Taking Back What's Ours? Possibilities and Impossibilities of Recapturing Bonuses
| Author | Nicola Gundt |
| DOI | 10.1177/1023263X1001700204 |
| Date | 01 June 2010 |
| Published date | 01 June 2010 |
| Subject Matter | Article |
162 17 MJ 2 (2010)
TAKING BACK WHAT’S OURS?
POSSIBILITIES AND IMPOSSIBILITIES
OF RECAPTURING BONUSES
N G*
ABSTRACT
is a rticle deals with the possibilities that Dutch and French civil law and labour law
oer to b ring about changes in employment contracts, more particularly, the possi bilities
to change bonus clau ses. Both countries use rather dierent concepts. Where the Dutch
law uses general principle s and relies on the judge’s appreci ation of the fa cts, the French
law o pts for strictly objective reasonings with virtual ly no role for the judge other than
objectively applying the conce pts. However, in a concrete case, the outcome may not dier
as much as one might expe ct on rst sight.
Keywords: Labour Law; Employment contracts; Adaptation of contracts to change of
circumstances
§1. INTRODUCTION
Since about two years ago, the nancial and economic crisis is part of our daily life.
As a consequence of bad risk management and spec ulation with non-existing values,
banks al l over the world have gone ba nkrupt. Others are in di re straits and have
become extremely cautious w ith cred its and lending. In order to restore the ow of
money and to keep the ec onomy running, national and reg ional authoritie s support
some of them wit h billions of Dollars or Euros. However, while the authorities try to
save t he banks with public funds, the latter pay their leading ma nagers and directors
substantial bonuses.1 is behaviour, not unexpectedly, triggered an enor mous wave
* Dr. Nicola Gundt, Lec turer Labour Law, Maast richt University.
1 See for example the newspaper headings on Friday, July 31st; ‘Hoge bonussen voor bankiers VS ondanks
staatssteu n’, elec tronically ava ilable at
voor_bank iers_VS_ondanks _staatssteun > (last visited 16.06. 2010).
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 163
of moral indignation. Barack Obama, for exa mple, qual ied t he banke rs’ behaviour
as sh ameful.2 A nd the Dutch Secretar y of Fi nance, Wouter Bos, called the managers’
greed inappropriate. According to Bos, the bonuses are t he unwanted and excessive
consequence of cu rrent incomes policies, but there is not much that can be done about
them, except to hope that managers voluntari ly refrain from claiming t he bonuses.3 Bos
seems to thin k that there are no legal ways to at least challenge t he bonuses. In my view,
he is wrong. In this essay I want to show the range of possibilities that Dutch and French
law oer with regard to the adaptation of employment contracts. I wil l focus on t he
possibilities to adapt an employee’s remuneration, but if necessa ry, I will deal with the
adaptation of other conditions of employment, too.
§2. DUTCH LAW
e Dutch civil c ode contains two specic provisions for t he adaptation of employment
contracts.4 ese are Art icles 7:611 of the Dutch Civ il Code (hereinaer BW) and 7:613
BW respectively. Article 7:613 BW stipulates that an employer can only invoke a w ritten
clause conferring the right to adapt the contract if he ca n show an interest of such
overriding importance that t he employee’s interests which the i ntended modication
aects must reasonably be deemed to yield. 5 Article 7:611 BW is a so-cal led open norm
stipulating merely: ‘Employer and employee must behave as good employer and good
employee respectively.’6
A. ADAPTATION BASED ON ARTICLE 7:611 BW
e rather crypt ic provision obliging employer and employee to act in good faith, has been
interpreted by the Dutch Supreme Court (Hoge Raad) i n the famous Tax i Ho fm an 7case
of June 26th 1998 and the equally famous Mammoet case8 of July 11th 2008. In Tax i
Hofman, t he Hoge Raad developed a t hree-step test to judge a n employer’s proposal for
adaptation. In the rst place, to be able to invoke Article 7:611 BW, there must be a change
2 Www.nytimes.com/2009/01/30/business/30obama.htl?_r=1&em.
3 ‘Bos w il hard ingrijpe n in b onuscultuur’, electron ically availab le at < w ww.nrc.nl/economie/
article2189649.ece /Bos_wil_ hard_ingrijp en_in> (last v isited 16.06.2010).
4 Before the ye ar 2000 Article 6:248 subsec tion 2 BW w as regula rly invoked a s a legal basis. By now it
seems to have lost its (suppose d) added value.
5 ‘De werkgever kan slecht s een be roep doen op een s chrielijk be ding dat he m de bevo egdheid gee een
in de arb eidsovereenkom st voorkomende arbeidsvoorwa arde te wijzige n, indien hij bij de wijz iging een
zodanig zwa arwichtig bel ang hee da t het belang van de werkn emer dat do or de wijzigi ng zou worden
geschaad, d aarvoor naar maat staven van redelijkheid e n billijkheid dient te w ijken.’
6 ‘De werkgeve r en de wer knemer zijn verplich t zich als e en goed werkgever en e en goed werknemer te
gedragen’.
