Response to consultation Paper on Draft Guidelines on sound remuneration policies under Directive 2013/36/EU

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Question 1: Are the amendments to the subject matter, scope and definitions appropriate and sufficiently clear?


Question 2: Are the amendments regarding gender neutral remuneration policies sufficiently clear?


Question 3: Are the guidelines on the application of the requirements in a group context sufficiently clear?


Question 4: Are the guidelines regarding the application of waivers within section 4 sufficiently clear?


Question 5: Is the section 8.4 on retention bonuses sufficiently clear?


Question 6: Is the amended section 9 on severance payments sufficiently clear?

I think that the wording of the new 165 (e) should not be changed, as it may create doubts.

The new, proposed wording for 165 (e) seems to be narrower than it was in the current version. The new version does not cover settlement agreements that are signed at the pre-court stage to avoid potential court dispute. I am not sure whether this was intentional, as such settlements are common in practice.

They enable avoiding troublesome and expensive court proceedings. Such settlement agreements also allow to terminate the staff member's contract immediately, without waiting till the end of his/her notice period. To compensate the loss of the notice period and pay for the lower risk of any court proceeding related to termination of contract, staff members usually receive significant amount of money. However, at least part of them is a substitute of the fixed remuneration that would be normally due for the notice period. Please see the example below as an illustration.

For example, an employee has a three-month notice period. The institution wants to dismiss him/her, but is aware that he/she can challenge dismissal letter due to unfair dismissal/insufficient termination reasons. Moreover, due to the employee-oriented case law, the employee chances to win the case are high. However, in the case of settlement agreement, the employee has very limited possibility to challenge the dismissal before the court. So, the institution offers to sign a settlement agreement with an immediate effect. The proposed severance pay is equal to 6-month fixed salary (3-month salary to compensate the salary for the "lost" notice period and additional 3-month salary for elimination of the risk related to termination).

In the light of the new wording of 165 (e), this is not clear whether such settlement payments will fall within its scope. I think it will not.

Consequently, they do not fall within the scope of exclusions of the new par. 170 (b). As a result, the institutions would have to take into account the entire severance payment when calculating the ratio (subject to the new par. 173), even though such pre-court stage severance pay compensates the fixed remuneration and decreases the court risk.

If you do not agree with my comment, you can alternatively at least consider adding the paragraph confirming that compensation for the loss of notice period are not treated as severance payment.

Apart from that, the section 9 seems clear.

Name of the organization

CMS Cameron McKenna Nabarro Olswang Pośniak i Bejm sp.k.