(Final?) news on the reservation of voluntary status

As of 2013, the Federal Labor Court (BAG) ruled that a reservation of voluntary status contained in a standard form employment contract is not sufficient to exclude a legal right to a christmas bonus, provided that the amount of the christmas bonus is regulated in detail (BAG, ruling dated February 20, 2013 - 10 AZR 177/12).

Now, the BAG stated: A reservation of voluntary status that generally refers to special payments such as vacation and christmas bonuses and can be interpreted in such a way that it also covers subsequent individual agreements on the payment of special payments unreasonably disadvantages the employee and is therefore invalid (BAG, ruling dated January 25, 2023 - 10 AZR 109/22).

The following facts formed the basis of the recently published decision:

The plaintiff (employee) and the defendant or its legal predecessor (employer) disputed the employee's claims to vacation and christmas bonuses. In their employment contract dated January 12, 2015, the parties agreed, inter alia:

"3. Remuneration
[...]
e) The payment of special bonuses, in particular christmas and/or vacation bonuses, shall be at the employer's discretion and shall not give rise to any legal claim for the future, even if the payment is made on several occasions and without express reservation of voluntariness."

"10. Ancillary Agreements and Amendment of Contract:
There are no verbal collateral agreements. Amendments and supplements to this contract must be in writing to be effective."

In each of the calendar years 2015 - 2019, the employer paid the employee and other employees both a vacation bonus and a christmas bonus. In the calendar year 2020, the employer stopped the payment. The employee then sued for payment of the vacation and christmas bonus for the year 2020. The BAG has granted the employee this claim on the following grounds:

• The repeated (more than three times) unconditional payment of vacation and christmas bonuses had created a company practice which was prevented neither by the reservation of voluntary status stipulated in the employment contract nor by the (simple) written form clause agreed in the employment contract.
• The reservation of voluntary status unreasonably disadvantaged the employee and was therefore invalid pursuant to § 307 (1) sentence 1 Civil Code (BGB). It violates the provision of § 305b BGB, according to which the priority of the individual agreement applies. It is not clearly limited to the fact that it merely wanted to prevent the emergence of a company practice, but rather allows the interpretation that it should also apply to subsequent individual agreements on the payment of special benefits. This is all the more evident because it was used in combination with a simple written form clause. This reinforced the impression that all subsequent agreements which were not made in writing (i.e. including individual agreements) were of no legal significance.
• Moreover, the simple written form clause does not prevent an implied amendment of the contract and/or the emergence of a company practice. By unconditionally paying the vacation and christmas bonuses and accepting these payments without objection, the parties had conclusively and informally rescinded the written form requirement.

Conclusion

Reservations of voluntary status contained in standard form employment contracts are - in terms of their legal advantages - practically history. If employers wish to prevent claims from arising, for example on the basis of company practice, an occasion-related reservation of voluntary status must be used in connection with the granting of a special bonus.

If this is not done - or is not desired for HR policy reasons - companies are well advised to at least draft their written form clauses contained in standard form employment contracts in such a way that they prevent a company practice from emerging. Such written form clauses are often the last resort, especially in this context.