For employees and managers, bonus systems are often an essential part of their overall compensation, but disputes and misunderstandings are not uncommon, says lawyer and specialist in banking and capital market law Eser.
Attorney Eser, who has been working in labor law for over 20 years, represents managers of banks and savings banks in particular in questions relating to bonus systems and bonus lawsuits.
Thanks to his many years of practical experience, he knows first-hand the typical problems and challenges that arise in such cases. Whether it is unclear bonus regulations, the denial of bonuses or unfair cuts – Attorney Eser knows exactly how to successfully enforce these concerns. His in-depth expertise enables him to find tailor-made solutions for his clients and to effectively defend their claims.
German case law recognises that employees may be entitled to bonus payments despite the contractually agreed “voluntary” nature of the bonus, particularly if the bonus has been paid regularly or is contractually agreed.
Employers are obliged to create transparent and objective criteria for awarding bonuses and may not arbitrarily refuse bonuses, says lawyer and specialist in banking and capital market law Eser.
Entitlement to bonus payment: Overview of case law
In recent years, case law on the right to bonus payments has developed clear guidelines that are equally important for employees and employers. Despite contractual wording such as “voluntary performance” or “without recognition of a legal obligation”, there may be a right to bonus payments.
Here are some key decisions of the German labor courts:
1. Federal Labour Court (BAG), judgment of 13 November 2013 – 10 AZR 848/12
The Federal Labour Court clarified that the regular payment of a bonus can give rise to an employee’s entitlement even if the agreement was originally described as “voluntary”. If bonuses are paid regularly over several years, a company practice arises that gives rise to an obligation on the part of the employer to continue paying.
2. Federal Labour Court (BAG), judgment of 20 March 2013 – 10 AZR 8/12
In this ruling, the BAG ruled that bonus regulations must be clear and transparent. Unclear wording or blanket regulations that make the bonus dependent on incomprehensible conditions are to the detriment of the employer. This means that the employee is entitled to the bonus if the employer does not specify the conditions sufficiently.
3. Regional Labour Court of Düsseldorf, judgment of 24 January 2019 – 11 Sa 319/18
The Düsseldorf Labor Court ruled that a contractually agreed bonus entitlement cannot be unilaterally cancelled by the employer. The employer must prove that the conditions necessary for the payment of the bonus were not met. An arbitrary cancellation of the bonus is not permitted.
4. Federal Labour Court (BAG), judgment of 26 September 2007 – 10 AZR 569/06
In this ruling, the BAG emphasized that even if a bonus is made dependent on the “free decision of the employer”, this decision may not be made arbitrarily. The employer must apply objective criteria to refuse to pay a bonus. Abuse of decision-making power can lead to the employee’s bonus claim being enforced in court.
Judgment of the Federal Labor Court (BAG) of 15 November 2023, Ref. No. 10 AZR 288/22
The ruling of the Federal Labor Court (BAG) of November 15, 2023 (case no. 10 AZR 288/22) provides important clarifications regarding bonus payments in the event of voluntary termination.
The case under discussion concerned the effectiveness of cut-off date clauses in bonus agreements which exclude the right to a bonus in the event of voluntary termination.
The core of the ruling: The employee demanded a bonus for the 2019/2020 fiscal year, even though he had resigned himself. According to the works agreement, however, there was no entitlement if the employee resigned before the end of the fiscal year. The Federal Labor Court ruled that such cut-off date regulations can be ineffective because they do not adequately take into account work performed and disproportionately interfere with freedom of occupation.
The ruling strengthens the rights of employees, especially in the case of voluntary termination, and recommends that employment contracts be checked for such clauses.
Conclusion: The BAG ruling emphasizes the protection of employee rights and the fair design of bonus agreements. If you have any questions, please do not hesitate to contact me.
Lawyer profile:
With over 20 years of experience in employment law, Eser, a lawyer and specialist in banking and capital market law, supports employees and managers in legally enforcing their claims to bonuses and variable remuneration.
Attorney Eser represents, among others, executives of banks and savings banks in questions relating to bonus systems and bonus lawsuits.
Attorney Eser supports his clients in enforcing their claims to bonus payments.
In the often complex and contentious matter of bonus systems in the financial sector, lawyer Eser advocates for the rights of executives, especially when it comes to unjustified cuts or denials of bonuses.
His expertise offers individual solutions and assertive representation to ensure fair and performance-related remuneration.
Scope of my advice on bonus systems:
• Legal review of bonus systems: I support my clients in reviewing the bonus regulations in employment contracts and works agreements to ensure that the bonus structures are transparent and legally secure.
• Representation in bonus lawsuits: If bonuses are denied or reduced, I represent employees and managers in court to successfully assert their claims.
• Negotiation of individual bonus agreements: I negotiate tailor-made bonus arrangements, especially for managers and senior executives, that ensure fair and performance-related remuneration.
With my specialized know-how in employment law, I ensure that my clients fully exercise their rights and receive the bonuses they are entitled to.
I invite all those affected to seek advice about their options.
I would be happy to support you in enforcing your claims – whether out of court or as part of a bonus claim.
Attorney Eser’s law firm offers a free online check to determine claims and supports affected executives regardless of their place of residence.
