Company Practices—Their Unintentional Creation and how to Eliminate Them

A "company practice"—defined as consecutive actions by an employer leading an employee to conclude eventually that this practice will continue for the duration of the employment relationship—may subsequently turn into a legal claim by the employee since the practice has, by implication, become part of the individual’s employment agreement. The simplest example of the above is a Christmas bonus. Generally, even if not called for in the written employment agreement, if an employer in Germany pays a Christmas bonus for three consecutive years without expressly notifying the employee that the payment is not to become a "company practice", the employee will have a legal claim to a Christmas bonus after the third consecutive payment.