Abuse of Rights and “in good faith violations” – Belgian Supreme Court calls for judicial restraint on employers’ rights
Written By
Counsel
Belgium
As Counsel in our International HR Services group in Brussels, I have in-depth experience in employment and civil law litigation, with a practice that spans an array of employment and social security law matters, focusing on dismissals, compensation and benefits and workplace health and safety hazards.
In civil law jurisdictions, the wrongful exercise of an otherwise legitimate right can give rise to civil liability under the doctrine of Abuse of Rights. Where one exercises a right in a manner that has caused injury to another, the judge may grant pecuniary damages to the victim or decide that compensation for the victim can be granted by “reducing” the right to its exercise within the limitations of its legitimacy. A classic example of an abuse of right is a property owner who constructs a building on his property with the sole malicious intention of obstructing his neighbour's view.
Background
Within the context of employment relations, an employer can be considered to have abused its right to dismiss the worker if (i) there are no objective reasons for dismissal or (ii) if the employee is dismissed as a reprisal after having made rightful claims or (iii) if the conditions of the dismissal are particularly offensive or humiliating for the worker. For a claim on the basis of an abuse of rights to be successful, the claimant must prove three elements: a specific fault committed by the holder of the right, the existence and the extent of damages suffered by the claimant and a causal link between fault and damages.
Closely linked to the doctrine of abuse of rights – although with its own intricacies – the theory of “in good faith” violations has also been given increasing attention over the past few decades. All contracts – and therefore also employment contracts - are by law to be performed in good faith (art 1134, par 1 & 3 Old Civil Code). This concept has been interpreted as imposing a duty of loyalty on both parties to a contract and would, under specific circumstances, also allow for a judge to reduce the “abusive” exercise of a right to its “normal” limits.
The decisions of the Labour Court of Appeal of Brussels …
In two joint decisions in 2017 and 2018, the Labour Court of Appeal applied both doctrines in the context of the right of the employer to decide on the employee’s right to a bonus. Whereas the employee claimed he was entitled to the maximum bonus, the employer had assessed his performance as sub-standard and consequently only granted 25 % of the maximum bonus.
The Labour Court of Appeal considered that (i) the employer had not acted in good faith by not giving the employee the opportunity to rebut the employer’s claim that he had performed poorly and (ii) conferred damages to the employee, calculated at the remaining 75 % of the maximum bonus.
… Quashed by the Belgian Supreme Court
The Supreme Court clearly rejects the use of both doctrines as a legal panacea that would allow for any decision of an employer to be recalled by jurisdictions based on vague considerations that do not take into account the actual terms of the agreement between the parties. It appeared from the factual considerations of the Labour Court’s decision that the employee had indeed performed poorly on a number of issues. The Labour Court of Appeal should therefore have examined if, in the absence of any “in good faith violation” on behalf of the employer, the employee would have been entitled to the maximum bonus. As regards the doctrine of abuse of right, the Supreme Court observed the Labour Court had failed to examine if the employer had indeed exercised its right to assess the employee’s right to the bonus in a “clearly/patently wrongful” manner and if so, if the employee would have been entitled to the full bonus, had the employer exercised its right in a normal manner.
This decision is to be welcomed for two reasons: firstly, the Supreme Court reiterates in non-equivocal terms the strict line of reasoning to be followed by the jurisdictions when applying both doctrines (i.e. determining fault, damages and causal link) and reaffirms the primordial importance of adherence to the terms of the contract as agreed between the parties. Secondly, the Supreme Court puts a clear stop to a certain form of judicial activism whereby judges overrule the employer’s right to decide on the employee's right to a bonus under the terms of a bonus plan. Both legal and practical certainty on the respective role of the judge and the employer are thus well served.
Source: Supreme Court, 20 December 2021, S.18.0089.N.