7 HR 26 June 1998, NJ 1998, 767 (Van der Lely/Taxi Hof man).
8 HR 11 July 2008, JAR 2008 , 204 (Stoof/Mammoet).
Nicola Gundt
164 17 MJ 2 (2010)
of situation at work. Only situations that qualify as a relevant change of situation at work
come within the ambit of Article 7:611 BW. Secondly, if this is the case, the employer may
make a reasonable oer conta ining an adaptation of the contrac t. irdly, the employee
must, in good faith reac t in a positive way, unless acceptation of the reasonable oer
cannot be reasonably expected from him. In Mammoet, the Hoge Raad focused on the
criteria to assess the reasonableness of the employer’s oer and oered some much needed
guidance as to the aspects that may be relevant when establishing t he reasonableness of
the employer’s oer. e court held that t he judge has to consider the cha racter and the
impact of the proposed adaptation, t he employer’s and the enterprises interests in the
change, the employee’s position a nd his interests in an unmodied continuation of the
contract. I wil l deal with the dierent steps in gre ater detail now.
1. e rst step: change of situation at work
is asp ect concerns t he scope of A rticle 7:611 BW. Unfortunately, the Hoge Raad has
never dened properly which situ ations fall w ithin the ambit of Art icle 7:611 BW. e
case law of the lower courts shows that a wide range of situ ations is brought within the
scope of A rticle 7:611 BW. A rst category of situations in which Article 7:611 BW can
be invoked are restructuring , transfer of undertakings, mergers and acquisitions and the
like. For example, if a t ransfer of underta king results i n the disappeara nce of a certa in
category of jobs, the employer may invoke t his in order to propose an adaptation of an
employee’s duties.9 Article 7:611 BW can also be used as a legal basis if t he reason for the
change lies within the employee’s person, for example, if the employee is not functioning
properly or if he is physically unable to perform his original duties.10 Even a change of
the legal situation is considered to come within the a mbit of a change of situation at
work.11
is shor t overview shows that nearly every cha nge of circums tances aecti ng the
working sphere can be classied as a change of situation as described in the Taxi Hofman
formula. erefore, the possibility to invoke Ar ticle 7:611 BW as a legal basis for an
adaptation is nearly always t here.12
9 See for example the Mammoet case. ere, an acquisition had led to the disappearance of the employee’s
position. e employer the n oered a dierent position w ith (slightly) dierent dut ies.
10 See, for example Kt r Rotterdam, 17.2. 2005, JAR 20 05/91.
11 Ktr Leiden, 9 Aug ust 2006, JAR 20 06/219.
12 e except ion probably is the employer who wants to adapt cont racts in order to have employees at
hand to replace employee s in another outlet who a re on strike.
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 165
2. e second step: the reasonable oer
Once it has been established t hat there is a relevant change of situation, the employer
can make a rea sonable oer to change the contract. e oer is tested for its formal and
material reasonableness.
Formal aspects of rea sonableness
e exigencies of formal reasonableness concern the procedural aspects. A rst condition
of reasonableness is the need for consultation. An employer who does not consult the
employees about an oncomi ng change, or who abruptly stops the ta lks, act s contrary
to the principles of reasonableness.13 Furthermore an employer is obl iged to inform the
employees as timely a nd completely as possible. e adaptation of the contract may not
come as a surprise to the employee.14 irdly, t he employer must inform the employee
about consequences of the ad aptation which the employee will not necessarily be aware
of, such as for example the fact that a change of remunerat ion may have consequences
for a pe nsion scheme.15 A fourt h, extremely impor tant aspect is whether the employer
oers a reasonable transition period to allow the employee to adapt to the changes in the
working envi ronment. is aspec t gures in formal and material reasonableness-tests.
Within t he formal reasonableness, it is not so much the reasonableness of the contents
of the tra nsitional period that a re at stake, but rather the fact that the employer oers a
reasonable amount of time to al low the employee to adapt to the new situation.
Material aspect s of reasonableness
e material reasonableness has been the main focu s of the judiciar y and the scholars.
As a lready mentioned, in Taxi Hofman , the Hoge Raad oered no gu idelines at all as
to how to a ssess the material reasonableness of an oer of adaptation. erefore, the
lower court s had to establish the criteria by themselves. In t he 10 years between Taxi
Hofman and Mammoet, the lower courts d eveloped an extensive and quite diverse body
of case law. In spite of the diversity, however, three main conditions of reasonableness
can be disti nguished. ese are the type of employment condition th at is aected by the
adaptation; the overa ll impact of the proposed ch ange on the contract and t he question
of responsibilit y for the reason that led to the adaptation proposal. ese criteria very
closely resemble the criteria t he Hoge Raad formulated i n Mammoet. ough the
wording does not show this resemblance immediately, the aspects that are considered are
the same a s those that gu re in the lower courts’ case law. First, there is a link between
13 Rb. ‘s-Gravenhage , 19 January 2000, JA R 2000/97.
14 Vzr. Ktr Eindhoven, 25 May 2004, JAR 2004 /139; Ktr Amsterdam, 12 June 2001; 12 February 2002 , JAR
200 2/48.
15 Rb. Arnhem, 16 Apri l 1998, JAR 1998/108.
Nicola Gundt
166 17 MJ 2 (2010)
the question whether the adaptation a ects primary, secondary or tertia ry conditions of
employment or individua lly agreed contract terms and the Mammoe t criterion ‘ impact
of the adaptation’. Second ly, there is a lot of overlap between t he question whether the
employer tried to reduce the negative consequences of the adaptation, for example by
using transitional arrangements and the Mammoet criterion just mentioned. e question
of the respective interests of employer, enterprise and employee guring in Mammoet,
can be considered under t his heading as well. i rdly, the aspec t of responsibility i n
Mammoet gu res as ‘the charac ter of the change of situation’. Here, quest ions as to the
cause of the adaptation and the resp onsibility for this cause can be ta ken into account.
