Christmas bonus after a termination: A guide for employees in Germany

Christmas bonus after a termination

For many people, their Christmas bonus is more than just an extra payment – it is an integral part of their annual income, often planned for well in advance. But what happens to the Christmas bonus if you are dismissed? Does this mean that your long-planned Christmas holiday has to be cancelled? In the following article, we answer this question and others, and provide tips on the most important things employees should consider in such a situation.

Do you need help with German labor law?

Get a free initial consultation now – with an expert on German labor law!

Free initial consultation

Key information at a glance:
  • The right to a Christmas bonus may be set out in an employment contract, a collective agreement, company practice or a works agreement.
  • When the employment relationship is terminated, various clauses may be included in the contract, such as: (1) waiving or reducing the entitlement to a Christmas bonus, (2) stipulating that the employment relationship must be ongoing when the bonus is due (cut-off date rule), or (3) requiring the repayment of any Christmas bonus already paid.
  • The effectiveness of these clauses depends on whether the Christmas bonus is intended as remuneration or as a reward for loyalty to the company. The following principle applies: cut-off date rules and repayment clauses are ineffective if the Christmas bonus also constitutes remuneration, as this would result in the employee being deprived of remuneration that has already been earned.

When are employees entitled to receive a Christmas bonus?

A Christmas bonus is a special payment granted by many employers to their employees in addition to their regular salary. However, it is not required by law. Entitlement, conditions and amount may be determined by the following factors:

  • Employment contract: An employment contract is an individual agreement between an employer and an employee that regulates their rights and obligations. Entitlements such as Christmas bonuses can also be agreed upon here.
  • Collective agreement: A collective agreement between trade unions and employers’ associations, or individual employers. If a collective agreement provides for a Christmas bonus, employees covered by the agreement are generally entitled to it.
  • Works agreement: This is a regulation concluded between the works council and the employer that applies to all employees in the company. It can regulate voluntary benefits, such as Christmas bonuses, in a uniform manner.
  • Company practice (custom): This arises from the regular and unconditional payment of Christmas bonuses. This usually occurs after three years of unconditional payment. Employees can then rely on this in future and are entitled to it. There is no need to record this company practice in writing in the employment contract. It arises solely from the employer’s behaviour.
Lawyer Berlin english speaking
How much severance pay are you entitled to? Calculate now!
  • Calculate your individual severance pay for free
  • Calculation of the standard payment up to a very high settlement
  • Get a strategy to maximise your severance pay

Check severance pay

Christmas bonus and voluntary reservation

However, the payment of the Christmas bonus may be subject to a voluntary reservation, meaning that the payment is made at the employer’s discretion and does not guarantee future entitlement.

This is usually included as a ‘general term and condition’ in the employment contract. These are strictly reviewed by the courts. In most cases, they are considered invalid if they are too general, unclear, or not transparently formulated. There are also exceptions to effective reservations. In this case, it is strongly recommended that you seek legal advice, as case law is very complex.

The same applies to a so-called revocation clause. Here, entitlement to a Christmas bonus is deemed to have arisen but is then revoked.

Christmas bonus and termination

If an employee leaves the company before the cut-off date or the Christmas bonus due date, the following cases must be distinguished:

  • Rewarding loyalty to the company: If the Christmas bonus only rewards past or future loyalty, entitlement may depend on full employment during the reference period. It can also depend on employment during a specific part of that period. Depending on the provisions, entitlement may be waived in full or in part. This applies if the employee leaves before the payment date or before a specified cut-off date.
  • Remuneration character: If the Christmas bonus is purely remunerative, it must be paid pro rata in the event of early departure.
  • Collective agreement: If entitlement to a Christmas bonus arises from a collective agreement, the parties to the agreement have considerably more leeway. They can regulate cut-off dates and other details more freely.

In practice, the Christmas bonus is usually a combination of remuneration and loyalty to the company. If an employment contract grants entitlement to a Christmas bonus, the employer must respect this agreement. Provisions that eliminate the payment entirely are invalid. The same applies to cut-off date provisions linking the payment to continued employment, since they disadvantage employees unreasonably. They jeopardise wages that have already been earned and make it more difficult to terminate the employment relationship.

Unfairly dismissed in Germany?

Check your severance pay now – you have only 3 weeks to preserve your severance package!

Check severance pay

Repayment of the Christmas Bonuses after Termination

Many employment contracts contain repayment clauses. These stipulate that Christmas bonuses already paid must be repaid if the employment relationship is terminated within a certain period of time.

  • Repayment clauses are not permitted if the special payment also served as remuneration for work already performed.
  • Repayment clauses are permissible if the Christmas bonus is intended solely to reward loyalty to the company. Regarding the permissible binding period:
    • A repayment clause is always invalid for Christmas bonuses up to a gross amount of 100 EUR. If the employee receives less than one gross monthly salary, a repayment clause is permissible provided that the employment relationship does not continue beyond 31 March of the following year. The employee may leave the company at the end of 31 March.
    • However, if the employee receives at least one full gross monthly salary, the employer can reclaim this if the employee leaves before the next permissible termination date after the end of the first quarter.
Repayment provisions are invalid if:
  • The repayment periods are too long.
  • Neither the repayment conditions nor the length of the employee’s commitment are specified.

The employee can then leave at any time without having to repay anything.

Enforcing entitlement to Christmas bonus in the event of termination

To enforce any entitlement to a Christmas bonus, employees should check the following:

  • Check your employment contract for provisions relating to a Christmas bonus. If there are none, you can also look in the applicable collective and works agreements, which may contain additional provisions.
  • Any deadlines for making a claim must also be observed. These include any exclusion or limitation periods agreed in the contract.
  • Employees should also gather relevant documents, such as payslips.

For clarity, it is also advisable to submit a written claim for a Christmas bonus to your employer. Employees can contact their trade union for assistance with legal matters. However, it is often helpful to seek advice from a lawyer who specialises in this area.

CTA_Button_EN
Free initial consultation with a specialist lawyer
  • 15min free initial consultation with a lawyer
  • Prompt online appointment via Calendly or quick call-back
  • Strategy for negotiating your severance pay

Free initial consultation

Frequently asked questions (FAQ)

CTA_Button_EN
Free initial consultation with a specialist lawyer
  • 15min free initial consultation with a lawyer
  • Prompt online appointment via Calendly or quick call-back
  • Strategy for negotiating your severance pay

Free initial consultation

All information on our website is of an editorial nature and expressly does not constitute legal advice. Naturally, we have made every effort to ensure the accuracy of the information and links contained on this website. Nevertheless, we cannot guarantee the accuracy of the information. It is in no way a substitute for legal advice from a lawyer.