OD Flash | Thirteenth-month bonus: Payments from the conversion of time savings account (CET) rights are not included in the bonus calculation, unlike rewards for long-service medals (“médaille du travail”), as outlined in the collective agreement for France Travail employees

French Supreme Court, Social Chamber, November 6, 2024, No. 22-23.689

The time savings account (CET) allows employees to accumulate rights to paid leave or to receive compensation, whether immediate or deferred, in exchange for unused leave or rest periods, or amounts allocated to the account (French Labor Code, Art. L. 3151-2). In a decision dated November 6, 2024, the French Supreme Court ruled on the treatment of amounts in exchange for the release of CET rights in the calculation of the thirteenth-month bonus.

The collective bargainingagreement France Travail employeesprovides for the payment of a thirteenth-month bonus to all employees, calculated based on remuneration during the reference period, from December 1 of the previous year to November 30 of the current year.

In 2020, the union for executive employees (CFE-CGC) filed a claim against France Travail, challenging the calculation of the thirteenth-month bonus. Employee representatives argued that the amounts received by employees in exchange for the release of CET rights should be included in the calculation base and sought to regularize the situation for all employees. The Paris Judicial Court dismissed the union’s claims, and the employee representatives appealed the decision.

The Court of Appeal held that amounts corresponding to the release of CET rights do not exhibit any regularity linked to the employee’s performance of work and upheld the Judicial Court’s decision. Since the thirteenth-month bonus is calculated based on a specific period of work, these amounts are not to be included in the calculation base. Furthermore, the Court of Appeal also determined that the gratifications related to long-service medal (“médaille du travail”) provided under the applicable collective bargaining agreement are not wages but rather bonuses. The union appealed before the French Supreme Court, arguing that even though CET contributions are discretionary and differ in timing from regular pay, they should count as part of the remuneration for calculating the thirteenth-month bonus, just like long-service (“médaille du travail”) medal rewards.

The French Supreme Court dismissed the appeal concerning the CET amounts but overturned the Court of Appeal’s decision regarding long-service medal. It reiterated that amounts stemming from the use of CET rights do not exhibit any periodicity related to work performance or remuneration. First, the funding of the CET is determined freely by the employee and employer. Second, the liquidation of the CET depends solely on applicable legal and contractual provisions.

Thus, these amounts cannot be considered as remuneration paid by the employer for work performed during the reference period for calculating the thirteenth-month bonus. The Court of Appeal was correct in ruling that these amounts should not be included in the calculation base for said bonus.

The French Supreme Court had previously ruled that amounts stemming from the monetization of CET rights are excluded from the calculation base for severance pay (Cass. Soc., July 10, 2013, No. 12-18.273) or redeployment leave (Cass. Soc., June 22, 2016, No. 14-18.675), as they do not form part of the reference month’s remuneration.

Lastly, the French Supreme Court reaffirmed in this decision that gratifications related to long-service medals (“médaille du travail”), as provided under the collective bargaining agreement France Travail employees and granted in recognition of service, are mandatory and constitute remuneration received during the reference period.