How do you calculate employee bonuses

Bonus and premium payments for employees

A bonus or a premium is understood to mean a performance by the employer in addition to the basic salary, which is usually linked to the individual performance of the individual employee and / or to the performance / results of the company or a department.

An employer can provide a bonus payment as a voluntary additional service. However, the employer can also be legally obliged to make a bonus payment. If an employee is entitled to a regular bonus or premium payment, the bonus or premium is usually paid once a year.

Entitlement to a bonus or a premium

An (if necessary enforceable) claim to a bonus payment or to the payment of a premium can result from all labor law claim bases, i.e. from

Bonus payment amount

It is typical of a bonus claim that it depends on various components, such as the operating result and / or the employee's personal performance. The amount of the bonus therefore usually fluctuates.

To calculate the amount of the bonus payment, the criteria that have been specified in the corresponding entitlement basis (e.g. in the employment contract) must be used. The amount of the bonus entitlement can, for example, also result from an additional target agreement and be based on the degree to which the set targets have been achieved.

If the amount of a bonus payment is based on whether and to what extent the employee has achieved certain goals, but no goals have been set, the employee can still be entitled to a bonus payment. If the target agreement is not agreed, the employee is usually entitled to the bonus payment if the employer should have taken the initiative to agree targets. As a rule, this can be assumed.

Often it is not specified exactly how the amount of the bonus payment should be calculated. In a contractual regulation it can say, for example:

"The amount of the bonus depends on the performance of the employee and the operating result."

Or quite simply:

"The employee receives an annual bonus."

In such cases, the employee regularly has the problem that he cannot determine the amount to which he is entitled to a payment. He cannot precisely quantify his entitlement and therefore cannot ask the employer to pay a certain amount.

If the employee has no knowledge of the calculation bases required to calculate the amount of his bonus entitlement, he may, however, be entitled to receive information from the employer about the calculation of the bonus. If necessary, the employee can enforce this right to information by filing a corresponding action before the labor court.

Many bonus regulations give the employer a certain amount of leeway when it comes to determining the amount of the bonus payment. This applies in particular in cases in which the amount of the bonus payment depends on the employee's performance to be assessed by the employer. If the employer has a margin of appreciation, he must make his decision according to "equitable discretion". In particular, this means that the employer's decision must not be arbitrary or irrelevant. In addition, the employer must observe the principle of equal treatment.

If the employer has to decide on the amount of the bonus payment at its own discretion, the employee can be entitled to receive information from the employer that prompted the employer to make the decision.

If the employer has to decide on the amount of the bonus payment at its own discretion, but does not make a decision, this can be made by the labor court.