Christmas (bonus) is for everyone

The Federal Labour Court (Bundesarbeitsgericht, BAG) ruled on November 13, 2013 (docket number – 10 AZR 848/12) that employers cannot validly exclude grants of special payments such as Christmas bonuses in their regulations with respect to employees whose employment ended during the calendar year, if such bonus shall not only reward company loyalty but also remunerate performed work. The court argued, that such exclusions are void, because they unreasonably deprive employees of their earned salary. Consequently, affected employees are entitled to pro-rated payments of such bonuses. Employers must therefore ensure that Christmas bonuses are exclusively granted as a reward of company loyalty if they want to limit such entitlements to employees who are still employed at the end of the calendar year.