Bonuses and variable pay in France: base salary, bonus, targets

In a job offer or on a payslip, pay often splits into several pieces: a base salary, variable pay linked to targets, and bonuses that are more or less regular. They are not all worth the same. Some are guaranteed; others depend on your results, the company's results or the employer's goodwill. This guide helps you sort them out, know what must be in writing, and compare two offers that mix base and variable pay in different proportions.

Base, variable, bonuses: three different things

The base salary is the contract's basic pay, paid every month whatever happens. Variable pay depends on performance: individual or team targets, revenue, margin, number of deals signed. Bonuses are sums paid on top of salary, at regular intervals or not: thirteenth month, holiday bonus, seniority bonus, one-off bonus. Profit-sharing schemes (intéressement and participation) are not salary: they have their own rules, described in the guide to profit-sharing schemes.

The bonuses you will come across

• Target bonus: a target amount, paid in full or in part depending on how far objectives set for the period were met.
• Commission: a percentage of sales or margin, common in sales roles, often paid monthly or quarterly.
• Thirteenth month and holiday bonus: annual bonuses, often provided for by the collective agreement; the guide to the thirteenth month covers the first one.
• Seniority bonus: it grows with the years spent in the company, when the collective agreement or the contract provides for it.
• Bonuses linked to working conditions: on-call duty, night work, dirty or hazardous work.
• One-off bonus: paid once, at the employer's discretion; the value-sharing bonus (PPV) is a form of it regulated by law, with its own social security and tax treatment.

Guaranteed or not: what makes a bonus compulsory

A bonus is compulsory when it is provided for by the employment contract, the collective agreement or a company agreement, a company custom (paid to everyone or to one category, regularly, on a fixed calculation) or an employer commitment. In every other case it is a gratuity: the employer decides each time, and it is not part of the pay you are owed. A “usual” bonus that was never written down can therefore be a right or a mere favour; it all turns on the three tests of a custom given above.

What the contract should spell out

Badly worded variable pay is a classic source of disputes. Before you sign, check that the contract or its yearly addendum answers these questions:

1. What is the calculation based on: individual or team targets, revenue, margin?
2. Who sets the targets, when, and in what form (in writing, at the start of the period)?
3. What is the target amount, and is there a floor or a ceiling?
4. When is it paid: monthly, quarterly, once a year after the year-end close?
5. Do you have to be employed on the payment date? What happens if you join or leave mid-period?
6. Is variable pay guaranteed, fully or partly, in the first year while you settle into the job?

Contributions and tax: a bonus is still salary

Bonuses, commission and gratuities count as pay subject to contributions, and as taxable salary. A bonus of €2,000 gross, paid on top of a €3,000 monthly salary, gives €1,583 net before tax and €1,640 of taxable pay, according to the site's engine. The notable exception is the value-sharing bonus, which can be exempt under conditions but cannot replace a pay rise. To see what a rise in base pay would give instead, the pay rise simulator works out the net gain month by month.

Comparing two offers with variable pay

Offer A: €3,000 gross a month, no variable pay. Offer B: €2,800 gross a month and a target annual variable of €3,000. On paper, B pays more. In net annual terms, worked out by the site, it all depends on how much of the variable is actually paid:

Offer A stays at €36,000 gross a year whatever happens. To run this calculation with your own two offers (status, months paid, meal vouchers, health cover), use the job offer comparison tool, and to read a job ad that mixes base and variable pay, the guide to reading a job ad.

Negotiate the base first

The base salary is the only guaranteed part, the one future pay rises build on, the one a bank or a landlord looks at, and the one that counts first when you next change jobs. Negotiate it first, in gross annual terms; variable pay comes after, as a top-up. If the employer cannot move on the base, ask for guaranteed variable pay in the first year, written and achievable targets, or a pro rata share if you leave. The full method is in the guide to negotiating your starting salary, and the CV analysis gives you a starting figure: what you are worth on the market.