09 December 2015

It is that time of the year again

Introduction

The run-up to Christmas is the best part of the year. For many, this is the time to reflect on the year gone by. The time for reflection and acknowledgements has come, not only at home but also among colleagues in the workplace. There are many reasons to be joyful – be it the office Christmas party, the receipt of a gift or the payment of a Christmas bonus. There are, however, some legal pitfalls in terms of employment law in this context that might dampen the festive spirit. 

Voluntary Christmas bonus

Disputes regarding the payment of a Christmas bonus are easily one of the classic issues in employment case-law. Employers often use the payment of a Christmas bonus as a way to say thank you without, however, wanting to set a precedent for any future payments. In order to remain as flexible as possible, many employment contracts contain reservations as to the voluntary nature of such payment, which are aimed at ruling out what is known as “company practice” (betriebliche Übung). This is because a payment claim not only arises under a corresponding provision in the employment contract, but might arise simply by the employer – through repeated, similar conduct – causing the employee to legitimately rely on the fact that he or she will continue to receive such payment. If a claim has arisen by way of “company practice”, the employer may not simply discontinue the payment but is committed to continue making it in the future.

The legal obstacles for the valid implementation of a reservation as to the voluntary nature of such bonus are now so high, however, that only very few provisions will pass legal scrutiny in practice. The establishment of a “company practice” may not be prevented by including such provisions.

In addition, the Federal Labour Court (Bundesarbeitsgericht) has considerably relaxed the requirements which must be met for a “company practice” to exist. Until now, it was required for the employee to have received at least three voluntary payments of the same amount. Now it suffices if the employer makes several payments – including payments of varying amounts. If, for instance, the employer pays a Christmas bonus of 100 euros in 2012 and 150 euros and 200 euros in the following years, such conduct now amounts to a “company practice”. In this case the employee is entitled to claim payment of a Christmas bonus for 2015; the amount, however, is at the employer’s discretion and may be set at a different level each year. 

The missed Christmas gift

The office Christmas party – one man’s joy is another man’s sorrow. There is generally no obligation to attend. Sometimes employers reward attendance of the Christmas party by making small gifts. In such cases the employee might end up regretting not having gone. Cologne Labour Court had to rule on whether an employee who had not attended the office Christmas party still had a right to receive an iPad mini which was handed out as a gift during the office party (value: approx. 400 euros). The court denied such right. Attending the Christmas party is not mandatory but constitutes a voluntary commitment outside normal working time. If the employer decides to make office celebrations more attractive by distributing gifts, the court argued that this justifies treating employees differently. According to the court, only employees who had attended the Christmas party had the right to claim the gift. A further reason to consider carefully whether or not to reject an invitation to the Christmas party.

The boozy Christmas party

Even if the Christmas party is not held in the office, one must not forget that it constitues a business event. The relaxed atmosphere makes some colleagues temporarily forget how to behave appropriately towards colleagues and superiors. This might have consequences under employment law because, as a general rule, the same rules of behaviour as in the office apply in relation to the Christmas party, i.e. there must be no offensive or violent behaviour. Neither the festive spirit nor the consumption of alcohol constitute carte blanche for inappropriate offensive behaviour and harassment of any kind and, as such, regularly does not justify such misconduct. That is why it is important to adapt one’s own behaviour at the Christmas party accordingly to avoid the New Year starting with a warning or even a dismissal.

Conclusion

We hope that you will successfully avoid the aforementioned stumbling blocks and that you and your employees enjoy a lovely run-up to Christmas. We wish you a good start to the New Year and look forward to continue bringing you news of recent interesting developments in the field of employment law. 

Data Central

The data economy is transforming the way we do business and leveraging the opportunities it presents is key to staying competitive in an evolving market.

A Guide to Investing in Australian Real Estate

Investing Down Under offers a quick overview of the legal, taxation, FIRB and structuring issues you may encounter when investing in Australian real estate.

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
Share on LinkedIn Share on Facebook Share on Twitter Share on Google+
    You might also be interested in

    Employment partner Hilary O’Connor shares her insight with Personnel Today on the ECHR’s ruling that could give employers the right to read personal emails.

    14 January 2016

    It is of particular importance both for the employee and the employer to know the scope of application of the German Termination Protection Act.

    21 October 2015

    Safe Harbor agreements and personal data transfers: King & Wood Mallesons report

    15 October 2015

    The Act on Collective Bargaining Unity ratified by the German upper house (Bundesrat) on is meant to avoid a clash of collective agreements.

    08 July 2015

    You may also be interested in...

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.