Quarterly holidays included in paid holiday pay: what the judgment of 22 June 2017 changes

You are an employer in an establishment for disabled persons near Arles, and each year you pay your educators additional quarterly holidays provided for by the 1966 collective agreement. But here's the thing: when one of them takes annual leave, should you include these quarterly bonuses in the calculation of their paid holiday pay? The question is tricky, and the answer from the Court of Cassation on 22 June 2017 (No. 14-15.135) has caused much ink to flow.

What few people know is that the amount of paid holiday pay can vary from single to double depending on what is taken into account. For an employee whose basic salary is €2,000, but who receives €500 in quarterly bonuses, the allowance could increase from €2,000 to €2,500 per month of leave. undefined, I have come across cases where employers, in good faith, applied a different rule, leading to costly litigation.

So, what does the judgment actually say? It states that remuneration relating to additional quarterly holidays (so-called "additional paid holidays under Article 6") must be included in the basis for calculating annual paid holiday pay. In other words, these bonuses are not a simple accessory: they form an integral part of the remuneration to be taken into account for calculating statutory paid leave.

The facts: a story that happens every day

Mr X, a special needs educator in a medico-social establishment in Aix-en-Provence, benefited, like all his colleagues, from additional quarterly holidays provided for by Article 6 of Annex No. 3 of the national collective agreement for establishments and services for disabled and handicapped persons of 15 March 1966. Each quarter, he received a specific allowance for these additional leave days. But when he took his annual leave (the statutory 5 weeks), his employer calculated the paid holiday pay solely on his basic salary, without including the quarterly leave remuneration.

Mr X challenged this method before the employment tribunal of Aix-en-Provence, arguing that the sums received for quarterly leave should be included in the basis for calculating annual paid holiday pay. The employer, for its part, argued that this remuneration was paid for a separate purpose (quarterly leave) and should not be taken into account for calculating annual leave.

The employment tribunal ruled in favour of the employee, but the Court of Appeal of Aix-en-Provence overturned that judgment. Mr X then appealed to the Court of Cassation. In its judgment of 22 June 2017, the Court of Cassation set aside the appeal judgment and referred the case back to the Court of Appeal of Montpellier. It held that remuneration relating to additional quarterly holidays must be included in the basis for calculating annual paid holiday pay, in the same way as other elements of remuneration.

The reasoning of the court — broken down

To understand the reasoning of the Court of Cassation, we must go back to Article L. 3141-22 of the French Labour Code. This provision states that paid holiday pay is calculated according to the rule of one-tenth of the total remuneration received by the employee during the reference period. The question was whether remuneration paid for additional quarterly holidays (Article 6 of Annex 3 of the collective agreement) forms part of this "total remuneration".

The employer argued that these sums were paid for specific leave, distinct from annual leave, and therefore should not be taken into account. But the Court of Cassation adopted a broad interpretation: as soon as remuneration is paid in consideration of work, it must be included in the basis for calculating paid holiday pay, unless the law or the collective agreement provides otherwise. However, nothing in the 1966 collective agreement excluded this remuneration.

In clear terms, the Court considered that additional quarterly holidays are a form of consideration for work, in the same way as basic salary or seniority bonuses. Consequently, the remuneration relating to them must be included in the calculation of annual paid holiday pay. Note, however, that this decision only concerns quarterly holidays provided for by Article 6 of Annex 3, and not other types of additional leave.

This reasoning is part of a jurisprudential trend favourable to assimilating additional leave with statutory leave for the calculation of the allowance. The Court of Cassation has already ruled that seniority leave (Article 22, paragraph 3) or reduced working time leave must be treated in the same way. Here, it confirms and extends this principle.

What this changes for you — concretely

If you are an employer in the medico-social sector, you must now include remuneration paid for additional quarterly holidays (Article 6) in the basis for calculating your employees' annual paid holiday pay. Concretely, this means that for an educator who receives €300 per quarter for this leave, you will have to add €1,200 (€300 × 4 quarters) to their annual remuneration to calculate the paid holiday pay. If their basic annual salary is €30,000, the allowance will increase from €3,000 (€30,000 / 10) to €3,120 (€31,200 / 10) for 5 weeks of leave. This may seem small, but multiplied by the number of employees, the financial impact is real.

If you are an employee and you benefit from these quarterly holidays, check your payslips. If your employer does not include this remuneration in the calculation of your paid holiday pay, you can claim back pay. Note, however, that the limitation period is 3 years (Article L. 3245-1 of the French Labour Code). Do not wait to act.

Let's take a concrete example: an educator working in Aix-en-Provence receives a basic salary of €2,200 per month, plus €400 quarterly remuneration for her additional leave (i.e., €1,600 per year). Her employer calculates the paid holiday pay solely on the basic salary: (€2,200 × 12) / 10 = €2,640 for 5 weeks. However, with the decision, the €1,600 should be included, i.e., (€26,400 + €1,600) / 10 = €2,800. The difference is €160 per year. Over several years, this can amount to several thousand euros.

Four tips to avoid this type of dispute

• Check your collective agreement: Not all collective agreements provide for quarterly holidays. Make sure you are concerned by Article 6 of Annex 3 of the 1966 agreement.
• Review your payslips: For employers, have your practices for calculating paid holiday pay audited. Systematically include remuneration related to quarterly holidays in the basis.
• Keep supporting documents: In the event of an Urssaf inspection or litigation, you must be able to demonstrate that you apply the rule. Keep payslips and leave records.
• Consult a lawyer lawyer: If you have any doubt about the interpretation of your collective agreement, seek advice. An initial 30-minute consultation (€45 with Maître Zakine) can save you from a trial.

Further information: related case law and developments

This decision is part of a line of Court of Cassation judgments favourable to including remuneration related to additional leave in the basis for calculating paid holiday pay. For example, in a judgment of 3 November 2016 (No. 15-18.855), the Court had already ruled that allowances paid for seniority leave should be included. Similarly, a judgment of 10 February 2016 (No. 14-21.737) concerned reduced working time leave.

The trend is therefore clear: the Court of Cassation assimilates additional leave of conventional origin with statutory leave for the calculation of the allowance. This principle could extend to other types of leave (exceptional leave, leave for family events, etc.) if similar texts exist.

For the future, employers must integrate this case law into their payroll software. Employees, for their part, must be vigilant and not hesitate to claim their rights. The Court of Cassation has clearly indicated that remuneration for additional leave is not a simple accessory: it forms an integral part of the remuneration to be taken into account.

What you absolutely must remember

FAQ:

1. Which leave is affected by this decision? Only the additional quarterly holidays provided for by Article 6 of Annex No. 3 of the national collective agreement for establishments and services for disabled and handicapped persons of 15 March 1966.
2. Can I claim back pay for the past? Yes, within the 3-year limitation period. If you have received paid holiday pay without inclusion of this remuneration, you can act.
3. Does my employer have to include all bonuses in the basis for paid holiday pay? No, only remuneration that is consideration for work is concerned. Bonuses unrelated to work (e.g., reimbursement of expenses) may be excluded.
4. What if my employer refuses to apply this rule? Apply to the employment tribunal. You can also contact a lawyer specialising in employment law to assess your situation.
5. Does this decision apply to other collective agreements? The principle could be extended to other agreements that provide for paid additional leave, but each case must be examined individually.

Are you in a similar situation? An initial 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →