A Bonus Without Communicated Targets
- Aug 5
- 3 min read
Anyone drawing a target bonus whose amount depends on company targets needs to know those targets while they can still be influenced. If the employer resolves them internally only and keeps them to itself, the full bonus can become payable as damages. That is how the Bundesarbeitsgericht (Federal Labour Court) ruled in spring 2026 (judgment of 22 April 2026, case no. 10 AZR 28/25). The outcome stays the same even where the company missed its targets in the end.
1. The Case: Figures That Never Arrived
The claimant worked as a manager in the finance function. Her bonus had two components: a personal one and one measured by the revenue and result of her business division. The details were set out in her employment contract and in a Betriebsvereinbarung (works council agreement) on variable pay.
On its own account, the employer had resolved the company-level targets for 2022 in good time. The claimant simply never heard of them. The workforce learned the figures only once the financial year was over, at an internal information event.
She met her personal targets in full. The employer rated the second component far lower because the division had missed its targets, and paid out around half of the agreed target bonus. The claimant pursued the difference as damages.
2. The Decision: An Internal Resolution Is Not a Target
The Federal Labour Court awarded her the full amount.
Where the employer alone may fix the targets, it makes a Leistungsbestimmung nach billigem Ermessen, a determination at its reasonable discretion. It therefore has to declare that determination to the employee, and the declaration has to reach him (§ 315 (2) Bürgerliches Gesetzbuch, the German Civil Code). The internal resolution is only the step before it; it does not take its place.
The thinking behind this is simple: variable pay is meant to steer behaviour. It can only do that if the targets are known during the running target period. Anyone who hears about them only afterwards never had the chance to align his work with them.
For the amount of the loss, a presumption then works in the employee's favour, that he would have met the targets in full had they been set on time. The court below had still required the claimant to describe what she would have done differently with earlier knowledge. The Federal Labour Court took a different view on that point and reversed the burden of pleading.
3. The Bad-Year Argument
The employer countered that the 2022 targets had been clearly missed in any event, and that notifying her would have changed nothing.
That was not enough for the Senate. An employer seeking to exonerate itself this way has to show that the same detriment would have arisen with proper notification too. That includes what the expectation looked like at the start of the year and whether the targets resolved upon were achievable at all. A bare reference to difficult economic conditions does not suffice.
The employer's second argument failed as well, namely that a single person can hardly move the figures of an entire division. Targets of that kind are met through the interplay of many employees. If nobody in the whole unit knew them, the individual's contribution cannot be declared irrelevant after the fact.
The court likewise found no contributory fault on the claimant's part. She did not have to ask after the targets or request disclosure. A Zielvereinbarung, a target agreement, is negotiated by both sides; with a unilateral Zielvorgabe, a target set by the employer, the initiative lies with the employer alone.
Not sure whether your bonus was calculated correctly?
Whether a reduced bonus payment holds up often turns on one plain question: were you actually told the relevant targets during the running year?
If you are an executive or employee holding a bonus statement that looks too low, or an employer who would like its target-setting process reviewed, I offer you a short, free initial assessment. In that conversation we clarify how your situation should be assessed and which next steps make sense.
