An employee is entitled to damages from their employer if the employer culpably breaches its obligation to provide a corresponding target specification for the respective year, by failing to set individual targets for the claimant and only communicating the company targets bindingly after approximately three quarters of the target period had already expired.
At that point, a target specification capable of fulfilling its motivational and incentive function was no longer possible. For this reason, a subsequent judicial determination of performance with regard to the targets is also out of the question.
In a recent case decided by the BAG (Federal Labour Court) (Federal Labour Court, judgment of 19 February 2025 (Case No.: 10 AZR 57/24)), variable remuneration had been agreed and the respective target specification was to be provided by 1 March. In 2019, the defendant's managing director did not inform the employees with managerial responsibility of the following target specification until 26 September 2019: for the year 2019, with regard to the individual targets, a target attainment level of 142 % would be assumed in line with the average target attainment of all executives over the past three years. On 15 October 2019, the claimant was given specific figures regarding the company targets, including their weighting and the target corridor; however, no individual targets were set for the claimant.
When determining the amount of damages to be compensated by way of estimation, the variable remuneration promised in the event of target attainment is to be taken as a basis, and it is to be assumed that the claimant, given a target specification corresponding to reasonable discretion, would have attained the company targets at 100 % and the individual targets in line with the average value of 142 %.
Conclusion:
In the case of an omitted or delayed target specification by the employer, contributory negligence on the part of the employee that would reduce the claim regularly does not apply due to a lack of cooperation, because the employer alone bears the burden of taking the initiative for setting the targets.
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