Law firm specialising in employment law
and social security law.
Law firm specialising in employment law
and social security law.
Each month, AvoSial(*) publishes a column for actuEL-RH. This month, Anne Leleu-Eté, a lawyer with the firm Axel Avocats, discusses the latest rulings on the holiday bonus provided for by the "Syntec" collective agreement, the outlines of which are constantly being refined by case law.
Column published in actuEL RH can be read by clicking on the link below: https://www.actuel-rh.fr/content/les-regles-respecter-lors-du-versement-de-la-prime-de-vacances-en-application-de-la or can be read below.
Article 31 of the national collective agreement for engineering firms, consultancies and consultancy firms (“Syntec”) provides for the payment of a holiday bonus.
These provisions raise questions for companies falling within its scope regarding the contours of this obligation: what is the calculation method for this bonus? What is the calculation base? What are the terms of payments? Can the employer make adjustments to this bonus?
In order to answer these questions, it is necessary to analyse two types of texts: firstly, the article of the collective agreement which provides the basis for the obligation, and, secondly, Court of Cassation case law which has gradually ruled on the practical assessment of this article.
In order for the bonus paid by an employer to be considered a holiday bonus, the calculation and terms of payment must fulfil specific conditions.
In accordance with the provisions of Article 31 of the collective agreement, two methods enable the employer to fulfil its obligation.
The employer may first pay a "holiday bonus" as such: the total amount paid as the holiday bonus (meaning the total amount paid by the company) must in this case be at least equal to 10% of the total amount of holiday pay for all employees recorded on 31 May.
Faced with such a lack of precision, in particular regarding how the bonus should then be distributed, the joint committee on the collective agreement specified that companies could opt for the following distribution methods:
The employer may also fulfil its obligation by paying a bonus or gratuity to employees: in accordance with the provisions of the collective agreement, “all bonuses or gratuities” paid during the year may be considered holiday bonuses and consequently replace it.
This second case is nevertheless limited to certain very specific conditions, provided that it is required that the bonus or gratuity is:
However, the relatively imprecise wording of Article 31 has given rise to a number of questions and disputes.
Case law continues to clarify the subject. Let’s look in turn at the two authorised cases for payment of the bonus.
Many questions remain regarding the conditions for payment of the "Syntec" holiday bonus, and some practices show that employers' obligations in this respect are not always fulfilled.
Prohibition on including the holiday bonus in the basic salaryFor example, it is not uncommon to find that some contractual clauses include the holiday bonus in the employee's gross monthly basic salary. Do such practices comply with the original text? Unfortunately, not. And yet, it is still a common practice.
It must be deduced from the text of Article 31 that a "fixed" component of the employee's salary cannot include the holiday bonus, just as the terms of payment of the salary cannot prevent payment of the bonus.
In this respect, the Court of Cassation underlined its position in a ruling of 5 May 2021. In this case, an employee was paid his gross annual basic salary in 13 instalments, which enabled his employer to argue that it had fulfilled its obligation to pay the holiday bonus. According to the employer, the final instalment constituted a 13th month of salary that could replace the holiday bonus. Unsurprisingly, however, the Court of Cassation underlined that the payment of the annual salary in 13 instalments corresponded to the terms of payment of the salary that could not replace the payment of the holiday bonus, even if expressly provided by the contract.
This case invites employers to be cautious in the drafting of employment contracts and in relation to the legal classification of salary components paid to the employee.
Therefore, in practice, the contractual clause must, if it refers to the holiday bonus, set out the calculation method and not include the bonus in the payment of the basic salary. The bonus must always be shown on a separate line item on the payslip.
The employer will only be considered to have properly fulfilled its obligations if these requirements are met (obviously provided that the calculation also complies with the terms of the collective agreement and the opinion of the joint committee).
A holiday bonus cannot be paid in return for workFurthermore, in accordance with Article 31 of the “Syntec” collective agreement, any bonus or gratuity paid during the year may be considered a holiday bonus provided that it amounts to at least 10% of the total amount of holiday pay and at least a portion of the bonus or gratuity is paid during the period between 1 May and 31 October.
Again, questions arise from this drafting since the nature or type of bonus or gratuity is not specified that may constitute a holiday bonus: it is precisely due to the lack of precision of this article that many disputes have arisen.
Is there a specific type of bonus or gratuity that may or may not be considered acceptable and therefore approved as a holiday bonus in accordance with the requirements set out in Article 31? Unfortunately, this is not possible for an obvious reason linked to the multitude of internal practices: each company has its own rules, defines the names of its bonus, and it is not possible to grant “pre-approval" for any type of bonus or gratuity. It is therefore only possible to define broad requirements for calculation and payment and it is subsequently for the courts to assess in concrete terms whether the contested bonus fulfils these requirements. Rulings handed down gradually by the Court of Cassation have given us some guidelines.
Firstly, bonus or gratuity means a sum of money paid on an exceptional basis which does not compensate any individual work done by the employee. In this respect, the Court of Cassation was able to clarify that the objective-based bonus provided for in the contract could not constitute a bonus or gratuity within the meaning of Article 31 (ruling of 18 June 2008).
Conversely, the Court of Cassation ruled that exceptional bonuses, seniority bonuses (not provided for in the employment contract or collective agreement) or incentive bonuses paid to all employees could be considered a holiday bonus (provided obviously that they fulfil the two other conditions stated above) (in particular, ruling of 7 March 2018).
It must also be understood from the case law of the Employment Division of the Court of Cassation that the payment of a sum of money cannot replace the holiday bonus if this sum already compensates for a component outside the employment relationship (such as, for example, meal vouchers or job insecurity bonus paid to temporary researchers in accordance with the provisions of the “Syntec” collective agreement) or if it represents additional remuneration provided for the employee's work.
Rulings are recurrent on these matters.
In the latest example, the Court of Cassation underlined on 19 May 2021 that a 13th month bonus paid in addition to the basic salary could replace the holiday bonus as long as it did not constitute terms of payment of the salary and it represented at least 10% of the total amount of holiday pay for all employees.
Such a solution is not new since the Court of Cassation had already ruled in this respect on 10 April 2019, but it deserves to be underlined since in practice, we find that some clauses in the scope of our activity may sometimes not comply with the Court of Cassation’s requirements and expose the company to legal risks.
As a reminder, for sums treated as salary payments, the limitation period is three years in this type of dispute.
For all these reasons, employers should be cautious when drafting employment contracts and line items on payslips. We strongly advise employers to pay particular attention to their practices in this area.
(*) AvoSial is an association of lawyers specialised in employment and social security law who advise and represent employers in court.