Is it discriminatory to reduce the performance-related bonus whilst an employee is on sick leave?

As expert labour lawyers, there is one issue we are frequently asked about: whether it is possible for an employee to have a bonus reduced that they are entitled to for achieving certain targets while on sick leave, and whether such a reduction could be considered discrimination on the grounds of illness. The Supreme Court has analysed this case, which we will examine below, along with other cases dealing with workplace discrimination.

According to the Supreme Court, reducing a performance-related bonus during sick leave is not discrimination

The matter began with Mercadona’s collective agreement for the years 2024 to 2028, which in Article 31 regulates performance-related bonuses and establishes that, if an employee accumulates more than 30 calendar days of sick leave due to common contingencies in a year, this period is not counted as working time for the purpose of receiving the bonus.

Let us look at an example: if, in one year, the employee has had several periods of sick leave amounting to 35 days due to different common contingencies (flu, domestic accident, sprain, etc.), they will not be entitled to receive the performance bonus. If the total sick leave is less than 30 days, they will be entitled to receive it.

The Galician Intersindical Confederation filed a claim to challenge the collective agreement before the National Court, arguing that Article 31, as described, was null and void as it constituted direct discrimination on the grounds of illness and was contrary to Law 15/2022 on equal treatment and non-discrimination.

The National Court dismissed the claim on the basis that the bonus was not only linked to objectives but also to continuity of service, and since temporary incapacity suspends the employment contract, there is no obligation to pay wages during those days. The union filed an appeal in cassation before the Supreme Court for infringement of:

• Articles 2.1 and 4.1 of the Equality Act. Article 2.1 refers to the right of every person to equal treatment and non-discrimination on the grounds of illness, among other causes. Article 4.1 establishes that the right to equal treatment and non-discrimination implies the absence of discrimination on all the grounds set out in Article 2.1.
• Article 169.1 of the General Social Security Act, which regulates situations giving rise to temporary incapacity.

The union argued that the agreement regulates other analogous situations in which no services are provided and the right to the incentive is maintained.

The Supreme Court rejected all the union’s arguments and held that it did not find any unlawfulness in the agreement.

What is a performance-related bonus?

In addition to a fixed salary, many companies implement variable remuneration linked to the achievement of certain objectives. Therefore, a performance-related bonus is variable remuneration connected to achieving a specific result within a given period of time, and thus depends on the employee’s performance and whether they have met previously set monthly targets.

Variable remuneration may take several forms:

• A bonus, usually intended for company directors or middle management, agreed in the employment contract, and dependent on results achieved.
• A premium, linked to both production and the quality of work carried out by the team.
• Commissions, received by an employee or team based on the volume of sales achieved over a specific period. This type of remuneration is very common in the commercial sector.
• Gratuities, granted voluntarily by the company to employees in specific situations for a particular effort at a given time.

What are the characteristics of variable remuneration?

The main characteristics of variable remuneration include the following:

• It is an amount that varies according to the results obtained over a given period of time.
• The objectives to be achieved must be set in advance.
• At the time of signing the contract, the employee and the company must agree on the variable remuneration.
• These payments are added to the employee’s basic salary on the payslip.

Cases that do constitute workplace discrimination

There are numerous cases in which the Supreme Court has issued rulings on workplace discrimination. Below are some of the most relevant judgments:

Discrimination in career progression

Supreme Court judgment 5798/2011 analysed a case of indirect discrimination in career progression. It concerned a situation in which a company favoured men for promotions to higher-level positions without justification. The Supreme Court declared the practice null and void.

Discrimination on the grounds of illness

According to various rulings of the Constitutional Court and the Supreme Court, illness constitutes a ground for discrimination when it acts as a factor of segregation. If an employee is dismissed because of their illness and not due to the limitation that the illness causes in their ability to work, this constitutes discriminatory dismissal on the grounds of illness.

Discrimination on the grounds of age

In 2023, the Supreme Court declared the dismissal of a 58-year-old Huawei engineer null and void due to age discrimination. The ruling confirms the judgment of the Employment Tribunal, which declared the dismissal null and void and ordered the company to reinstate the employee and pay the wages not received since the dismissal, as well as compensation of €20,000.

In conclusion, the Spanish Constitution enshrines equality and non-discrimination, and these principles also apply in the workplace to prevent situations in which a person may be discriminated against on the grounds of sex, race, gender, age or any other circumstance.

If you believe that you have suffered or are suffering any form of discrimination at work, contact our team of expert employment lawyers so that they can assess your case and analyse the possibility of bringing a claim against the company for discrimination.