In Germany Bonuses May be Credited Against the Minimum Wage
International Business Articles
By Dr. Eric Uftring, Esq.
WINHELLER Attorneys at Law & Tax Advisors
Frankfurt, Germany
Is it possible to credit an attendance bonus paid by an employer to his employees for any month, in which they have no days of absence, against the minimum wage or is such bonus intended for a specific purpose to be compensated in addition to the minimum wage?
Employer Pays Attendance Bonus
Since 1999, an employer paid a bonus of 100 DM to employees who attended work without days of absence due to illness. Upon introduction of the minimum wage in Germany on January 1, 2015, the employer decided to continue paying this bonus but to credit the amount against the minimum wage.
The suing employee believed that the attendance bonus could not be credited against the statutory minimum wage. The employer took a contrary view.
The employee initially won the case in the labor court. However, the court of appeal was right in reversing the decision and dismissing the employee’s action.
Intent and Purpose of the Bonus Are Decisive
The court’s reasoning was mainly based on the ideas of the Federal Labor Court’s settled case-law, according to which an attendance bonus cannot be separated from the employee’s basic contractual obligation to appear for work. As a consequence, there is a compulsory functional equivalence between the bonus and the work owed by the employee. The bonus may therefore be credited.
Exceptions only apply where laws provide that a supplement or allowance is paid for a specific purpose which precludes it from being credited against the minimum wage, for example night-time supplements.
Have Your Bonuses Checked in Advance
If you wish to provide performance incentives for your employees, you should first consult an expert. Our experienced attorneys will be pleased to advise you.
Contact:
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