OD FLASH | Calculation of the reference salary: indemnities for unused mandatory rest days should not be reintegrated into the remuneration.

French Supreme Court, Social Division, September 4, 2024, 23-10.520

In a ruling dated September 4, 2024, the French Supreme Court clarified the treatment of sums owed to an employee for unused mandatory compensatory rest, when calculating severance pay and compensation for dismissal without real and serious cause. These amounts, classified as damages and not as salary, must be excluded from the amount used to calculate the reference salary.

The employee’s entitlement to compensation for unused mandatory rest days is outlined in article D.3121-3 of the French Labor Code.

The dismissal was notified to the employee on July 6, 2018. The employee filed a claim with the Labor Court requesting that the dismissal be deemed unjustified and that their fixed-term workday agreement be declared unenforceable and that his employer be ordered to pay him various sums in this respect.

The Court of Appeal ruled that the dismissal was without real and serious cause and detailed the amounts owed to the employee by the employer. Judges ordered the company to pay them “damages for unused mandatory rest periods in 2017 and 2018.”

The issue was to determine the amount to be taken into account (on the point of compensatory indemnity for compulsory rest) when calculating severance pay and compensation for dismissal without real and serious cause.

To determine the amount of the reference salary to be used in the calculation of the severance payment, the Court of Appeal held that it was necessary to reintegrate into the reference salary the unused compulsory compensatory rest indemnity, which have the nature of salary.

The company lodged an appeal before the French Supreme Court. It disputed the fact that the indemnity granted in compensation for unused mandatory rest was included in the salary taken into account to calculate the severance pay and compensation for dismissal without real and serious cause.

The French Supreme Court based its ruling on three articles of the French Labor Code:

• Article L. 1234-9, which provides that an employee on a permanent contract (CDI) for more than 8 months is entitled to severance pay, except in cases of serious misconduct ;
• Article R. 1234-4, which states that the salary to be taken into account for the calculation of severance pay is the more favorable formula between the monthly average of the last twelve months preceding the dismissal or one-third of the last three months;
• Article L. 1235-3, which stipulates that if an employee’s reinstatement following dismissal without real and serious cause is refused, the judge shall award the employee compensation payable by the employer in accordance with amounts set by table.

The French Supreme Court ruled in favor of the company, stating that the indemnities for unused mandatory rest days owed to the employee qualify as damages.

As a result, these sums are not considered part of the remuneration to be taken into account by the employer when calculating the reference salary used to determine the severance pay and the compensation for dismissal without real and serious cause.