Setting up an employee remuneration system plays an important role for every employer. By setting up this system correctly, the employer can avoid penalties or failure in potential legal proceedings.
The Supreme Court has already dealt with the issue of the remuneration system several times. In its recent judgment of April this year[1], it addressed the right of a former employee to be paid a bonus which the employer, after evaluating its performance in the past year, awarded to its employees as a thank you for their outstanding performance and as an incentive for the next period. That award was granted to the employer’s existing employees who had worked for the employer for at least three months during the previous year and who were still employed by the employer at the end of May of the following year.
An employee who met the first condition (i.e., he had worked for the employer for at least 3 months in the previous year) but did not meet the second condition (i.e., he was not in the employer’s employ at the end of May of the following year) also claimed the award in court.
The Supreme Court first recalled the established case law of the court, according to which a distinction is made between the so-called entitlement component of wages, which the employer is obliged to provide whenever the employee fulfils the established conditions, and the so-called non-entitlement component of wages, to which the employee becomes entitled only on the basis of a special decision of the employer to award it. Such a decision is purely at the discretion of the employer.
According to the Supreme Court, however, an employer cannot proceed completely arbitrarily when deciding whether to award a non-profit component of wages. In this case, the employer must also comply with the principle of equal treatment of employees enshrined in Act No. 262/2006 Coll., the Labour Code, as amended, which guarantees equal rights to employees in the same or comparable position. The principle of equal treatment is infringed if the difference in treatment has no objective and justifiable justification. If an employer were to act against an employee in breach of the principle of equal treatment, the employer would be in breach of a legal obligation and the employee concerned would be entitled to claim damages.
In the present case, the Supreme Court held, in accordance with the above, that the employer had not acted against the employee in breach of the principle of equal treatment, as the employee was not in the same or comparable position as the employer’s former employees. A different situation would arise, for example, if the employer had paid the remuneration to one of the former employees who were in the same or similar position as the employee seeking payment of the remuneration in the present case.
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This article is for informational purposes only and does not constitute legal advice or guidance for any particular case.
[1] Judgment of the Supreme Court of 16 April 2024, Case No. 21 Cdo 2392/2023