Summertime is vacation time. Some employees receive a bonus from their employer in addition to their actual salary for their time off. It is not uncommon for job advertisements to offer holiday or Christmas bonuses. If this bonus has been paid for years and the employer suddenly wants to suspend payment, disputes often arise. Employers can keep the door to special payments open through voluntary and revocable retention. A new ruling by the Federal Labor Court (BAG, ruling of February 21, 2024, file number 10 AZR 345/22) shows that these are not always watertight clauses.
“The fact that an employer pays holiday pay to its workforce is not a legal regulation, but is often stipulated in employment contracts, collective agreements or company agreements,” says Jakob Friedrich Krüger, a specialist lawyer for labor law at the law firm Kliemt.Arbeitsrecht. In the BAG case, the company did not write down the payment of holiday pay in the employment contracts, but instead sent around an information letter every year. The bonus was presented as a one-time, voluntary social benefit. When the employer did not want to pay holiday pay for 2020 because of the economic situation, he did not take into account that a works council had now been formed. The change in special payments was therefore subject to co-determination. However, the employer left the works council out of the cancellation of the payment.
Transparent regulation on non-payment of holiday pay
In addition to this error by the employer, the BAG criticizes another aspect. “Even if the employer regulates the payment of holiday pay and also stipulates that it is only paid conditionally, once and voluntarily, he is not necessarily on the safe side,” says lawyer Krüger. According to the lawyer, if it is not clear to the employee under which conditions the holiday pay will not be paid, the clause may be ineffective: “The employment contracts are subject to general terms and conditions control, which means in short: everyone must understand what is in them.”
The defendant company often justified the payment of holiday pay with the company’s stable situation. The principles “on the granting of holiday and Christmas bonuses (as of 10/2017)” state that the payments can be made “if the company’s economic development is positive”. According to the BAG, the principles and letters of the various years contained a combination of voluntary and revocation reservations that were contradictory and therefore could not withstand a content check. According to lawyer Krüger, the wording “We reserve the right to pay in economically weak years” as a reason for non-payment and as a right of revocation could also be too vague. The company was also unable to prove the difficult economic situation in court. “The decline in profits would have to be significant for the payment to be canceled,” says Krüger.
When can you suspend payment?
In addition to the involvement of a possible works council and transparent, concrete clauses, the interests of all parties must also be weighed up “at reasonable discretion,” as the law says. Of course, the employee side is always interested in there being a payment. “If the company were to become insolvent due to special payments, this would not be in the interests of the employees,” explains Jakob Krüger. After all, a job is more important than holiday pay. According to Krüger, there have been particularly serious reasons in recent years due to the corona pandemic and the outbreak of the war of aggression on Ukraine. But this also has to be proven, because the defendant company was actually concerned with the year 2020 and the outbreak of the pandemic.
Due to the wording of the clauses, they can also be divided into two classifications, according to Krüger: “With special payments, care must be taken to ensure that they are either formulated with a remunerative character or as a special benefit for length of service.” The former is about bonuses for good performance. In these cases, the payments cannot simply be canceled because they are part of the remuneration. However, if the holiday pay is linked to company loyalty and unterminated employment relationships, the payments would not have the character of remuneration. This is the so-called deadline clause.
“In recent years, we have seen that employment contracts are becoming significantly longer due to case law, especially in vacation law, because companies want to regulate all eventualities,” reports Krüger from practice. He sees a negative development here, especially for employees, who usually can’t do much with a 10-15 page employment contract.
This article was published on May 8, 2024 and reviewed and updated on July 23, 2026.
As head of the online service, Gesine Wagner oversees the digital channels of human resources management and, as an editor, is primarily responsible for the topics of labor law, politics and regulation. She continues to be the contact person for everything that has to do with HR start-ups. She is also responsible for the CHRO Panel.
