Bundesarbeitsgericht rules on inflation bonus and minimum wage

The German Federal Labour Court (Bundesarbeitsgericht) has ruled that excluding employees from voluntary inflation compensation premiums because their income increased due to a statutory minimum wage hike violates the principle of equal treatment in labor law.

The case involved a full-time service worker whose hourly wage rose from 10.56 euros to 12.00 euros following the minimum wage increase in October 2022. The employer had provided a monthly inflation flat rate of 115.38 euros to most employees but offered only a one-time payment of 250.00 euros to those earning less than 11.49 euros per hour or more than 4,000.00 euros gross at a specific cutoff date.

The employer argued that workers benefiting from the minimum wage increase were less in need of inflation compensation. However, the court determined that such an exclusion is not objectively justified under labor law principles.