A rst aspect of mater ial reasonableness therefore s till is the type of employment
condition which will be aected by the adaptation of t he contrac t. Here, the judge
considers whether the adaptation concerns a primary aspect of the employment contract
or whether it r ather concerns other aspect s. Applied to the question whether t he
employee’s income may be subject to change, case law shows some relevant factors to
take into account. Genera lly speaking , an oer containing a substantial c ut of regular
wages is deemed un reasonable. Regular basic wages are considered to be primar y
employment condit ions. Adaptation of those primary employment cond itions is very
dicult, though not completely impossible. However, i n order to succeed in proving
that a n oer concerns an adaptation of primary e lements of the i ncome, the employer
needs an exceptionally strong case. is means that the cause for the adaptation probably
should be in t he employee’s sphere of responsibility. Even then, t he employer must oer
a transit ional arrangement or a compensation scheme. I w ill deal w ith these aspec ts of
material rea sonableness in greater detail below. Oers which are in no case thought to
be reasonable a re oers which are contra ry to promises about w ages made at an ea rlier
stage16; oers made to put pressure on the employee to accept a dierent position or
oers made to punish the employee for a ref usal to end t he employment c ontract by
mutual consent.17
e basic assumption that adaptations of income are not reasonable is mainly true
for aspects of the income which are classied as prima ry or essential employment
conditions such as the regular basic wages. Whether or not a bonus can be regarded as
a primar y or essential element of the contract depends on the facts of the specic ca se
in question. e Rotterda m county court for example had to decide on a n adaptation of
the remuneration sy stem. In the rm in question a system of bonuses exists confer ring
a right to a 30% bonus up to an amount of € 574,773 and above that a bonus of 45% of
returns before taxes. e employer wants to replace this system by a system of wages
based on indiv idual performance. e lump sum oered as buy-o is at least € 600,00 0.
According to t he judge, this oer c annot be deemed reasonable. It touches upon a n
essential element of t he employment contract forming a rather substa ntial part of the
16 E.g. Pres. R b Leeuwarden, 21 March 200 0, JAR 2000/99.
17 Vzr. Rb Arnhem 12 Januar y 2004, JAR 200 4/42; Ktr Brielle 22 June 20 04, JAR 2004/193.
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 167
employees’ remuneration.18 In another case however, an adaptat ion was held reasonable
in spite of the fa ct that the judge explicit ly considered the bonuses as essentia l elements
of the employment contracts.19 In this case, the payment of bonuses, t he amount a nd
the conditions a re subject of annual negotiat ions between employer and works counci l.
In the year in question, the works council agrees to the employer’s proposal not to pay
bonuses. e reason for this agreement is the exceptional ly bad nancial situation of the
rm wh ich has al ready led to substantial lendi ng. According to the judge i n this c ase,
the u ncertain natu re of the bonus proves t hat they fundamentally dier from regular
basic wages and t herefore do not need he same protection aga inst changes. Aer a ll, an
employee will not count on an uncert ain reward to meet his costs of living.
e second aspect of material reasonableness concerns the impact of t he proposed
change on other a spects of the employment contract a nd the eorts the employer made
to reduce the negative consequences of the adaptation. In the ca se of changes to a n
employee’s income, this usually means the obligation to al low an adequate tr ansitional
period to permit the employee to adapt to the new na ncial situation.
Whereas the rst criter ion assesses the importance of the employment condition
aected directly by the change, the second criterion assesses the overall impact of the
adaptation on the whole contract. Aer all, an adaptation may not only aect the targeted
element but may have consequences for other aspe cts of the employment conditions as
well. A change of duties and/or position, for example, may lead to a lower salary. An
adaptation of working times may have simi lar consequences due to a loss of bonuses
for irregu lar hours. In these cases a transitional arr angement is necessary. is applies
even if t he reason for the cha nge of working times comes within t he employee’s sphere
of responsibility, for example b ecause the employee is physically u nt for night work or
irregula r working t imes.20 is reasoning even applies if an employee hers elf asks for
a position with fewer resp onsibilities. Even though the employee specically asks for
a position with fewer responsibilit ies (which, of course, corresponds to a lower salary),
the employee m ay not abruptly pay her the corresp onding lower wages.21 e judge in
question was adamant and ru led that a transitional period was absolutely necessa ry
for the adaptation to be deemed reasonable. e request for a less stressf ul position did
not – according to the judge – automatica lly entail a request for or acceptance of the
corresponding sala ry.
e third criterion to be considered is the question of responsibility. is aspect enables
the judge to assess whether the consequences of the adaptation are borne by its ‘provoker’.
In practice this means that if the cause of the change comes within the employee’s sphere
of responsibilit y, a proposal for adaptation will more readily be considered rea sonable
18 Ktr Rotterda m, 28 October 2004, JA R 2005/73.
19 Ktr Amersfoor t, 1 June 2005, JAR 2005/158.
20 See for i nstance Ktr Zaandam, 16 November 20 06, JAR 2 006/296; Ktr Nijmegen, 1 M arch 2005, JAR
2005/127; Ktr Amsterda m, 3 October 2000, JA R 2000/242.
