In a decision of March 9th, 2023, the Paris Court of Appeal considered that a variable remuneration clause in a commission plan for an employee of Compagnie IBM France was void because it was mandatory.
Under the terms of article 1304-2 of the Civil Code, any obligation is void when it was contracted under a potestative condition on the part of the person committing himself.
The potestative condition is one which depends only on the will of one party to a contract.
The method of remuneration of an employee being a substantial element of his employment contract, it must be clearly fixed and cannot be modified unilaterally by the employer, without the agreement of the employee being obtained; failing this, it can only be analyzed as a potential condition likely to result in the nullity of the contractual clause relating to the method of remuneration which will be unenforceable against the employee.
1) Facts and procedure
Mr. X was hired on July 10, 2000 by Compagnie IBM France as an Executive
– Advisor (Pos III B2 225).
He most recently held the position of “Senior Sales Specialist”.
In addition to his fixed remuneration, Mr. X received variable remuneration.
A new commission plan was agreed between the parties for the first half of 2017 within the framework of which it was specified that Mr. of predefined clients.
On March 22, 2018, Mr. X and company Y concluded a conventional termination of the employment contract.
The contractual relationship between the parties ended on October 2, 2018.
The employee contacted the Paris industrial tribunal on February 4, 2019 in order to request payment of part of the variable remuneration of which he considered to have been unduly deprived and additional sums in respect of the contractual termination compensation of which he had benefited.
By judgment of December 15, 2020, the Paris industrial tribunal dismissed Mr.
X of all of his claims and ordered him to pay the costs.
By declaration dated January 7, 2021, the interested party filed an appeal.
In his latest conclusions, notified and filed at the registry electronically on January 9, 2023, Mr.
- declare his appeal admissible and well-founded;
- overturn the judgment of the Industrial Court in that it dismissed all of his requests;
ruling again,
- note that Compagnie IBM France has unlawfully capped, unilaterally, the amount of its variable remuneration for the first half of 2017;
Consequently,
- declare and judge that he should have received his entire variable remuneration for the first half of 2017;
- set your reference salary at 37,883.84 euros gross monthly (for the period of March
2017 to February 2018);
- order Compagnie IBM France to pay him the following sums:
o 233,104.59 euros gross as remaining variable remuneration for the first half of 2017;
o 23,310.46 euros gross for related paid leave;
o 64,231.52 euros gross for the remaining mobility leave allowance (article III.3 of the collective contractual termination);
o 6,423.15 euros gross for related paid leave;
o 36,780.45 euros gross for the remaining compensation for rapid completion of the project (article III.3 of the collective contractual termination);
o 189,978.99 euros gross for the remainder of the specific incentive compensation
(article III. 3 of the collective contractual termination);
o 4,000 euros under article 700 of the code of civil procedure.
- order Compagnie IBM France to contribute under article 83 of the General Tax Code on back pay, mobility leave allowance and specific incentive compensation;
- order Compagnie IBM France to provide him with pay slips, a work certificate and a Pôle Emploi certificate corrected and in accordance with the judgment to be issued, subject to a penalty of 50 euros per day of delay and per document;
- state that salary claims bear interest at the legal rate from receipt by Company Y of the summons before the conciliation and guidance office of the industrial tribunal and that compensation claims bear interest at the legal rate from delivery of the judgment;
- order Compagnie IBM France to pay possible costs.
In its latest conclusions, notified and filed at the registry electronically on January 4, 2023, Company Y asks the Court to:
- confirm the judgment of the Paris Industrial Tribunal in that it judged that the adjustment made to Mr.
- overturn the judgment of the Paris Industrial Tribunal in that it dismissed his requests under article 700 of the CPC and the civil fine based on article 32-1 of the
Code of Civil Procedure ;
Consequently :
- dismiss Mr.
- order Mr.
adding:
- order Mr.
CPC;
- order Mr.
2) Decision of the Paris Court of Appeal of March 9th, 2023
In its decision of March 9th, 2023 (RG 21/00888), the Paris Court of Appeal:
. confirms the judgment undertaken in that it dismissed Mr.
for mobility leave allowance, compensation for rapid realization of
project and specific incentive compensation,
. the cripple for the rest,
Ruling again on infirm heads and adding:
. orders Compagnie IBM France to pay Mr.
