The Employment Chamber of the French Supreme Court recently ruled that whilst employers retain the right to grant bonuses to some employees and not others, any difference in treatment must be justified in an objective manner. It concluded that the principle of “equal pay for equal work” applies to discretionary bonuses in the same way as other earnings.
This case involved an employee who, unlike the rest of his colleagues, had his discretionary bonus reduced year on year. He issued proceedings claiming that he was entitled to his unpaid bonus. Initially his claim was rejected because the Court of Appeal said that, in line with previous case law, the principle of equal pay for equal work did not apply to discretionary bonuses – the very nature of the bonus scheme meant that employers had a wide discretion over the amount of any payments.
The Supreme Court disagreed and in doing so has placed the burden for justifying any differences in treatment squarely on the shoulders of employers. It held that employers cannot avoid their obligation to give objective and relevant reasons for any differences in pay by saying they have discretion whether to pay a bonus or not.
The Supreme Court’s reasoning sounds familiar to the approach adopted in the UK Courts, namely that employers must not exercise their discretion in a way that is discriminatory, irrational, arbitrary or perverse.