A bonus payment in addition to the salary, that sounds attractive at first. But such a bonus does not necessarily always have advantages. What is important for employees.
A bonus payment – that sounds to many like a bonus for the top management of a company. But there have long been bonuses for employees in regular offices and increasingly also in factory buildings. Everything employees need to know about the benefits:
What exactly is a bonus payment?
“A bonus is a benefit granted by the employer in addition to the basic salary,” explains Inga Dransfeld-Haase, President of the Federal Association of Personnel Managers (BPM) based in Berlin. As a rule, the bonus is linked to the individual performance of the individual employee – or to the performance of the company or a department.
“In general, the bonus should be an incentive for employees to achieve above-average work results,” says Daniel Stach, labor lawyer at the Verdi union in Berlin. This means that the bonus payment in the narrower sense is a target wage in contrast to the conventional time wage. Employers and employees usually negotiate the details of the target salary in a target agreement. The basis are defined framework conditions.
What types of bonus payments are conceivable?
In a broader sense, in addition to the target salary, commissions, profit and profit-sharing systems, piecework bonuses and loyalty bonuses for long-term service also count as bonus payments. “The classic bonus payment, however, is the performance and success-related additional payment based on a target agreement,” says union lawyer Stach. It is variable and is granted regularly once a year in the form of a payment in cash or in kind.
The amount of the bonus depends on various components, such as personal performance or departmental or operational results. “The amount of the bonus therefore usually fluctuates,” says Dransfeld-Haase. An employer can pay out a bonus, invest in the company pension scheme or issue it in company shares.
Is there a right to bonus payments?
It depends. “An employer can make a bonus payment as a voluntary additional service,” says Dransfeld-Haase. However, the employer may also be legally obliged to do so. This is the case, for example, within the framework of a collective agreement, a company agreement or a general commitment.
If a target agreement is effectively agreed on this basis, a legally enforceable legal claim arises. “Agreements according to which the decision on the bonus payment is left to the employer’s discretion despite the achievement of targets are regularly ineffective,” says union lawyer Stach. Such a “voluntary reservation” would represent an unreasonable disadvantage for the employees.
How does the bonus differ from other one-off payments?
A bonus is a variable, performance-related income that employers pay on top of the salary. “In contrast to other one-off payments, employers can renegotiate the requirements for the bonus payment with their employees every year,” says Stach. Target type and level can be redefined annually. This makes the bonus payment as a target salary an additional performance and result-related management tool.
What should employees pay attention to when agreeing bonus payments with their employer?
Above all, transparency is important. Employers and employees should be clear about the goal and the essential framework conditions: What exactly is the goal to be achieved? Which period is relevant? When and how is the billing done? “If the cornerstones are sufficiently specific, both sides avoid misunderstandings and disappointments,” says Inga Dransfeld-Haase. According to her, a bonus agreement is often part of the employment contract.
What are the advantages and disadvantages of bonus payments for employees?
“A bonus payment motivates, binds to the company and acts as an advertising message to the outside world,” says Dransfeld-Haase. In times of a shortage of skilled workers and a competitive labor market, a bonus can be the decisive incentive to attract candidates to the company and keep employees.
On the other hand, the following applies: “A bonus system gives the employer an additional control and monitoring instrument, but this can be at the expense of the good working atmosphere and data protection,” says labor lawyer Stach. From his point of view, one of the problems is determining who is a low, good or top performer. On the surface, the most convenient way seems to be to collect and evaluate employee data using digital technology. However, the data collection frenzy of some companies often reaches the limits of what is legally permissible.
What should be considered when it comes to taxes?
Taxes and social security contributions apply to a regular bonus. An exception is the Corona bonus, which the legislator has made tax and social security-free for special services during the pandemic. “Alternatively, companies can offer monetary benefits,” says Dransfeld-Haase. These can remain tax-free within certain limits. “However, a pecuniary advantage is no longer a classic bonus.”