21 Ktr Hoorn, 22 Febru ary 2002, JAR 2 002/71.
Nicola Gundt
168 17 MJ 2 (2010)
than if the cause is a neutral one or comes within t he employer’s sphere of responsibility.
Causes that come within the employee’s sphere of responsibility are for example physical
or mental inabi lity to perform one’s duties, fa mily duties such as c hild care or religious
motives. erefore an adaptation of the working t imes resulti ng in a loss of bonuses
for ir regular hou rs may be considered reasonable, because the employee is physically
unt to work night shis. A lso if an employee calls in sick substantial ly more oen than
colleagues, the problems this may cause for the fu nctioning of a night shi may justif y
a change of working t imes resulting (in due course) a lso in a loss of income.22 On the
other hand, there are reasons u nderlying the proposal which fall wit hin the employer’s
sphere of responsibility. O ne may t hink of mergers, new methods of production, bad
marketing, and h igh prices for gas, oil and other resources and the li ke. If an adaptation
is proposed because of a change of situation for which the employer bears responsibilit y,
this does not necessarily mean t hat a proposal is not reasonable. For example, a proposal
containing a change of duties or position which is a consequence of restructuri ng can be
perfectly reasonable, provided t he employer compensates the losses in income, at least
for a transitional period and does not change worki ng hours or working times w ithout a
(very substantial) tra nsitional agreement.
3. e third step: reaction in good faith
Aer it has been established that the oer made by the employer ca n be considered
reasonable, the judge examines whether acce ptance of the oer made c an reasonably
be expected f rom the employee. At this point, the Mammoet judgment does not add
anythi ng to the Taxi Hofman formula as applied by t he lower courts.
e c ase law from the lower courts reveals several forma l and material criter ia of
reasonableness. A rst condition of formal reasonableness is a general willingness to
consider the proposal. An absolute refusal to co- operate in any way will be considered
unreasonable. 23 e employee may also be obliged to accept a tryout-period during
which he has to perform the contract in its adapted form.24 Finally, an employee whose
job ceases to ex ist may not remain passive. He is obliged to s earch actively for a suitable
new position and may not just wait for the employer to come up with a solution.25
Concerning the material aspects of reasonableness, the case law shows that individual
circumstances may lead to the conclusion that accept ance of a reasonable oer may not
be expected in the particular circumsta nces. For example, irregul ar worki ng hours,
night shis and weekend shis are harder to bear for elderly employees than for younger
ones. e fact th at an elderly employee is asked to work irregu lar shis thus ca n lead to
22 Vzr. Rb Arnhem 12 Januar y 2004, JAR 2004 /42; Ktr. Brielle 22 June 200 4, JAR 2004/193.
23 Ktr Hilversum , 16 October 2002, JAR 200 2/282.
24 Ktr Del, 24 Febr uary 2000, JAR 2 000/49.
25 Ktr Heerenveen, 27 July 20 03, LJN AI0483.
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 169
the conclusion that accepta nce of such working hours cannot rea sonably be expected.26
Another relevant individual reason is t he impossibil ity to nd care facilities for the
employee’s child(ren).27 Finally, the status and self-respect that comes with a part icular
job may be a reason to judge that a change of position cannot be considered reasonable.28
To the bes t of my knowledge, individua l pleas for hardship have not been accepted in
cases c oncerning changes i n income. ey have, however, been accepted to prevent an
acceptance of changes of worki ng hours or duties.
B. ARTICLE 7:613 BW
If a n employment contract contains an explicit provision authorising the employer to
unilateral ly adapt the contract to the needs of the undert aking, a n adaptation can be
based on Article 7:613 BW. e use of a clause like this is subject to the condition that the
employers’ interests are of such overriding importance that the employee’s interests must
reasonably yield. An adaptation based on Ar ticle 7:613 BW is assessed in a two-step test.
e rst step is to establish the overriding interests on the employer’s part; the second
step is a reasonableness-test.
1. e rst step: overriding interest s on the employer’s side
e main question within Article 7:613 BW is in which cases the employer’s interests can
be regarded as overriding. e Dutch word ‘zwaarwichtig’ indicate s that mere diculties
are in sucient to invoke an adaptation clause. According to the prepa ratory works of
other legal te xts in which the word also gures,29 it indicates a situation so serious that
a derogation form one of the basic principles of contract law, pacta sunt servanda, can
be justied.
Original ly, Article 7:613 BW was intended for the adaptation of several contracts
at t he same time. However, i n Mammoet, the Hoge Raad le no doubt about the fact
that it ca n also be used as legal basis for the adaptation of a single, individual contract.
Original ly, the provision contained a second subsect ion, stipulating a legal presumption
that t he employer’s interests were deemed to preva il if a trade union or works cou ncil
agrees to t he proposed change. Althoug h the second subsection was deleted during t he
deliberations in Parliament, its contents a re still thoug ht to be valid.30 is means that
if t he employer can secure the works council’s agreement to a change of non-primar y
26 HR 28 April 200 0, JAR 2000/120 (Guitoneau/M idnet Taxi).
27 Ktr Zevenbergen, 11 Ma rch 1998, Prg 1998/4947.
28 Ktr Zaanda m, 7 July 2000, JAR 200 0/174.
29 e word also gures in the WAZO (Law on leave s in relation to ca re), the WWB (Law on Socia l
assistance), the WOR (Law on Works Counc ils) and the WAA (Law on the adaptation of working
hour s).