- 233,104.59 euros gross as a reminder of variable remuneration for the first half of 2017
- 23,310.46 euros gross for related paid leave;
- 2000 euros under the provisions of article 700 of the code of civil procedure
. says that the employer will be required to present the employee with a summary pay slip,
and a Pôle Emploi certificate complying with the terms of this decision within the deadline of
two months following the notification of this judgment,
. states that the sums of a salary nature will produce interest at the legal rate from the receipt by the employer of its summons for conciliation and that the sums of a compensatory nature will produce interest at the legal rate from this judgment,
2.1- On the request for a reminder of variable remuneration for the first half of the year
2017
The variable remuneration plan agreed between Compagnie IBM France and Mr.
The parties agree that the transactions concerned by Mr.
Company Y explains, however, that it was justified in adjusting the employee's variable remuneration and that it was therefore right not to pay him 9% of the total turnover thus achieved, i.e. 333,006.57 euros but 99,901.98 euros.
Thus, she emphasizes that Mr. she had indicated to the employee by email of February 6, 2017 that beyond 100% of her expected earnings, the files would be studied and could be subject to a so-called “capping” adjustment (exhibit 5 of the respondent company ).
She also argues that the employee's commission plan included a clause entitled significant transaction which authorized her to adjust the amount of commissions paid (exhibit 7 from the respondent company).
However, the method of remuneration of an employee constitutes an element of their employment contract which cannot be modified without their agreement.
Also, as the employee points out, the email by which his employer indicated to him that the amount of his variable remuneration may be subject to an adjustment does not have contractual value and cannot therefore be opposed to him.
Furthermore, under the terms of 1304-2 of the civil code, any obligation contracted under a condition whose fulfillment depends solely on the will of the debtor is void.
In this case, the “significant transaction” clause stipulated in Mr. of variable remuneration concerned for the period of validity of the plan. In this case, the normal operation of the plan would be distorted, which would result in a payment disproportionate to the employee's actual contribution. Consequently and in order to restore the broken balance, the management of company Y reserves the possibility of adjusting the payment based on the actual contribution of the employee to the signing of this significant transaction and/or on the relationship between said significant transaction and the potential of the territory taken into account when determining the quota. The management of Company Y will justify this adjustment”.
Thus, this clause does not set any clear, objective and predefined criteria making it possible to know the methods of calculating the cap on variable remuneration and how “the actual contribution of the employee” is determined and consequently allows the respondent company to reserve the right to adjust the payment of commissions according to its sole will.
It is therefore potestative and cannot therefore be opposed to the employee.
The respondent Compagnie IBM France cannot therefore rely on it.
Also, she did not have the ability to cap the employee's commission by referring to the email from M.L., SW director of January 16, 2018 according to which: “Mr. SaaS transactions throughout the country although it does not play a key role in each of them. To reflect its overall cross-contribution: support for transactions, animation of SaaS actions... management's assessment is that it should receive 30% of transactions which are also supported by other sellers directly in their territories and technical sellers ”(exhibit 17 from the employer), which also makes no reference to any “significant transaction” or to any specific element relating to the adjustment made.
Mr.
3,700,073 euros.
The judgment will therefore be reversed in that it rejected the employee's recall request.
of commissions calculated on this basis.
Compagnie IBM France will therefore be ordered to pay him a sum of
233,104.59 euros corresponding to the difference between what he should have received
(333,006.57 euros) and what he received (99,901.98 euros) as a reminder of variable remuneration, in addition to the related paid leave.
2.2- On requests for revaluation of compensation allocated to the employee in the
framework of the termination agreement by mutual agreement
In accordance with the provisions of article 1103 of the civil code, legally formed agreements take the place of law for those who made them.
In this case, the termination agreement expressly provides for the gross amount of salary
(11,954 euros) on the basis of which the termination compensation allocated to Mr.
X and more precisely mobility leave allowances, for rapid completion of projects and specific incentives.
Also, Mr. remuneration which was judicially awarded to him.
The requests he makes in this regard will therefore be rejected.
2.3 - On other requests
The employer will be required to present to the employee a summary pay slip and a Pôle Emploi certificate complying with the terms of this decision within two months following notification of this judgment, without there being any need to order a penalty at this stage.
Sums of a salary nature will produce interest at the legal rate from the employer's receipt of its conciliation summons and sums of a compensatory nature will produce interest at the legal rate from this judgment.
There is no reason to order the employer to contribute to the back pay allocated to the employee as long as these, expressed in gross terms, are subject to contribution.
Due to the circumstances of the case, it appears fair to award Mr. to the device.
The unsuccessful employer will have his counterclaims dismissed.
Frédéric CHHUM avocat et ancien membre du conseil de l’ordre des avocats de Paris (mandat 2019-2021)
CHHUM AVOCATS (Paris, Nantes, Lille)
e-mail: chhum@chhum-avocats.com
https://www.instagram.com/fredericchhum/?hl=fr
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