„The bonus is discretionary” — three words your employer hopes will end the conversation. Often they do not. Under German law, even a contractually labelled „discretionary” bonus is subject to substantial constraints — equal treatment, billige Ermessensausübung (reasonable discretion), and in many cases a binding contractual claim once the bonus has been promised, communicated, or paid out in a consistent pattern over years.
The four types of bonus under German law
- Contractual fixed bonus. The contract specifies a fixed amount or a fixed formula (e.g., „13th-month salary equal to one monthly salary, paid in November”). Pure contract claim — fully enforceable.
- Contractual target-based bonus. The contract specifies target metrics and a payout formula. If the targets are met, the bonus is owed. The employer cannot unilaterally change the targets or withhold payment without breaching contract.
- „Discretionary” bonus reserved by contract clause. The contract reserves discretion to the employer („the employer can grant a bonus at its discretion”). Subject to § 315 BGB — billige Ermessensausübung. The employer must exercise the discretion reasonably; pure denial without reason is unlawful.
- Voluntary bonus without contractual basis (betriebliche Übung). No contract clause, but the employer has paid a bonus consistently for years. The doctrine of betriebliche Übung can crystallize this into a binding contractual claim after typically 3 years of consistent payment without effective reservation.
Billige Ermessensausübung (reasonable discretion) — § 315 BGB
Where the contract reserves discretion, that discretion is not unlimited. § 315 BGB requires the employer to exercise discretion reasonably — meaning the decision must take into account both the employer’s interests and the employee’s legitimate interests, and must follow recognizable, consistent, non-discriminatory criteria.
Practical consequences:
- The employer must give reasons. A bare „we decided not to pay you a bonus” without explanation does not satisfy § 315.
- The reasons must be objectively defensible. They must relate to factors within the employer’s bonus framework — typically company performance, individual performance, or both.
- Equal treatment. If colleagues with comparable performance received bonuses, withholding yours requires specific justification grounded in your individual circumstances.
- Burden of proof. Once you allege unreasonable exercise, the employer bears the burden of proving the exercise was reasonable (BAG, 19.3.2014, 10 AZR 622/13).
- Judicial review: the court can substitute its own determination of what would have been a reasonable bonus (§ 315(3) BGB).
The Freiwilligkeitsvorbehalt (voluntary reservation) trap
Many contracts contain a clause like „Bonuses are paid voluntarily; no entitlement for the future is created by repeated payment.” This Freiwilligkeitsvorbehalt is intended to prevent betriebliche Übung from crystallizing into a binding claim.
Current BAG case-law (BAG, 8.12.2010, 10 AZR 671/09) has substantially weakened these clauses:
- The reservation must be transparent and unambiguous (§ 307(1) BGB).
- If the bonus payout is part of the regular salary structure (e.g., target-based annual bonus that is communicated each year), a generic Freiwilligkeitsvorbehalt cannot validly negate the contractual entitlement.
- If the reservation is combined with a Widerrufsvorbehalt (right to revoke) in the same clause, the clause may be wholly invalid under § 307 BGB.
- The reservation cannot override a specific bonus promise given for a particular year (e.g., target letter for 2025 with payout in 2026 — the reservation does not invalidate the specific year’s promise).
In practice: many Freiwilligkeitsvorbehalt clauses are invalid or limited in scope. Have your contract reviewed before accepting that the bonus is „off the table”.
Pro-rated bonus on departure
A common dispute: you leave mid-year, and the bonus is paid only to employees in employment on the payout date (a Stichtagsregelung). The BAG has held:
- Stichtagsregelungen are generally permissible for pure loyalty bonuses (where the bonus rewards future commitment).
- Stichtagsregelungen are generally not permissible for performance bonuses that reward work already performed during the year — these must be paid pro-rated for the period worked (BAG, 13.11.2013, 10 AZR 848/12 and consistent follow-on case-law).
- Where the bonus has a mixed character (partly performance, partly loyalty), the proportions matter — substantial pro-rated entitlement often survives.
