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Covid-19 update: Reduction of variable remuneration in respect of the Covid-19 pandemic – Questions we are being asked in Germany

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Accessing Europe’s talent

The Covid-19 pandemic has caused immense economic damage. During the first quarter of 2020 only, German economic output dropped by 10.1%, leading to considerable revenue losses for German companies. This puts companies under pressure to identify and exploit savings potential.

In this context, the idea of reducing bonus payments is discernible, as bonuses are regularly linked to the success of the company. But which legal guidelines must be observed when reducing bonus payments? How should the works council be involved in this context? Under which circumstances can bonus parameters be adjusted unilaterally or with the works council? And how can companies adjust their bonus plans to prepare for future crises? The following Q&A provides an overview regarding the most important questions.