« Equal pay for equal work » or the end of discretionary bonus ? Inventory of fixtures about the principle of equal treatment

By a decision of April 30rst, 2009 n°07-40.527, the French Supreme Court of appeal (Cour de cassation) completes its case law about the principle “equal pay for equal work” by broadening it to the traders' bonus.

1) Facts and procedure

A trader qualified as a “financial analyst” was given a variable bonus. This one was fixed discretionary by the employer.

Contrary to his colleagues, the trader has seen his bonus progressively reduced each year, then totally suppressed by the employer, before being fired.

This employee raised the case to the French Employment Tribunal (Conseil de prud'hommes) by claiming discrimination.

The Court of appeal rejected his claim by stating that the discretionary criterion of this bonus prevented the application of the principle “equal pay for equal work”, and that the employee did not bring the evidence to be victim of discrimination.

Then the employee went to the Supreme Court of appeal (Cour de cassation) which received his claim favourably.

2) Solution

First, the Supreme Court of appeal reminds that it is to the employer to establish that the wage difference between employees doing the same work is justified by objective and discerning elements.

French judges apply the European Community Law in the discrimination and equality of treatment matters.

The objectivity requirement chases away the discretionary power and the discerning requirement refers to the respect of the proportionality principle, dear to the European Community.

The evidence supported is lightened for the employee who only has to bring some facts which presume the difference of treatment. The employer would have so to establish that the wage difference is justified.

Moreover, the Supreme Court of appeal adds that the employer cannot put forward his discretionary power to escape from his obligation to justify unequal measures (See the press release from the Cour de cassation:

As a conclusion, the Social Chamber rightly decides that regarding to the principle “equal pay for equal work” the only fact that a bonus is leave to the free assessment of the employer, does not justify a wage difference.

An employer cannot give bonus and taking them back at will. He has to respect the principle “equal pay for equal work” or prove a possible objective and discerning reason, which will be check by judges who will assess it advantage by advantage.

Regarding to this case law, in our opinion, employer cannot grant discretionary bonus anymore, each measure taken would have to be justify regarding to the principle “equal pay for equal work”.

The advice to employers could be to inform in advance the employees about the bonus attribution criterions, by the means of memorandum or negotiation with trade unions. Transparency reigns.

Frédéric CHHUM avocat à la Cour


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