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The indemnity for breach of the protective status is subject to income tax and social security contributions

The French Supreme Court recently held (FSC, February 12, 2015, n°14-10886) that the indemnity for breach of the protective status paid to a protected employee who has been dismissed without the Labour inspector’s authorization must be included in the basis on which social security and unemployment contributions are paid, given that this indemnity is not mentioned in article 80 duodecies of the French Tax Code in the list of the indemnities that are not subject to income tax.

The Court of appeal (Angers, November 19, 2013, n°12.01159) had initially followed the employer’s argument against a social security reassessment, according to which « the indemnity for breach of the protective status paid to the employee dismissed is meant to sanction the employer’s ignorance of the employee’s protective status but not to repair the harm which the latter has suffered from as a result of the termination of his employment contract ; it should not therefore be treated as a salary item ».

The French Supreme Court did not follow suit and on the contrary quashed the Court of appeal’s decision.