Employees can insist on compensation if employers set the targets too late for which bonus payments are available. This was decided by the Federal Labor Court in a case from North Rhine-Westphalia (10 AZR 57/24).
The claim for damages arises when the employer culpably violates their obligation to provide the employee with timely goals linked to the achievement of variable compensation, according to the decision by Germany's highest labor judges.
Such goal-setting exists nationwide in many company bonus systems or variable compensation systems, for example, for executives.
Judge: No Contributory Negligence of the Employee
In its previous case law, the Federal Labor Court mainly dealt with the obligations of employers and employees when concluding target agreements. Now, it concerned goal-setting, which is usually determined by the employer.
In the decision of the Federal Labor Court, it states:
“In the case of an omitted or delayed target setting by the employer, contributory negligence by the employee due to lack of cooperation is generally ruled out, because only the employer carries the initiative responsibility for setting the targets.”
Approximately 16,000 euros are due
The complaint was filed by an employee with managerial responsibilities who has a claim for variable compensation in his employment contract. It is agreed in his company that a target setting must occur by March 1st.
He received a target specification that was not individualized and included a revenue and profit target. His employer ultimately paid the plaintiff a variable compensation of 15,586 euros gross. However, he insisted on damages due to the delayed specification amounting to an additional 16,035 euros gross.
The Labor Court had dismissed the manager's lawsuit, the Regional Labor Court upheld it. Now the employer must pay damages.