30 Kamerstuk ken II 1996/97, 24 615, nr. 5, nr. 6, nr. 9, nr. 10. Kamerstukk en I 1997/98, 24 615 nr. 81a.
Nicola Gundt
170 17 MJ 2 (2010)
elements of remuneration (which, according to Article 25 of the Dutch law on Works
Councils is necessary anyway), t he overriding nature of his interests is presumed to
exist. It is then up to the employee to rebut the presumption that the employers’ interests
must reasonably prevail. In case the employer cannot rely on the trade union’s or works
council’s assent, he has to prove his overrid ing interest in other w ays, for example with
selling gures and statistics showing the underta king’s nancial and economic situation,
assessments on t he market situation and/or likely f uture developments. Case law shows
that harmonisation of employment conditions aer a transfer of underta king, merger or
acquisition is not in itself an overriding interest. Situations in which an overriding interest
has been accepted are dire nancial straits which have already forced the employer to use
credit facilities , prevention and limitation of forced collective dismissa ls and prevention
of drop-outs in feebly staed shi s such as night and weekend shis.
2. e second step: the reasonablenes s test
Secondly, the adaptation of the contract must meet the requirements of reasonableness.
Generally speaking, the same aspects as mentioned in paragraph 2.1.2 are to be considered.
However, as within the ambit of Article 7:613 BW the employer acts unilaterally, only his
actions a re subject to s crutiny. He is u nder the obligation to prepare the adaptation in
a ca reful way. He must consult the employees31 a nd oer a transitional period during
which the cha nges are introduced.32 Materi ally, the only criterion that can be deducted
from case law are that primary employment conditions is hard to change, even if the right
to a unilateral change has been explicitly laid down in the employment contract; whereas
changes in secondar y, tertiar y or other contractual elements can be accomplished much
more ea sily. is criterion also gures i n the reasonableness-test w ithin Ar ticle 7:611
BW. Interestingly, the works council’s opinion, which is already taken into consideration
in the rst step, someti mes also gures as an aspect of mater ial reasonableness.
C. CONCLUSION
A change of employment conditions, including wages, can be based on Article 7:611 BW as
well as on Article 7:613 BW. Generally spea king, an adaptation of the basic remuneration
is not considered reasonable. is point of view i s based on dierent arguments. First of
all, the basic wages are a primary employment condition. As such, t heir adaptation is
subject to a much stricter test than the adaptation of secondar y or tertia ry elements of
the remuneration. When accept ing a job, the wages play an importa nt role in the future
employee’s considerations. Furthermore, the wages allow the employee to make a liv ing.
e average employee will need an income in order to pay all costs. He will usually a lso
31 Ktr Apeldoorn 17 Oct ober 2001, JAR 2002/23; Ktr Devent er 15 June 2000, JAR 200 0/226.
32 Ktr Roermond, 15 Octo ber 2002, JAR 2002/2 86; Ktr Apeldoorn 17 October 2 001, JAR 2002/23.
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 171
have adapted spe nding to income. If an abrupt change occurs in t he income, there is a
great risk of nancial ins tability, as the spending pattern will need to be adopted, which,
however, is not done quickly. erefore, if an adaptation of wages wil l stand the slightest
chance of being reasonable, there must be transitional agreements. Even if that is the case,
a change of wages wi ll usually only be deemed reas onable, if the cause of the adaptation
comes within the employee’s sphere of responsibilit y, for example if the employee’s
performances are low and in spite of eorts by t he employer remain insucient or if t he
employee is not physically or psychologically t for his original job and is oered a lower
job. Even if the employee herself asks to be given a nother, lower job, the employer may
not abruptly pay her the corresponding (lower) salar y.33
If the adaptation concerns not the prim ary wages but bonuses, gratications and t he
like, the employer enjoys much greater freedom. is is due to the fact that bonuses and
gratications are not considered to b e primary employment conditions. Furthermore,
particula rly where the bonuses are u ncertain, the employee will not count on t hem in
order to meet regular costs of living. erefore, according to the cas e law, these elements
of remunerat ion can be changed more easily. In these cases, the legal basis wi ll quite
probably be Article 7:613 BW, because an employer wil l need the works council’s
agreement to a change of t he regul ations any way. And if that approval is given, the
individual employee w ill have a hard time provi ng that his individual case is so specic
that acceptation of the change s in collective regulations can not be reasonably expected.
Finally, case law reveals that income elements which have explicitly been negotiated
between employer and employee are as hard to change as are primary elements of income.
is may be the main d iculty with managers’ bonuses . However, the above shows that
adaptations can ta ke place. As the case law shows, t he prevention of dismissals and/or a
ruinous nancial situation may justify a proposal to adapt or completely stop the payment
of bonuses. One line of argumentation can be based on the consequences for others in the
undertak ing which can be substantially reduced if the bonuses a re lowered or stopped.
