German Court Ruling on Missed Bonus Targets Rewrites Rules for Manager Critiques

A missed deadline for setting corporate goals can now cost companies the full bonus a worker might have earned, according to a landmark decision by Germany’s Federal Labor Court (BAG) on April 22, 2026 (case reference 10 AZR 28/25). If an employer fails to define annual targets at the start of the year, employees may claim compensation for the lost variable pay – and courts will typically assume the targets would have been met.

The ruling lands as a new practical guide for legally safe performance discussions reaches managers. Published June 25, 2026, the handbook draws a sharp line between a performance critique and other formats such as return-to-work talks, formal warnings, or the company integration management process (BEM).

Five Steps to a Constructive – and Compliant – Criticism

The authors recommend a structured conversation built on five phases:

1. Preparation: Analyze the facts, set clear goals for the talk.
2. Opening: Explain the reason transparently.
3. Fact presentation: Describe performance gaps objectively, avoiding generalizations.
4. Employee’s perspective: Give the worker space to respond.
5. Solution and agreement: Jointly develop measures and document them in writing.

Done right, the discussion becomes a catalyst for change rather than a simple reprimand. Legally, the tool rests on the employer’s right to issue instructions under section 106 of the German Trade Regulation (GewO) – a works council’s co-determination is usually not required for individual talks.

BEM: Voluntary Participation, but Refusal Weakens Dismissal Protection

Special caution is needed when health issues lie behind performance problems. If an employee is unfit for work more than six weeks within a year, the employer must offer a BEM process (§ 167 para. 2 SGB IX). Take-up is voluntary, but refusing it seriously undermines a worker’s protection against a later illness-related dismissal.

Participants in BEM can suggest specific workplace adjustments. The employer must prove in any dispute why such measures were not feasible. Before the process begins, strict data-privacy briefing obligations apply.

Slack and Digital Oversight: Strict Limits for Employers

Messaging tools such as Slack impose clear boundaries on surveillance. If private use is explicitly banned, the employer may only monitor chats when there is a concrete suspicion of a criminal offense or serious breach of duty.

Where the company permits personal messaging, telecommunications secrecy kicks in – making monitoring far harder. Works councils have extensive co-determination rights over any monitoring software.

Additional Safeguards for Severely Disabled Employees

Managers must also watch procedural pitfalls when dealing with severely disabled or equivalent workers. For an extraordinary dismissal, approval from the Integration Office must be requested within two weeks of learning the decisive facts. If the office does not respond within two weeks, consent is deemed granted. Additionally, both the disability representatives and the works council must be heard.

Beyond formal rules, the guide flags subtle warning signs: promoting an employee to managing director while stripping them of dismissal protection, or installing a dual leadership to sideline a worker. In such cases, the authors advise documenting responsibilities in writing and placing the old employment contract on hold rather than canceling it.

Leerlauf Risks: No Duty to Report, but Duty to Work

Idle time at work carries its own legal minefield. Although there is no statutory obligation to report downtime, the duty to remain ready for work persists. The employer can assign other reasonable tasks under the right to direct work. If new duties are silently accepted over an extended period, an unintended contract modification may occur, the guide warns.

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