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Anniversary bonus – No continuing employment relationship required

The Federal Labour Court (Bundesarbeitsgericht, BAG) decided that the payment of an anniversary bonus does not require the duration of the employment relationship beyond the date of the anniversary  (judgment dated April 9, 2014, docket number 10 AZR 635/13).

The plaintiff was employed by the company for exactly forty years. His employment terminated on 28 February 2012. According to the employment contract he was granted an anniversary bonus in the amount of EUR 1,000 after a tenure of forty years. The defendant denied the payment arguing that entitlement to the bonus required the duration of the employment relationship beyond the date of the anniversary. However, the court rejected this argument. The function of an anniversary bonus is to award the employee´s loyalty in the past rather than setting incentives for the future. Against this background, the bonus payment cannot be subject to the continued duration of the employment, even for only a short period.