Tag archives: variable remuneration

Employment Law and Financial Institutions

In the financial sector, in addition to individual employment contracts, working conditions can be subject to various industry related statutes and regulations, collective bargaining agreements and works agreements.

Laws and regulations

As a reaction to the global financial crisis, the participants of the 2008 G20 summit in Washington, including Germany, agreed on the establishment and implementation of global standards of regulation, cross-border supervision and management to avoid conflicts of interest and to create an early warning system to avoid a repetition of the financial crisis.

In response to this resolution, the Financial Stability Board (FSB) published principles for sound compensation … Continue Reading

Recent developments in French employment law regarding financial institutions: How the French Government wants to enhance Paris’ attractiveness as a global financial place

Apart from certain provisions which may be tailored to the relevant situations negotiated by companies or sectors of business through collective agreements (subject to compliance with a number of basic rules and principles), French employment law does not include any specificities in relation to certain sectors of business.

In particular, financial institutions are subject to the same set of rules as any other French company.

However, this may change in the next few weeks or months.

As part of the process of ratification of President Macron’s ordinances reforming the French labour code,  the French National Assembly adopted on 23 November … Continue Reading

Failure by the employer to set an employee’s targets may justify the judicial termination of the employment contract

General background

The principle of remuneration based on the employee’s performance has long been permitted by French employment law provided in particular that such remuneration is based on objective criteria, does not result in payment of remuneration inferior to the minimum wage and complies with the general principle of equal work for equal pay.

In the context of variable remuneration, the setting of the employee’s objectives is decisive since it is the achievement of such objectives that determines the extent of his/her variable remuneration.

In addition, if the employment contract provides that the employee’s objectives will be set upon agreement … Continue Reading

Variable remuneration: a motivational tool to use with caution

It is common practice for companies to pay their employees a variable remuneration based on their performance. Such remuneration has become an increasingly popular component of employee compensation as it constitutes a very effective way of ensuring employee commitment.

French case law permits such remuneration but lays down strict conditions to be complied with. Consequently, variable pay is acceptable provided that such remuneration is based on objective criteria beyond the sole control of the employer, does not result in payment below the minimum wage and complies with the general principle of equal work for equal pay.

It is tempting for … Continue Reading

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