The start of 2026 sets a new employment law landscape: the cost of terminations is rising, the mechanics of contribution reductions and exemptions are changing, and certain issues are coming back to the fore (purchasing power, pay transparency). At the same time, the French Supreme Court (Cour de cassation) is pursuing substantive work: it is shifting the cursor on working time and employee representation.
For employers, the challenge lies less in piling up new rules than in identifying the areas where a detail becomes a risk.
Without attempting an exhaustive review of the changes at the start of this year, several issues, with varied origins, deserve immediate attention.
Termination by mutual agreement: the increase is confirmed
Since 1st January 2026, the specific employer contribution on the termination payment under a termination by mutual agreement (rupture conventionnelle) has risen to 40% (instead of 30%) on the portion exempt from social security contributions[1], an increase that applies in the same way to the retirement payment where retirement is at the employer’s initiative.
This is a net increase in cost for the employer, to the detriment of terminations by mutual agreement.
Payroll mechanics change formula: configuration errors become a risk
On 1st January 2026, the general contribution reductions were not adjusted but restructured. Two changes shape the reform: first, the abolition of reduced rates of employer health insurance and family allowance contributions (excluding special schemes)[2]; second, the introduction of a single, tapering general reduction (réduction générale dégressive unique, RGDU) which replaces and consolidates the former reduction mechanisms, tapering up to 3 times the national minimum wage (SMIC)[3].
As URSSAF stressed in its points of attention at the start of the year, this new reduction formula must be read together with, in particular, the changes to the exemption schemes for overtime.
In this respect, the employer’s flat-rate deduction is now presented according to a standard scale linked to headcount: €1.50 below 20 employees; €0.50 from 20 employees [4].
Caution, then, where payroll is concerned. Discrepancies rarely arise from a single case; they stem from ordinary situations (part-time work, absences, adjustments, etc.) and add up over several months.
For example, a part-time employee whose working hours vary over the year, or an employee with absences and returns during the month, may trigger pro rata calculations and adjustments which mechanically alter the reductions applied, and a formula or configuration error is then replicated across a series of payslips.
Fixed-term contracts: a new ground for career transition
Since 1st January 2026, a new ground for using a fixed-term contract (CDD) linked to the career transition period has come into force[5]. On paper, it is one more option. In practice, it is a useful contractual route for certain mobility and career-change paths, but also a classic area for reclassification as a permanent contract. The benefit is real, but its use and implementation must remain cautious, as is traditionally the case with fixed-term contracts.
Pay transparency: an issue to anticipate before it becomes compulsory
Pay transparency is no longer an image issue: it is a legal project. The European directive of 10 May 2023 must be transposed by 7 June 2026 at the latest[6] (a deadline which, according to the Minister of Labour, may nonetheless not be met).
Even though the French details will depend on the transposition, the direction of travel is clear: pay policy will have to become explainable and, above all, justifiable.
In practical terms, two trends are set to take hold in companies: first, greater transparency at the recruitment stage (the pay or, at the very least, a pay range and criteria); second, increased pressure on the ability to justify internal pay gaps objectively, because comparison becomes easier and challenges more structured.
The sensitive point is therefore not disclosure as such: it is the ability to explain, with supporting evidence.
Pay practices will have to become defensible and traceable: job classification, progression criteria, exceptions, variable pay and consistency of pay levels.
Paid leave and overtime: a further step
Having accepted, in September 2025[7], that paid leave must be taken into account in triggering overtime under a weekly calculation, the Court now applies the same reasoning to a two-week calculation[8].
For employers, the issue is a practical one: review the working time and payroll configuration wherever leave and overtime intersect. Back-pay claims are often built this way: an incorrect calculation, repeated, rarely ends as a simple adjustment.
CSE: loss more easily established where no elections are held and no report of no candidates is drawn up
The Social and Economic Committee (CSE) is not an issue reserved for large groups. On the contrary, the risk is concentrated around the thresholds: headcount not properly monitored, elections not initiated, lack of candidates not formally recorded.
If no representatives are elected once elections have been organised (which is compulsory when the company has had at least 11 employees for 12 consecutive months), a report must ultimately be drawn up recording the lack of candidates (procès-verbal de carence).
Failing that, the lack of representation gives rise to a right to compensation, without the employee having to prove any separate loss.[9].
In other words, failing to set up a CSE does not only carry a collective risk; it can become an individual, quantifiable and recurring risk.
January 2026 can be summed up in one sentence: terminations cost more, payroll changes formula, and pay transparency must be prepared before it is imposed.
[1] Article 15 of Act No. 2025-1403 of 30 December 2025 on social security financing for 2026
[2] Articles 18 and 40 of Act No. 2025-1403 of 30 December 2025 on social security financing for 2026
[3] Decree No. 2025-887 of 4 September 2025 on the implementing arrangements for various schemes reducing and exempting employer social security contributions, in force since 1st January 2026
Article 18 of Act No. 2025-1403 of 30 December 2025 on social security financing for 2026
[4] Article 21 of Act No. 2025-1403 of 30 December 2025 on social security financing for 2026
[5] Article L. 1242-3, 5 of the Labour Code, in force since 1st January 2026
[6] Directive (EU) 2023/970
[7] Cass. soc. 10 September 2025 No. 23-14.455 and No. 23-14.457
[8] Cass.soc. 7 January 2026, No. 24-19.410
[9] Cass. soc. 17 December 2025, No. 24-19.383
