VARIABLE REMUNERATION: Employers must prove that the targets are achievable.

[credit image Ricarda Mölck de Pixabay]

In a recent decision of the French High Court “Cour of Cassation” on 15 November 2023, employers were reminded of the need to demonstrate the achievability of the targets set for each financial year when paying the variable part of an employee’s salary.

In this case, the employee received, in addition to his fixed monthly salary, a variable salary calculated on the basis of collective and individual targets set unilaterally by the employer for each financial year.

As he had not received all of his bonuses for two financial years, he brought the matter before the French Labour Court (Conseil des Prud’hommes), claiming back pay and stating that the targets set by the employer for those years were not achievable in view of the company’s commercial policy. This was due in particular to the company’s decision to let go a major customer and the resulting impact on revenues.

In this case, the “Cour of Cassation” confirmed its previous positions in similar cases and reiterated the requirements for the employer, namely:

  • The employer must prove that it communicated the objectives to the employee at the beginning of the period in question;
  • The burden of proof is on the employer to demonstrate that the objectives are achievable;

It is consequently highly important to communicate as clearly as possible in writing when setting your targets for each financial year and to ensure that the targets for each employee are achievable.

In the event of a dispute, it is up to the employer to prove to the courts  that the targets were achievable, and not up to the employee to prove that they were not achievable.


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