Christmas bonus on dismissal: keep it, claim it pro rata or repay it?

Christmas bonus on dismissal: the answer in 4 steps

Whether you keep your Christmas bonus, can claim it pro rata or have to repay it, you clarify in this order:

1. Basis: What is your entitlement based on? Employment contract, collective agreement, works agreement, a circular to all employees or years of payment without reservation.
2. Purpose: Is the Christmas bonus also consideration for your work (pay or mixed character), or does it only reward your loyalty to the company?
3. Clause: Is there a cut-off date clause (entitlement only if you are still employed on a certain day) or a repayment clause (money back if you leave before a certain day)?
4. Validity: Does the clause stand up to review? Strict standards apply in a standard-form employment contract (Formulararbeitsvertrag) (Sec. 307 (1) BGB), more generous ones in a collective agreement.

The following sections go through these steps one by one.

Are you entitled to a Christmas bonus at all?

No law obliges the employer to pay a Christmas bonus. An entitlement only arises from a provision. Typical bases are:

• Employment contract: a clause on the Christmas bonus, a 13th month's salary or an annual special payment.
• Collective agreement (Tarifvertrag): if it applies to your employment, for example because you are bound by it or your employment contract refers to it.
• Works agreement (Betriebsvereinbarung) between the employer and the works council.
• General commitment (Gesamtzusage): a letter or notice to all employees with fixed rules. The BAG has recognised such "guidelines" as a basis for a claim, without the individual having to have demonstrably received the commitment (BAG, 10 AZR 848/12).
• Company practice (betriebliche Übung): if the employer pays an annual gratuity to the workforce at least three times without reservation, it usually becomes binding unless special circumstances speak against it (BAG, judgment of 25 January 2023, 10 AZR 109/22).

Does the contract say "voluntary"?

Many employment contracts declare special payments to be voluntary, even if they are paid repeatedly. Such a blanket voluntariness reservation (Freiwilligkeitsvorbehalt) is often invalid. The BAG has rejected it where it can be understood as also covering later individual agreements on special payments; the priority of individual agreements (Sec. 305b BGB) prevails. In the case decided, the employee was therefore entitled to a Christmas bonus from company practice despite the reservation in the contract (BAG, 10 AZR 109/22). A reservation covering all future benefits of whatever kind is equally invalid (BAG, 10 AZR 848/12).

Important: by contrast, a reservation that the employer clearly declares with each individual payment prevents a company practice, because the employer thereby rules out any commitment for the future (BAG, 10 AZR 109/22).

Pay or loyalty bonus: the purpose decides

When your employment is terminated, the purpose of the payment is the key factor. The BAG distinguishes three types:

Type of payment	Recognisable by	Consequence if you leave during the year
Pay, e.g. 13th month's salary	fixed part of the annual salary, described as remuneration for work	pro-rata entitlement, cut-off date invalid in a standard-form contract
Mixed character	intended to remunerate work and reward loyalty to the company, e.g. "thanks for your commitment", paid in twelfths if you join during the year, reduced for unpaid absences	pro-rata entitlement, cut-off date invalid in a standard-form contract (BAG, 10 AZR 612/10 and 10 AZR 848/12)
Pure loyalty bonus (gratuity, Gratifikation)	linked only to the continuation of the employment, typically an amount in the range of usual gratuities without reference to work performance	a cut-off date on the payment date may be valid, then no entitlement (BAG, 10 AZR 667/10)

The name "Christmas gratuity" (Weihnachtsgratifikation) alone does not turn a payment into a pure loyalty bonus. In the BAG's 2013 case, the payment had that name but was expressly also meant as "thanks for personal commitment" and was paid pro rata to employees who joined during the year. It was therefore also consideration for work (BAG, 10 AZR 848/12). If the purpose remains doubtful after interpreting the standard-form contract, the doubts go against the employer (Sec. 305c (2) BGB).

Cut-off date clause: do you get a Christmas bonus despite dismissal?

A cut-off date clause (Stichtagsklausel) makes the entitlement conditional on your employment still existing on a certain day, often with the addition "not under notice". Whether it applies depends on the purpose.

Christmas bonus as pay: pro-rata entitlement

If the Christmas bonus is also remuneration for work, the employer usually cannot make it conditional in a standard-form employment contract on the employment still existing on 31 December (BAG, 10 AZR 848/12). This applies all the more to a cut-off date in the following year (BAG, judgment of 18 January 2012, 10 AZR 612/10). The reasoning: the clause takes away pay you have already earned and makes it harder for you to resign, which puts you at an unreasonable disadvantage (Sec. 307 (1) sentence 1 BGB). Employment is an exchange of work for remuneration (Sec. 611a (2) BGB); what you have earned, you do not lose because you leave.

In the 2013 case, a controller had resigned with effect from 30 September. The employer's guidelines required employment not under notice on 31 December. The BAG awarded him 9/12 of his monthly salary.

