You should pay attention to this in bonus agreements
To clarify, bonus payments should first of all be distinguished from gratuities. As a rule, these are not based on personal achievements, but in most cases are event-related. These include, for example, the Christmas bonus and a loyalty bonus upon reaching a certain length of service. Bonuses, on the other hand, are salary components based on an employee’s personal performance.
In order to avoid unwanted consequences, both the company and the employee should make sure when concluding the bonus agreement that the respective agreement on variable remuneration is formulated as clearly and transparently as possible. In addition, all criteria relating to the calculation of the bonuses should be clearly defined so that at the end of the respective reference period it can always be clearly determined whether and in what amount a bonus has to be paid out. This is the advice of the law firm Kolb Blickhan + Partner on their website.
The law firm also advises that the agreed goals should also be within a realistic range so that the employee can actually achieve them. An example of an arrangement where the achievement of the set goals is not within the employee’s control would be that of an employee at a pharmaceutical company who is assigned to visit a certain number of doctors in private practice, but who is assigned by his company to work in the office. The goals against which any bonus is measured must not only be clearly and transparently defined, but also realistically achievable for the employee.
Those are the potential pitfalls
When negotiating the individual bonus agreement for an employee, it is not only important to observe various labor law principles, in particular the control of content and exercise, but also individual supervisory regulations.
The Winheller law firm has compiled some of the most important legal principles that play a role in negotiations on a bonus agreement and the appreciation of which is essential in order to avoid possible pitfalls when it comes to bonuses. These include, for example, the principle of equal treatment under labor law, transparency when determining the requirements for a bonus payment, the determination of comprehensible criteria for exercising discretion when agreeing a purely discretionary bonus and the relationship between fixed salary and bonus amount. The requirements of the Institute Remuneration Ordinance for bonus payments in credit institutions must also be observed, in particular the orientation towards long-term objectives, eg through so-called “deferral” regulations.
How to claim the bonus
As a rule, bonuses are paid out in the first few months of the following year of a financial year. When it comes to billing, most employers usually proceed in such a way that the details of the process are clear to the employee and pay the resulting amount to the employee. Both the entitlement to the bonus and the related entitlement to information are subject to any limitation periods and the laws of the statute of limitations.
If the bonus to which you are entitled is not paid out, you should definitely submit both the information and the accounting for the bonus as well as the bonus claim to the employer. If, for example, you only assert the bonus claim and this is rejected by the company, it can happen that the right to information has already expired in the meantime. In such a case, it can be very difficult to get the money that is actually due to you, since you yourself are obliged to justify the claim, which in most cases is not possible without appropriate information from the company.
Thomas Weschle / Editor finanzen.net
Image sources: Maslowski Marcin / Shutterstock.com, Marian Weyo / Shutterstock.com