Federal Labour Court (BAG) confirms: compensation due to delayed target setting.

After the plaintiff resigned from his position with the defendant in November 2019, he sued for damages. Why? He claimed that he had been informed of the company’s targets late, so that he no opportunity to fully exploit the performance-related part of his remuneration. In addition to the variable remuneration paid in the amount of €15,586.55, he claimed damages amounting to €16,035.94 gross.

In the employment contract, the parties had agreed that 30% of his gross annual salary would be paid depending on his target achievement. In a works agreement, the defendant and the local works council agreed that the employees would receive a specific target by 1 March of the calendar year. It remained disputed when the plaintiff was actually informed of the relevant parameters of the company’s targets. In any case, he received specific figures on the company’s targets in mid-October of that year. No individual targets were set at all.

The employer has a unilateral right to determine performance targets within the meaning of Section 315 (1) of the German Civil Code.

Unlike with target agreements, the employer sets targets alone. The employee has no obligation to cooperate in this regard. The date up to which a target agreement can be made up depends on the meaning and purpose of the performance determination and the interests of the parties. If a subsequent target is unable to fulfil its motivational function, impossibility occurs in accordance with Section 275 (1) of the German Civil Code. At any rate, this is the case on expiry of the relevant target period. In the present proceedings, the Federal Labour Court dismissed the defendant’s appeal and upheld the appeal decision of the Cologne Regional Labour Court of 6 February 2024 The latter had ordered the defendant to pay damages in lieu of performance in accordance with Sections 280 (1), (3) 283, 252 of the German Civil Code in the amount of €16,035.94 gross to the plaintiff.