In Germany and around the world, a bonus can be a substantial component of an employee’s compensation, particularly among executives. Below is information you should know when negotiating a bonus or seeking to have your employer pay a bonus to which you are entitled.
There Are Different Forms of Bonuses
There is no single type of bonus payment in Germany. Instead, there are several bonus categories, each aligned to a distinct incentive or purpose. For example, a performance-based bonus compensates the employee for individual results, while a profit-sharing bonus – usually reserved for high-level employees – is based on the company’s achievements. Employees may also be paid gratuities, such as holiday or anniversary bonuses, and supplemental pay to compensate for extra work time.
Bonus Policies Are Generally Discretionary
Companies often give themselves the authority to determine bonus amounts, conditions for payout, and when or even if they will grant a bonus. Employees seeking bonus payments look to German labor tribunals to force companies to adhere to their own rules and policies, ensuring employers treat workers fairly.