The calculation of severance pay and reassignment pay for an employee on part-time parental leave must be based on their full-time remuneration, as any contrary national legislation leads to indirect discrimination on grounds of sex, the EU Court of Justice ruled on Wednesday 8 May (case C-486/18).
At the end of 2010, the French company Praxair MRC dismissed one of its employees as part of a collective dismissal procedure for economic reasons, while she was on part-time parental leave. After having definitively left Praxair MRC in September 2011, the latter contested the terms and conditions for calculating the severance pay and reclassification leave allowance paid to it.
Questioned by the French Court of Cassation, the Court of Justice first considers that the framework agreement on parental leave, which appears in the Annex to the European Directive (96/34/EC), precludes the reduced remuneration received by a worker on parental leave, employed on a part-time basis when dismissal takes place, from being taken into account in calculating his dismissal compensation.
The Court also considers that the framework agreement on parental leave is also applicable to a benefit such as reclassification leave allowance. Therefore, like severance pay, reclassification leave allowance must be determined entirely on the basis of the remuneration for full-time work performed by the worker.
Secondly, the Court points out that indirect discrimination on grounds of sex occurs when the application of a national measure, although formulated in a neutral manner, puts a much higher number of workers of one sex at a disadvantage compared to the other.
Thus, since a considerably higher number of women than men choose to take part-time parental leave, the French legislation in question contravenes the principle of equal pay for equal work or work of equal value, as provided for in Article 157 of the Treaty on the Functioning of the Union (TFEU).
See the judgment: https://bit.ly/2Yhx88O (Damien Genicot - intern)