Federal Labour Court rules on company pension adjustment timing

The German Federal Labour Court has ruled on the timing of adjustments for company pensions based on collective bargaining agreements. In a recent decision, the court addressed a case where a former employee sought pension and Christmas bonus increases following salary hikes in July 2023 and August 2024.

The court confirmed that if a company agreement stipulates annual adjustments to pension benefits on a fixed date based on salary developments, only tariff increases that have become effective before that specific cutoff date are to be considered. Consequently, a salary increase occurring on the adjustment date itself does not trigger an immediate increase in company pensions; instead, it is accounted for during the following year's adjustment cycle.