How Is Unemployment Benefit Calculated: Reference Salary (SJR), Caps, and Special Cases
During a dismissal or a mutually agreed termination, the calculation of the A.R.E. (Return-to-Work Allowance) raises many questions. Severance payments, last salary, bonuses, caps, high incomes, benefit degressivity… The rules are specific and often misunderstood.
This article explains how unemployment benefits are actually calculated, in a clear and educational way, based on up-to-date rules and with legal accuracy, including for executives and senior managers with high incomes.
1. A.R.E.: A Replacement Income, Not a Severance Payment
The ARE (Return-to-Work Allowance) is an unemployment insurance benefit paid by France Travail to employees who have lost their job and meet the required contribution conditions.
It is distinct from:
- severance pay,
- the specific indemnity paid in the event of a mutually agreed termination,
- any amount negotiated as part of the termination.
The ARE is solely intended to partially compensate for the loss of salary, in accordance with strictly defined rules.
2. The Reference Salary: The Basis for the Calculation
2.1 The Reference Period for Calculation (PRC)
The reference salary is calculated based on the gross salaries received before the termination, over a defined period:
- the 24 months preceding the last day worked and paid,
- 36 months for jobseekers aged 55 and over.
This period constitutes the PRC (Reference Period for Calculation).
2.2 Remuneration Taken Into Account
The following are included:
- base salary,
- overtime pay,
- regular bonuses (seniority, role-related, attendance),
- regular commissions,
- recurring variable pay components,
- customary salary-related benefits.
This corresponds to the normal remuneration related to actual work performed.
2.3 Excluded Remuneration
The following are excluded:
- severance pay (statutory or additional),
- the specific indemnity paid in the event of a mutually agreed termination,
- compensatory indemnities (paid leave, notice),
- non-compete indemnity,
- damages,
- replacement income.
These amounts never increase the ARE.
3. The SJR (Daily Reference Salary)
3.1 Definition
The SJR is calculated using the official formula:
SJR = total gross salary taken into account ÷ number of calendar days in the period
The calculation takes into account:
- days worked,
- and non-worked days (weekends, public holidays, leave, etc.).
🔎 Why are Non-Worked Days taken Into account?
Since the unemployment insurance reform:
- non-worked days are included in the calculation,
- but capped at 70% of worked days (since 1 April 2025),
- 75% for employment contracts ending before that date.
Purpose: to prevent an alternation of short-term contracts from artificially increasing the SJR.
3.2 Salary Reconstitution in the Event of a Work Interruption
In the event of:
- sickness,
- maternity leave,
- paternity leave,
- short-time work (partial activity),
France Travail reconstructs the usual salary in order to avoid penalising the claimant.
4. Calculation of the Daily A.R.E. Amount
The gross daily amount of the A.R.E. corresponds to the most favorable amount between:
- 40.4% of the SJR plus a fixed portion,
- 57% of the SJR.
Fixed portion in force since 1 July 2025: €13.18 per day.
Minimum and Maximum Limits of the A.R.E.
The gross daily amount of the A.R.E. (Return-to-Work Allowance) is subject to several regulatory minimum and maximum limits, which are applied after the theoretical calculation.
Minimum Amount
The daily amount of the A.R.E. cannot be lower than
- €32.13 per day since 1 July 2025
This minimum threshold does not apply in certain situations, in particular in cases of part-time work.
Maximum Amount
The gross daily amount of the A.R.E. is also capped at a maximum amount, set at:
- €294.21 gross per day
5. The Waiting Period: A Time Lag Before Payment
The waiting period corresponds to a delay before the first payment of the A.R.E., without any impact on the amount of the entitlement.
It includes:
- a mandatory 7-day waiting period,
- a deferred period related to paid leave,
- a specific deferred period linked to additional (supra-legal) severance payments.
Maximum Waiting Period:
- 157 days (general case),
- 187 days (economic redundancy).
6. The Special Case of High Earners
6.1 Capping of Remuneration Taken Into Account
For unemployment insurance purposes, the remuneration taken into account is capped at four times the PASS (Annual Social Security Ceiling).
- PASS 2026: €48,060 (effective from 1 January 2026)
- 4 × PASS: €192,240 per year (maximum 2026 SJR ≈ €192,240 ÷ 365 ≈ €525 per day)
Beyond this threshold, no additional entitlement is generated.
6.2 Impact on the Amount of Unemployment Benefit
In 2026, this cap results in a maximum unemployment benefit of approximately €300 gross per day,
i.e. around €9,000 gross per month (based on 30 days, France Travail monthly calculation).
7. A.R.E. Degressivity: When and Why the Benefit May Be Reduced
Principle
In principle, the A.R.E. remains stable throughout the entitlement period and then ends when rights are exhausted.
Degressivity is a targeted exception.
Who Is Affected?
- jobseekers under the age of 55 at the end of the employment contract,
- whose SJR exceeds €159.68 per day,
- i.e. an A.R.E. above €92.11 per day,
- corresponding to a previous salary above €4,915 gross per month.
Jobseekers aged 55 and over are not affected.
When Does It Apply?
- from the 7th month of compensation,
- i.e. after 183 compensated days
(9th month for certain situations prior to 2021).
How Does It Work?
- a one-off reduction of up to 30%,
- subject to a floor of €92.11 per day,
- the reduced amount applies until the end of the entitlement period.
Degressivity is suspended when the claimant undertakes training during the compensation period.
8. Why Seek Support from a Lawyer?
The calculation of the A.R.E. is technical.
A mistake regarding the PRC (the period over which your salaries are assessed), bonuses, the SJR calculation, caps, the waiting period, or degressivity can result in a significant financial loss over the course of your benefits.
9. The Lawyer’s Role: Advice, Review, and Legal Safeguarding
An employment law lawyer can:
- anticipate the effects of a termination,
- advise on the departure strategy,
- verify the calculation of the SJR and the A.R.E.,
- secure the claimant’s rights,
- challenge an incorrect decision.
Schedule an appointment now with Eve Domaniewicz’s law firm for tailored, personalised support.