Here, the bad nancial situation which necessitates a huge input of taxpayers’ money can
also be ta ken into account. A second li ne of argument may be that t he bonuses, though
individual ly negotiated, sti ll are subst antially dierent from regular wages. Usually,
bonuses are linked to unk nown quantities such as individual performance s, rm results
and the li ke. erefore, an individual employee should never base the costs of living on
income plus bonus. ere always is the possibil ity that t he conditions are not met and
the bonus will not be paid. As thi s dierence in certainty is one of the core aspects when
protecting i ncome against changes, it can, in my view, be a relevant argument to al low
for an adaptation of uncerta in elements of income.
33 Ktr Amersfoor t, 1 June 2005, JAR 2005/158.
Nicola Gundt
172 17 MJ 2 (2010)
§3. FRENCH LAW
e French Labour C ode does not contain a n explicit provision providing for a general
legal b asis for adaptat ions of employment contracts.34 Judges and scholars deduce the
possibility to adapt contracts f rom Article 1134 Civil code. Its second subse ction states
that the contracting pa rties can put an end to the contract by mutual consent. A fortiori,
parties must be deemed to be able to adapt the contract by mutual consent, since t he
‘stronger’ right to end the contract completely is laid down i n the law.
e Cour de Cassation distinguishes two ways to adapt a contract. ese a re the
‘modication du contrat de travail’ and the ‘changement des conditions de travail’. e
rst term applies for adaptations of essential contract elements. ese elements are called
‘éléments c ontractuels’ and toget her they form the so-called ‘socle contractuel’, the core
of the contract. Adaptation of these elements is possible but with the employee’s consent.
e ‘changement des conditions du travail ’ des cribes the ad aptation of all the other
elements of the employment relationship. ese adaptations can, in principle, be ca rried
out unilateral ly by the employer. An élement co ntractuel may be adapted, if the contract
contains an adaptation clause (clause de variati on). Its validity and use are subjected to a
close scrutiny by the judge.
A. DEFINING THE ‘SOCLE CONTRACTUEL’
e te rm ‘socle contractuel’ has rst been used by Waquet in order to describe those
aspects that, acc ording to him, must necessarily be protected by Ar ticle 1134 Code civil.
By now, judges and scholars widely ag ree on the quest ion which elements should be
regarded as contractual elements. ese are wages, position and working hours. Working
times a nd schedules are not regarded as contractua l elements. e same counts for the
place where the work has to be done. e employer may adapt the place uni laterally,
provided, he respects a cer tain geographical zone, known as se cteur géographique.
Even if t here is general agreement concerning the mai n lines, the distinction of t he
exact ambit of the dierent elements is far form clear or undisputed. C oncerning the
wages, the Cour de Cassation’s case law clearly shows that only the so-called rémunération
contractuelle is dened as a contractual element coming within the ambit of Article 1134
Code civi l. In 1998 the Cou r de Cassation states:’(…) que la rémunération contractuelle
du salar ié constitue un élément du contrat de travail qu i ne peut être modié, même de
manière minime, sans son accord (…)’. 35 From later case law, it becomes clear that only
those elements of the i ncome that are ind ividually negotiated between employer and
34 ere a re two provisions that apply in partic ular c ircumstances , thoug h. Art icle L1222– 6 contai ns
rules for cha nges due to economic circ umstances; Ar ticle L-1222–7 contains r ules which apply in c ase
of a reduction of worki ng hours.
35 Cass. Soc. 19.5.1998, D r. soc. 1998. p. 885 (Di Giovanni c. / Compagnie franç aise des produits nat urels).
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 173
employee are regarded as rémunération contractuelle. For example, an hourly wage which
had been individual ly negotiated and laid down in the employment contract itself cou ld
not be adapted unilaterally by t he employer.36 is also holds tr ue for an adaptation
of individually negotiated allowances for travelling expen ses.37 A mere reference to
a document containing a reg ulation of wages is insucient to ma ke t he element in
question a contractual element. Such repetitive clauses and reference clauses respectively
are considered to be information clauses only, which do not change the legal nature of
the element in question.38
B. THE ADAPTATION CLAUSE CLAUSE DE VARIATION
Elements that fall within the ambit of the socle contractuel cannot be adapted unilateral ly
by the employer. Any change necessitates mutu al consent. An employer may, however,
stipulate an adaptation clause. i s clause oers the possibility to un ilaterally adapt
contractual elements to the undertaking’s needs . However, in order for the contract to
remain denable, t he clause must specify t he situations in which it may be i nvoked and
the changes it may bring about.
e answer to the question whet her or not a (suciently specic) clause d e variation
can be validly inserted in the employment contract depends on the element that is subject
to the adaptat ion. Clauses concerning the ‘rémunération contractue lle’ can be legally
inserted in the contract as long as t hey meet three criteria. First of all, the clause must
refer to objec tive factors and reasons for the adaptation, such as a loss in t urnover. An
employer can choose a ny parameters as long as he has no inuence on t hem. Examples
in the case law refer to turnovers, but a lso to the u nsure event of the continuation of a
contract with a third party.39 A clause which confers upon the employer the right to
arbitrarily x the level of wages or the conditions t hat have to be met in order to receive
a bonus are held inval id. e Cour de Cassation adheres to a strict interpretation of th is
condition. Any clause which oers some leeway for arbitra ry decisions by the employer
is held invalid. is was the case with a clause stipulating that the employer had the right
to adapt the remuneration ‘selon l’évolution du marché et des produits de la marque’.40
e Cour de C assation quashed this clause for lack of precision and danger of arbitrary
decisions.
