France: How Damages are Assessed in Unfair Dismissal Cases

On 18 March 2026, the French Supreme Court ruled that damages in case of unfair dismissal must be calculated on the same reference salary as legal severance indemnities.

Since the 2017 “Macron” ordonnances, the amount of damages an employee can claim in case of unfair dismissal is determined according to a set scale. This scale sets out the minimum and the maximum amount of damages an employee may be awarded, expressed as a certain number of month’s salary, which varies in accordance with the employee’s length of tenure.

However, the ordonnances did not detail how to calculate the reference salary which would then be used to calculate the number of month’s salary in damages which could be awarded.

The French Supreme Court ruled that the reference salary should be calculated in the same way as the reference salary which is used to calculate the severance indemnity due in case of dismissal i.e. the month average of the last 12 months salary or a third of the last 3 months salary (according to which is more favourable for the employee), all annual or exceptional bonuses paid during this reference period being calculated prorate.

Key Action Points for Human Resources and In-House Counsel

Ensure your payroll is set up to properly calculate the appropriate severance indemnity.