The BAG has indicated exceptions where work in a specific period before the cut-off date is of particular value, for example in seasonal businesses, or where the payment is linked to the company's results on a cut-off date (BAG, 10 AZR 848/12).

Christmas bonus as a pure loyalty bonus: no entitlement once notice has been given

If the Christmas bonus only rewards loyalty to the company, the employer may make it conditional on your employment existing on the payment date without notice having been given. This also applies if the employer gave notice itself, for example for operational reasons (BAG, 10 AZR 667/10). In the case decided, notice was given in November with effect from the end of the year, and the gratuity was to be paid with the November salary; under the clause, there was no entitlement. "Not under notice" means: neither side has given notice.

Exception: dismissal in bad faith

If the employer only gives notice in order to save the Christmas bonus, it cannot rely on the clause (Sec. 162 (2) BGB). In the 2012 case, the employee had argued that she had been dismissed because she did not want to waive the Christmas bonus. The BAG therefore referred the case back so that the Regional Labour Court (Landesarbeitsgericht) could examine this submission (BAG, 10 AZR 667/10).

How is a pro-rata Christmas bonus calculated?

If you are entitled to the Christmas bonus pro rata, you usually receive one twelfth for each full month in which the employment existed in the calendar year. What counts first is what your own provision says, for example on months begun or months without paid work.

Example: Your Christmas bonus is one monthly salary of €3,000 gross. Your employment ends on 30 September 2026.

• Months from January to September 2026: 9
• Share: 9/12 of €3,000 = €2,250 gross

If your employment ends on 31 December, you are entitled to the full amount of a Christmas bonus in the nature of pay.

When is the pro-rata Christmas bonus paid? In principle on the date your provision specifies, usually with the November salary. In the BAG's 2013 case, the employee left with effect from 30 September and received interest on the pro-rata amount from 1 December (BAG, 10 AZR 848/12).

Illness: An agreement under which special payments are also reduced for periods of incapacity for work is permitted. For each day of illness, the reduction may not exceed a quarter of the pay that, on an annual average, falls on one working day (Sec. 4a EntgFG). Without such an agreement, the employer may not make reductions because of illness. More on continued pay in the guide sick pay.

Part-time: Part-time employees receive a divisible benefit such as a Christmas bonus at least in proportion to their working time compared with a comparable full-time employee (Sec. 4 (1) sentence 2 TzBfG). Fixed-term employees receive it at least in proportion to the length of their employment compared with the assessment period (Sec. 4 (2) sentence 2 TzBfG).

Repaying a Christmas bonus: when do you have to?

This is about money you have already received, usually with the November salary, before you leave. The most important rule: Without a repayment clause, you do not have to repay anything if you were entitled to the money. If the employer paid although you were not entitled to anything under a valid cut-off date clause, it can reclaim the money even without a clause (Sec. 812 (1) sentence 1 BGB).

With a clause, it again depends on the purpose:

Clause	What it does	Valid in the employment contract?
Cut-off date clause (continued-employment clause, Bestandsklausel)	entitlement only if the employment exists (not under notice) on a cut-off date	for a pure loyalty bonus yes, for pay or mixed character usually no
Repayment clause	Christmas bonus already paid must be repaid if you leave before a cut-off date	only for a pure loyalty bonus and a reasonable commitment period; for mixed character no (BAG, 10 AZR 290/17)
Voluntariness reservation	is meant to prevent an entitlement for the future	as a blanket reservation for all benefits or with priority over individual agreements no (BAG, 10 AZR 848/12 and 10 AZR 109/22)
Reduction for illness	Christmas bonus falls for each day of illness	yes, at most a quarter of the average daily pay per day (Sec. 4a EntgFG)

Repayment clause with mixed character: invalid

The BAG expressly applies its case law on cut-off date clauses to repayment: if the entitlement cannot validly be made conditional in the employment contract on the employment existing on a cut-off date, the same applies to a repayment clause. Anyone who is entitled to the benefit does not have to repay it (BAG, 10 AZR 290/17, para. 23).

Repayment clause with a pure loyalty bonus: permissible commitment period

For a pure loyalty bonus, a repayment clause must not bind you for an unreasonably long time, because it affects your freedom of occupation (Art. 12 (1) GG) and is subject to review of its content under Sec. 307 BGB (BAG, 10 AZR 612/10). For the length of the commitment, a scale from older BAG case law is used in practice:

Amount of the Christmas bonus	Repayment possible if you leave
up to €100	no repayment
over €100 but less than one monthly salary	before 31 March of the following year
one monthly salary or more	before 30 June of the following year

The scale only helps the employer if the clause is clearly worded and the Christmas bonus really is a pure loyalty bonus. A clause that binds you beyond these limits is invalid and is not reduced to the permissible extent.

Collective agreement: here the commitment may go further

The parties to a collective agreement have more leeway than an employer with its standard-form contract. The BAG approved a collective agreement provision under which a bus driver had to repay his collectively agreed special payment of one monthly salary because he left at his own request up to and including 31 March of the following year, even though the payment also remunerated work (BAG, 10 AZR 290/17). If a collective agreement applies to you, read it before you resign.