Secondly, an adaptation clause may not result in the employee bearing the risks of the
employer. e precise content of this restrict ion is subject of debate. ere is some general
agreement as to the minimum level of protection. is lowest common denominator is
36 Cass. soc. 3.7.2001, Dr. Soc.2 001, p. 1006 (Pierre c./ société des t ransports Sico).
37 Cass .soc. 20.1.1999, quoted in Dr, soc. 1999, p. 568 (Sica du Silo).
38 Cass. Soc. 11.1.2000 , Dr. soc. 2000, p. 837 (Louiss ier c./ société IBM France).
39 Cass. Soc. 20.5. 2005, RJS 2005–7, nr. 710 (Rodrigue s c./ société électrique ser vice Languedoc et Febvay c./
société élec tronique service L anguedoc).
40 Cass. Soc. 30. 5.200, Bull V, nr. 206, p. 160 (société Can on France c./ Garcia et Le Ga c).
Nicola Gundt
174 17 MJ 2 (2010)
that an employee bears an intolerable risk if the clause can result in a remuneration which
is lower than the minimum wage s xed by law or t he minimum wages stemming from
the relevant collective labour agreement.41 Some scholars wa nt to go furt her and argue
that other clauses should also be deemed contrary to law. ey refer to clauses which
allow t he employer to shi typical risks such as problems with sales to the employees.
According to these scholars, such risks do not t the employment relationship in which the
employee is in a subord inate position without abi lity to inuence the sit uation.42 Finally,
Antonmattéi has diculties w ith the idea that an employee is made to stand surety for
a rm’s losses. For him, t his is dicu lt to accept e ven in cases of gross negligence, but
totally unaccepta ble if the employee has not done anything wrong.43 Sympathet ic or not,
these arguments for a protection beyond the legal or collective minimum wages have so
far not become a generally a ccepted position. e prohibition of wages below minimum
level is still the lowest common denomi nator.
e thi rd condition to be met is t hat application of the clause may not result in an
income which is lower tha n the minimum wage xed by law, by collective or individual
agreement. is condition does not add anythi ng to the second one, because its contents
are the same as the lowest common denomi nator among the scholars about how to
interpret the shi ing of risks.
C. CONTROLLING THE ADAPTATION
1. Adaptation of non-contractual elements of the income
When adapting non-contractua l elements of the remuneration, the employer’s actions as
well as the employee’s reactions to t he intended changes a re subject to judicia l control.
e exercise of the employer’s unilateral rig ht to eect cha nges i n non-contr actual
elements in French law is is known as ‘pouvoir de direction’ and thought to be one of
the main characteristics and a decisive prerogative of being an employer. erefore, the
employer is always entitled to implement a changeme nt des conditions du travail.44 us
his action is not usual ly scrutinised in depth.
e employee’s reaction to the adaptation however, is closely scrutinised. is usually
takes place during the procee dings concerning the dismissal th at follows the refusa l to
comply wit h the changes. e employee wil l be dismissed bec ause of his refusa l. e
only question t hat remains is whether he has a right to compensation for the loss of his
41 Radé, annotation of Cass. S oc. 2.7.2002 (M. Sucier c./ so ciété Fidal), Dr. soc. 2002 , p. 998–1000, p. 1000.
42 P.H. Antonmattéi, Les cla uses du contrat de travail, (É ditions Liaisons , Paris 2005) p. 23.
43 Ibid.
44 ere may be case s in which the unilateral c hange amounts to an abuse of rig hts, but I have not com e
across any case law dea ling with such claim s. Nevertheless, I do not want to exclude the pos sibility that
in extreme case s, an employer will not be allowed to adapt a contra ct because this wil l amount to abuse
of right.
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 175
contract. is depends on the reason for the refusal. Some reasons a re judged to be of
such importance t hat the employee cannot be blamed for his decision to give preference
to other duties instead of the employment contract. is conclusion does not however
imply that the employer will not be allowed to dismiss the employee. Quite the contrary ;
in spite of the good reason, the employer may change t he contract and dismiss the
employee who refuses to comply. His only duty will be the payment of compensation.
e freedom the employer enjoys with the adaptation of non-contractua l elements of the
employment contract remains fu lly intact.
2. Adaptations of the rémunération contractuell e
In the case of an adaptation of the rémunération contractuelle, being a contractual
element, the judges’ focus i s on the employer’s ac tions. e only quest ion is whether
the employer abuses his contractual r ight by invoking t he clause in a spec ic situation.
Interestingly, the employer’s good faith is presumed. It is the employee’s task to show that
in his particu lar case the employer did not act in good faith. Not surprising ly, employees
hardly ever succeed in provi ng the absence of good faith.
e Cour de Cassat ion is very cautious not to speak of abuse lightly. It only classies
three situations as abuse. e rst one is the situation in which t he employer merely
intends to cause harm to the employee. e best example for this is the employer who
invokes a clause allowing him to s end the employee to a dierent outlet 300 km away,
knowing that the employee will refuse, w hich oers the p ossibility of a cheap layo.
