It is possible that the parties to an employment agreement agree upon a bonus, which shall be determined at the employer´s equitable discretion. However, if the employer in such case does not decide about the bonus payment within his equitable discretion, the employment law court can determine the amount of the bonus payment unilaterally. This has now been confirmed by the German Federal Employment Court in a decision dated August 3rd, 2016.
Furthermore, the Federal Employment Court explained that the employment court must weigh the submitted facts of each party in order to decide about the bonus amount. For this process, the court can consider all indicators regarding the bonus amount, such as the amount of bonus payments in previous years, economic data of the company and the degree of target achievement of the employee. The employment court is required to determine the amount of the bonus payment, in its own discretion, only in circumstances where neither party has offered any indicator of the bonus amount.