Whether you repay gross or net and how tax and social security contributions are corrected depends on the individual case. Do not pay without checking: first have it clarified whether the clause is valid.

When can you resign without losing your Christmas bonus?

If you are planning to resign yourself, a look at the calendar helps. The examples assume a pure loyalty bonus with a valid clause. With a Christmas bonus in the nature of pay, resigning only costs you the share for the months after you leave.

End of employment	Typical consequence for a pure loyalty bonus	Notice must be received (basic period 4 weeks to the end of the month)
30 November 2026	no entitlement if the provision requires employment (not under notice) on the payment date or on a cut-off date in December	by 2 November 2026 at the latest
31 December 2026	entitlement may fail because of "not under notice"; money already paid can be reclaimed if there is a valid repayment clause	by 3 December 2026 at the latest
31 March 2027	repayment up to 31 March possible under the scale; the wording is decisive ("before" or "up to")	by 3 March 2027 at the latest
30 June 2027	for a Christmas bonus below one monthly salary no more repayment; for one monthly salary or more a borderline case under the scale	by 2 June 2027 at the latest

The notice column assumes the statutory basic period for employees: four weeks to the 15th or to the end of a calendar month (Sec. 622 (1) BGB). Your contract or collective agreement may provide for longer periods; details in the guide notice periods for employees. If you change jobs, have the new contract reviewed before you sign it, including its special payment clauses: employment contract review is available at a fixed price, with a review report within 24 hours.

Special cases

Dismissal by the employer

The same criteria apply to a dismissal by the employer. A Christmas bonus in the nature of pay is due to you pro rata. For a pure loyalty bonus, a clause "not under notice on the payment date" can exclude your entitlement even in the case of a dismissal for operational reasons, unless the dismissal was in bad faith (BAG, 10 AZR 667/10). Whether a repayment clause also applies when the employer dismisses you depends on its wording. If you want to challenge the dismissal itself, a deadline of three weeks from receipt applies for filing a claim, see deadline for an unfair dismissal claim. You can claim the Christmas bonus independently of this.

Termination agreement

A termination agreement (Aufhebungsvertrag) ends the employment without notice of termination. Whether a clause that refers to notice of termination or to employment "not under notice" then applies is a question of interpretation. So settle the Christmas bonus expressly in the agreement, together with remaining holiday and severance. Watch out for general settlement clauses, which can extinguish claims. More in the guide termination agreement and on outstanding holiday days under remaining holiday on dismissal.

Public sector (TVöD) and retirement

Under the TVöD (the collective agreement for the federal and municipal public service), the Christmas bonus is called the annual special payment (Jahressonderzahlung). Employees who are in employment on 1 December are entitled to it (Sec. 20 (1) TVöD, federal and municipal (VKA) versions). If your employment ends earlier, for example on 30 November, there is no annual special payment for that year, not even pro rata. Sec. 20 TVöD does not provide for repayment if you leave later. The BAG confirmed this cut-off date rule for an employee who had left on 31 October on reaching the age limit (BAG, 10 AZR 718/11). Other collective agreements expressly provide for a pro-rata benefit on retirement; it depends on your provision. Notice periods and protection from ordinary dismissal in the public sector are explained in the guide TVöD notice period.

Probation

There are no special rules for the Christmas bonus during probation; the same steps apply. For the short notice period, see notice period during probation.

How to enforce your Christmas bonus

Checklist: Christmas bonus on dismissal

• Find the basis: employment contract, collective agreement, works agreement, circular on the gratuity. Read everything on special payments, cut-off dates, repayment and voluntariness.
• Secure the payment history: payslips from the last three years show whether payment was made without reservation and whether it is calculated pro rata.
• Classify the purpose: if the Christmas bonus is paid in twelfths when you join during the year or reduced for absences, this points to pay or mixed character. Pro-rata payment only in the year of joining is not enough on its own (BAG, 10 AZR 667/10).
• Claim in writing: assert the pro-rata amount in writing with a calculation and set a deadline.
• Observe exclusion periods: many employment contracts and collective agreements require you to assert claims within a few months of falling due, otherwise they lapse. Check your contract for the exact period.
• Limitation: independently of this, claims become time-barred after three years, counted from the end of the year in which they arose and you knew about them or would have known without gross negligence (Sec. 195, 199 (1) BGB). A Christmas bonus that fell due in 2023 therefore becomes time-barred at the end of 31 December 2026, unless a shorter exclusion period applies. More on limitation periods.
• Have a reclaim reviewed: if the employer demands money back or withholds it from your last salary, check the clause first before you pay or agree. The employer may only set off against the attachable part of your salary (Sec. 394 sentence 1 BGB).

For the dismissal itself and its requirements, see ordinary dismissal. If you want to challenge the dismissal, you will find advice under unfair dismissal claim, at a fixed price.