On 2 October 2015 the Higher Court of Berlin-Brandenburg (Landesarbeitsgericht Berlin-Brandenburg) decided that an employer must not credit the employee´s entitlement to holiday and Christmas bonus against the obligation to meet the legal requirements of the Minimum Wage Act (docket number: 9 Sa 570/15).

Since the Minimum Wage Act (Mindestlohngesetz) became effective of 1 January 2015 an employer is obligated to pay its employees a minimum wage of 8.50 Euro per working hour. The defendant employer paid its employees less than the minimum hourly wage. However, the employees were entitled to additional holiday as well as an additional Christmas bonus in the total amount of one monthly salary. The employer increased the hourly wage in accordance to the legal requirements but issued a constructive dismissal in order to end the bonus entitlements. The affected employees challenged the constructive dismissals and succeeded in the first and second instance.

The appellate court confirmed the decisions of the regional labour court of Berlin. As the holiday bonus and the Christmas bonus must be deemed to be a special gratuity rather than a reward for the employee´s performance, the intended setting-off of these bonuses against the increased wages was not valid. In any case a reduction in employees’ remuneration entitlement requires that the employer is able to argue that its business would become insolvent without the reduction in the employees´ salaries. The defendant employer was not in the position of imminent insolvency. As a consequence the employer was ordered to maintain the bonus payments as well as the increase to the statutory minimum wage.