Secondly, making use of the clause is thought to be abusive if the employer is negligent by
not taking into account the employee’s personal circumsta nces. An illustration is the case
of a mother who helps her disabled child with lunch at school. e employer changes her
schedule as well as the place of work, so she is no longer able to help the child. Her former
position remains vac ant. In this case , the Cour de Cassation held that the employer was
acting negligently by not taking i nto account the employee’s personal circumstance as
well as the fact that t he employee’s position remained available.45 In the third place,
any adaptation which fa lls short of the exigencies of good fait h is deemed to be abuse of
rights. is may be the case if application of the clause resu lts in the employee working
at two dierent places, which was not the intention when the clause was inserted into the
contrac t.46
D. CONCLUSION
French law concern ing the adaptation of elements of the income seems rather
straightforwa rd. e most important distinction is the dist inction between the éléments
45 Cass. Soc. 6. 2.2001, Bull V nr. 41, p. 31 (société Abilis c./ D oussin).
46 Cass. Soc. 20.12. 2006, RJS 2007–3, nr. 309 (Dragomo re c./ société Le Bac à Linge).
Nicola Gundt
176 17 MJ 2 (2010)
contractuels on t he one hand and the éléments non-c ontractuels on the other hand. is
distinction is made by using objective criteria, the most important of which is the basis for
the payment. If this basis is the individual employment contract, the element in question
will be regarded as a contract ual element and can therefore not be modied unilaterally.
Other elements may be changed unilateral ly. Considering the bonuses, their contrac tual
nature might be a breaking point. As the bonuses are usually indiv idually negotiated and
agreed upon, they are contract ual in nature. Unilateral changes therefore are impossible
if the contract dos not conta in an adaptation clause. is clause i s the only way to adapt
contractual elements. e val idity of th is clause is subject to several conditions, which
mainly aim at protecting the employee’s basic wages. ese restrictions should not lead to
problems when the adaptation of managers’ bonuse s is targeted. ey are paid on top of
the regular sala ries, and their withdrawal or adaptation will not lead to an income which
is below the applicable minimum wa ges. Furthermore, an interference with t he bonuses
will not mean that the managers bear ri sks which employees should not bear.47 Once the
clause is held to be val id, its application is tested for compliance with the ex igencies of
good faith. Rebutt ing the presumption of the employer’s good faith and proving his bad
faith inste ad usually is a ha rd task which employees hardly e ver succeed in completing.
With regard to the bonuses, I personally nd it hard to imagine a sit uation in which the
withdrawal of a bonus for bankers who work in banks that need millions of state aid is
made in bad faith.
If the bonuses are not of a contractual nature , t heir adaptation is substantially
easier. In these case s, the employer has the right to change t he bonuses unilaterally. e
employee may refuse to comply with the changes, but this will b e a cause for dismissa l.
It is then up to the employer to decide whether he wants to car ry on with the adaptation
and re the employee(s) who refuse or to decide t hat the employee is too important to
lose and therefore opt for an unmodied c ontinuation of the employment relation.
§4. COMPARISON
e above has shown that the Dutch and the French legal system oer several possibilities
to adapt contracts. Interestingly, although the French and the Dutch system use dierent
concepts, the outcomes do not dier as much as the fundamentally di erent choices may
suggest. W here the French start from objective criteri a and try to eliminate the judge’s
subjective appreciation of facts as much as possible, t he Dutch system opts for open
clauses which oer a great leeway to judges and their appreciation of the facts. e most
important consequence is that in French law certai n adaptations are categorically ruled
47 In my opinion, t he validity of this last cond ition is questionable in the case of m anagers, becaus e they
are responsible for revenues and/or losses. As the French cas e law does not deal with this problem, I just
want to mention thi s thought here without oer ing a ready-made answer.
Taking Back Wh at’s Ours? Possibilities and I mpossibilities of Rec apturing Bonuses
17 MJ 2 (2010) 177
out.48 Dutch law on the contrary, does not categorica lly rule out any kind of adaptation.
In theory, every aspect of the contract may be subject to change, t hough in practice,
the high requi rements for changes of primary employment conditions a nd employment
conditions which are individual ly negotiated, lead to huge protection. Nevertheless, in
extreme situations, even a prim ary employment condition may be subject to adaptation.
With regard to the bonuses, the Dutch system probably oers more options. e open
norm of reasonableness allows balancing all the relevant aspects of the case. Case law
shows t hat prevention a nd/or reduction of the number of forced dismiss als may be a
valid reason to make a reasonable oer for adaptation. is argument may have helped in
one Dutch case where the bonuses were equivalent to the salaries of about 500 employees
who were dismiss ed. In this ca se, an oer to reduce or withdraw the bonuses may have
been declared re asonable, also considering t he uncertain nature of the bonuses and the
fact that the managers do not necessarily need them to provide for their living. In French
law, such a exible solution may not be possible. As individually negotiated bonuses a re
an élément contractuel, their adaptation i s only possible if an adapt ation clause foresees
their adaptation. Even then, the clause must specify the situations in which the employer
may use them and must also speci fy the adaptations wh ich are possible. erefore, if
the clause does not provide for a possibility to reduce or withdraw a b onus in case of a
nancially disastrous situation, there is nothing, the employer can do ab out it, except
putting an end to the employment relation. Dutch law oers more possibilities to adapt
and therefore preserve the contract .
48 is is the case for ad aptations of the working hou rs which are of a contract ual nature and for which it
is not possible, acc ording to the Cour de Ca ssation, to stipu late a valid adaptat ion clause. As I have not
dealt with cha nges of working hours, I just mention the absolute imp ossibility for unila teral changes of
working hours here .
To continue reading
Request your trial