Discreationary Reductions in Overtime Pay Claims
In employment disputes, the application of discretionary reductions (equitable reductions) in calculating claims for overtime pay, weekly rest day pay, and national holidays and public holidays has become an established judicial practice. Applying such a reduction falls directly within the judge’s duties and powers.
The main rationale for this reduction is that an employee’s working continuously at the same pace over a prolonged period, without interruptions due to illness, personal circumstances or leave, would be contrary to the ordinary course of life. Indeed, in one of its decisions, the 9th Civil Chamber of the Court of Cassation1 stated that, where overtime pay, weekly rest day pay and public holiday pay are calculated based on witness testimony, it is unrealistic to assume that an employee worked at the same intensity every day over a prolonged period. The Chamber noted that days on which the employee could not work due to illness, personal circumstances or leave are inevitable. Accordingly, the court held that a reasonable reduction consistent with the circumstances of the case should be applied. Where calculations are based on witness testimony, the final amount awarded therefore depends on the reduction rate applied by the judge at the conclusion of the proceedings.
An important distinction must be made regarding the legal nature of the reduction. This mechanism differs from an equitable reduction in damages, which allows the amount of compensation to be reduced on grounds of fairness. Here, the court does not assess fault or equity. Instead, it considers that the assumption that an employee worked overtime continuously throughout the entire period is inconsistent with real life. The reduction therefore rests on a presumption that the employee did not work overtime during certain periods of the year. For this reason, the General Assembly of Civil Chambers of the Court of Cassation has stated that the practice is more appropriately described as a “reasonable reduction based on a presumption” rather than an “equitable reduction”2.
The main factor determining whether a reduction may be applied is the type of evidence. A reduction primarily arises where the calculation relies on witness testimony subject to the court’s assessment. In a recent decision, the 9th Civil Chamber of the Court of Cassation3 applied a 30% discretionary reduction to an overtime calculation based on witness testimony, taking into account “human endurance, the ordinary course of life, the employee’s social and family life, and personal needs.”
The nature of the evidence is relevant both to whether a reduction should be applied and to the applicable rate. When determining the rate, the duration of the work, the evidence underlying the calculation and the amount of the calculated claim are assessed together. Accordingly, depending on the circumstances of the case, the Court of Cassation may also consider a 50% discretionary reduction appropriate.
Similarly, in a dispute considered by the 9th Civil Chamber of the Court of Cassation , the claimant challenged the 30% reduction, arguing that the calculation also relied on internal company emails and attendance records, while the defendant argued that the reduction was insufficient. As part of its assessment of the witness testimony, the Regional Court of Appeal found the reduction rate appropriate. Its decision, appealed by the defendant, was upheld by the Court of Cassation.
Indeed, an example in which a 50% reduction was found appropriate is the decision of the 9th Civil Chamber of the Court of Cassation dated 2 February 2021, Case No. 2019/2964, Decision No. 2021/3052. In that dispute, the court took into account the duration of the work, the reliance on witness testimony, and the substantial amounts awarded for overtime, weekly rest day, and national and public holiday pay. The court decided that a 50% reduction, rather than 30%, was more appropriate in light of the case file. The decision therefore recognised that a 50% reduction may be applied where warranted by the circumstances.
In conclusion, applying a discretionary reduction and determining its rate fall within the judge’s duties and authority and should be assessed in light of the evidence underlying the calculation and the specific circumstances of the case. The decisions reviewed show that, alongside cases in which a 30% reduction was found appropriate, a 50% reduction can also be applied, taking into account the duration of the work, the reliance on witness testimony and the substantial amount calculated. Accordingly, 30% should not be treated as a fixed rate, and a 50% discretionary reduction should also be considered where the circumstances of the case warrant it.