Under the French Labour Code, holiday pay must be calculated according to the more favourable of the following two formulae:
Holiday pay must be equal to a tenth of the total gross remuneration received by the employee within the "reference holiday year" (from 1 April one year to 31 March the following year)
Employees on holidays must benefit from "the same salary as if they had been working".
However, the law does not mention the elements of the remuneration which must be taken into account to make this calculation.
Since this "holiday indemnity" aims at maintaining salary, French case law considers that employees on holiday must benefit from the elements of remuneration which are linked to their own personal activity and which are impacted by the holiday period.
For instance, items that the courts have decided must be included in the basic calculation of holiday pay include: target-based bonuses (Cass. soc., September, 22, 2011); employee's commissions, provided they are aimed at rewarding personal work (Cass. soc., June, 3, 2009), and also performance bonuses, even if they are only partially linked to the personal activity of the employee (Cass. soc., December, 7, 2011).
By contrast, items that are not taken into account include commissions which are calculated based on the results of an entire commercial department (Cass. soc., June, 22, 2011); commissions which are not impacted by the holiday period because they are due for the whole year (Cass. soc., April, 10, 2013); a "13th month" bonus payment (Cass. soc., June, 8, 2011); or any amount which is aimed at covering the employee's expenses, such as transport premiums (Cass. soc., December, 18, 2012).
In other words, to determine whether variable remuneration should be included in the calculation of the "holiday indemnity", the following questions should be asked: Is the element of remuneration linked to the employee's personal activity? Does the employee's absence during his holiday impact the amount of his/her commissions? If the answer is "yes", then the calculation of the "holiday indemnity" should include the commissions. If the answer is "no", then the calculation of the "holiday indemnity" should not include the commissions.
As a result, relating to holiday pay, French Labour Law seems to be in compliance with the European Court decision in Lock which held that an employee's holiday pay cannot be limited to the basic salary.
However, in relation to sickness leave, according to French case law the reference year for calculating holiday pay does not include sickness leave because the French Labour Code does not refer to it specifically – unlike maternity leave and paternity leave, for example (Cass. soc., March, 13, 2013). This position seems not to be in compliance with EU case law which suggests that, under the wide definition of the reference holiday year under the EU Directive, the employee's holiday rights cannot be impacted by sickness leave (Dominguez, January 2012). (French case law has decided not to apply this EU Directive since it cannot be invoked in litigation between two people and cannot exclude a national law.)