Holiday Pay Indemnity: Bonuses and Supplementary Hours Must Be Included

In Charleville-Mézières, an academic researcher wonders while filling in his tax return: should bonuses for marking exam papers and sitting on professional degree viva voce panels, received in addition to his basic salary, be taken into account to calculate his holiday pay indemnity? A question that arises for any employee receiving supplementary remuneration. The Court of Cassation, in a judgment of 13 September 2023, answers in the affirmative: any sum paid in consideration of or in connection with work must be included in the basis of calculation of the holiday pay indemnity. A decision that clarifies a often contentious point and protects employees' rights.

The Facts: A Story Like Many Others

Mr X, a lecturer at the University of Reims, receives each year bonuses for marking exam papers and participating in viva voce panels for professional degrees. In 2018, he claims from his employer, the university, a back-payment of holiday pay indemnities for the periods 2015-2016 and 2016-2017, considering that these bonuses should have been integrated into the calculation. The university refuses, arguing that these payments are exceptional and not linked to his main activity. The dispute is brought before the employment tribunal, then the Reims Court of Appeal. The latter rules in favour of the employer in 2021, considering that the bonuses in question are not part of the normal remuneration and therefore should not be taken into account. Mr X appeals to the Court of Cassation. The Court of Cassation quashes the appeal judgment, ruling that the sums paid for marking exam papers and viva voce panels are indeed paid in consideration of or in connection with work, and must therefore be included in the basis of calculation of the holiday pay indemnity.

The Court's Reasoning — Analysed

The Court of Cassation relies on Article L. 3141-22 of the Labour Code, which provides that the holiday pay indemnity is calculated on the employee's total remuneration. It clarifies that this remuneration includes all sums paid in consideration of or in connection with work, including bonuses and allowances, whatever their designation. In this case, the bonuses for marking exam papers and viva voce panels are paid for tasks performed within the scope of the employee's professional activity, even if they are occasional or distinct from his main duties. The Court of Appeal had excluded these sums on the ground that they were not part of the usual remuneration, but the High Court reminds that the criterion is not regularity, but the link with work. This decision confirms consistent case law: since a judgment of 26 January 2022 (n° 20-21.813), the Court of Cassation requires the inclusion of all work-related bonuses, such as target bonuses or 13th-month bonuses. The employer's arguments – exceptional nature, lack of direct link – are therefore dismissed.

What This Means for You — Practically

For employees receiving bonuses (seniority, year-end, profit-sharing, or supplementary hours), this decision means that their holiday pay indemnity must be calculated on the basis of their total remuneration, and not solely on the basic salary. Concretely, in Épernay, a salesperson receiving €2,000 fixed salary and €500 monthly bonuses will see their holiday pay indemnity calculated on €2,500, not €2,000. For an employer, the cost can be significant: they must check their payroll records and regularise any underpayments for the last three years (three-year limitation period). If you are an employee and you notice that your holiday pay indemnity does not include your bonuses, you can claim a back-payment. For employers, it is urgent to update your payroll software and employment contracts.

Four Tips to Avoid This Type of Dispute

• Check your payslips: ensure that the holiday pay indemnity mentions the total gross salary, including bonuses. If in doubt, ask for a breakdown from your employer.
• Keep all evidence of bonuses: contracts, riders, payslips, bank statements. This will facilitate proof in case of a dispute.
• For employers: update your payroll software to automatically include all bonuses in the calculation of holiday pay. Train your HR department on the latest case law.
• In case of disagreement: send a recorded delivery letter to your employer requesting a back-payment, then refer the matter to the employment tribunal within 3 years of the end of the contract or the disputed payment.

Further Reading: Related Case Law and Developments

This decision is part of a protective trend for employees' rights. Already, in a judgment of 26 January 2022 (n° 20-21.813), the Court of Cassation had ruled that the target bonus must be included. However, certain bonuses not linked to work (such as reimbursement of professional expenses) remain excluded. The Court of Justice of the European Union (CJEU) has also reminded that the right to paid leave is a fundamental principle of European social law, reinforcing the obligation of an indemnity calculated on normal remuneration. In the future, one can expect judges to extend this rule to other types of variable remuneration, such as tips or commissions. Employers must therefore anticipate a broad interpretation of the notion of "total remuneration".

What You Must Absolutely Remember

FAQ:

• Which bonuses are affected? All those paid in consideration of or in connection with work: seniority bonuses, 13th-month bonuses, target bonuses, profit-sharing bonuses, supplementary hours, etc. Sums not linked to work (reimbursement of expenses) are excluded.
• Can I claim a back-payment for past years? Yes, within the three-year limitation period (3 years from the end of the contract or the disputed payment).
• What if my employer refuses? Refer the matter to the employment tribunal. A consultation with a specialised lawyer can help you assess your rights.
• Does this decision apply to civil servants? Yes, the principle is similar in the civil service, but the applicable texts differ.
• How is the holiday pay indemnity calculated? The method most favourable to the employee is applied: either 1/10th of the total remuneration received during the reference period, or the maintenance of the basic salary. Your employer must apply the most advantageous rule.

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