Labour law: Variable remuneration – compensation instead of bonus

The Federal Labour Court (Bundesarbeitsgericht, BAG) has ruled that employees are entitled to compensation if their employer notifies them of variable remuneration targets too late or not at all (judgment of 19 February 2025, ref. 10 AZR 57/24).

An employee had filed a lawsuit because he had not been informed of his individual targets for 2019 and had only learned of the company’s targets late. He demanded compensation of €16,000 in addition to the €15,500 already paid, as he would have achieved his targets if they had been announced in good time.

The Federal Labour Court (Bundesarbeitsgericht – BAG) upheld the decision of the Cologne Higher Labour Court (Landesarbeitsgericht – LAG) and found that the delayed target-setting constituted a breach of duty on the part of the employer. Retroactive target-setting was no longer motivating. The court rejected contributory negligence on the part of the employee, as the employer was responsible for setting the targets.