutory severance pay, or twice the previous year's gross annual pay or 50% of the payment, capped at six times the annual social security ceiling. It receives the same social contribution treatment as voluntary departure payments.