The implication: if you leave on 30 September with a 2026 annual bonus that would have paid in March 2027, you are typically entitled to 9/12 of the performance component pro-rated, even if the Stichtagsregelung would deny it. The most common litigation outcome: settle at 50–100% of the pro-rated amount, depending on the strength of the case.
Target letters and bonus plans
Target letters issued at the start of each year (or each performance cycle) are particularly powerful evidence:
- A target letter is typically read as a year-specific bonus promise, even where the general framework reserves discretion.
- Once targets are set and the year is underway, the employer cannot unilaterally change them.
- If you meet the targets and the bonus is denied, the burden is on the employer to demonstrate other reasons — and those reasons are subject to § 315 BGB.
- If your manager (or HR) verbally indicated „you’re on track for full payout”, this is also evidence (though harder to prove than a written target letter).
What to demand and how
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Collect the evidence
Contract clauses (bonus + Freiwilligkeitsvorbehalt + Widerrufsvorbehalt), target letters, prior bonus payments (last 3+ years), payslips showing the bonus elements, internal communications about targets, performance reviews. Comparable colleagues’ situations (where known).
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Written Geltendmachung within the Ausschlussfrist
A formal written claim citing the specific contractual basis, the targets met (or the equality argument), and the demanded amount. Sent within 3 months of the bonus due date.
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Employer response
The employer must give substantive reasons for any denial. Generic „discretion was exercised” is not enough.
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Zahlungsklage if needed
Filed at the Arbeitsgericht. Streitwert = bonus amount. Most cases settle at the Gütetermin; substantive litigation is rare because employers usually prefer to settle to avoid disclosure of internal bonus criteria.
The Ausschlussfrist on bonus claims
Worked examples
Bank employee, denied bonus after merger
Senior banker at a Frankfurt bank, contractual target bonus structure, 5 years of consistent target-met payouts averaging €60,000/year. Bank merges with another. New management denies bonus for the year of the merger, citing „discretionary” wording. We assert: (1) the target letter was a year-specific promise; (2) targets were verifiably met; (3) Freiwilligkeitsvorbehalt is invalid under § 307 BGB. Settled at €52,000 (87% of expected payout) at the Gütetermin.
Tech employee, mid-year departure
Senior engineer at Cologne tech company, 4 years of €20,000 annual bonus paid each March. Leaves on 30 June. Employer refuses pro-rated 2026 bonus citing Stichtagsregelung. We assert: bonus has clear performance character (linked to individual KPIs); Stichtag-only forfeiture is invalid for the performance component. Settled at €10,000 (full 6/12 pro-rata).
Sales rep with quarterly commissions
Sales rep with €40,000 commission earned in Q1, payment deferred to Q4 under a clawback clause. Employee dismissed in Q2. Employer refuses to pay the Q1 commission, citing the clawback. We assert: commissions for completed sales are earned at the time of the underlying contract — clawback for subsequent dismissal is invalid. Full €40,000 paid out at the Gütetermin.
Frequently asked questions
Is a „13th-month salary” the same as a bonus?
Usually yes — though the legal label differs. A 13th-month salary explicitly written into the contract is typically a fixed contractual entitlement, fully enforceable. If it is in the contract, you have a claim; if it has been paid for years without a contract clause, betriebliche Übung may apply.
What if my manager promised the bonus verbally?
Verbal promises are enforceable in principle, but the burden of proof is on the employee. Document the conversation immediately afterward (email summary, calendar note). Witnesses help. The risk: the employer denies the conversation took place.
Can the employer deduct the bonus because of my poor performance?
Only where the bonus structure explicitly provides for performance gating, and where the gating has been applied transparently and consistently. „Surprise” performance-based denials at year-end are typically vulnerable to § 315 review.
What if my contract has a clear „voluntary, no future entitlement” clause?
Have it reviewed. Many such clauses are invalid under current case-law (§ 307 BGB). Even where valid, they typically don’t override a specific year’s promise — only the future expectation. So your current-year bonus claim may well survive.