Employers must not use the inflation compensation premium for minimum wage to exclude low-income workers from a special payment. That’s the decision of the Federal Labour Court in a ruling dated 30 September 2026 (10 AZR 62/26). Excluding workers whose pay has increased due to the rise in the statutory minimum wage from a voluntary inflation lump sum violates the principle of equal treatment in employment law. The ruling strengthens the rights of all workers affected by similar regulations – and it has far-reaching practical consequences.
The Ruling at a Glance: BAG Strengthens Rights of Minimum Wage Recipients
The 10th Senate of the Federal Labour Court has clarified that employers may not form groups of workers when granting voluntary benefits unless there are legitimate reasons for doing so. The differentiation between minimum wage recipients and other workers when providing an inflation lump sum is unjustified. Those who earn more due to the minimum wage increase may not be excluded from a special payment granted to other workers.
Specifically, the case involved a service worker who earned €10.56 per hour before the minimum wage increase and €12.00 gross per hour after the rise. From November 2022, the employer granted all full-time workers a so-called inflation lump sum of €115.38 net per month for 26 months. Only those who, like the plaintiff, earned less than €11.49 per hour or more than €4,000 gross as of the cut-off date received just a one-off payment of €250. The BAG saw this as unjustified discrimination.
The Case: Service Worker and the Inflation Premium – The Facts
The plaintiff was employed full-time as a service worker. His base hourly wage initially was €10.56 gross. On 1 October 2022, his wage increased to €12.00 gross due to the rise in the statutory minimum wage. From November 2022, the employer introduced an “inflation lump sum” based on the possibility created by the legislature to pay up to €3,000 tax-free and social security-free to workers until December 2024. Part-time workers received a proportional amount.
Workers who earned less than €11.49 per hour or more than €4,000 gross as of the cut-off date of 30 September 2022 were excluded from the monthly payment and instead received a one-off payment of €250. The works council formally agreed to these distribution rules. The plaintiff considered this handling discriminatory and sued for payment of the full inflation lump sum minus the €250 already received. The Labour Court and Higher Labour Court dismissed the claim, but the Federal Labour Court granted leave to appeal.
The Principle of Equal Treatment: What Employers Must Consider When Granting Special Payments
The principle of equal treatment in employment law requires employers to treat all workers uniformly when granting voluntary benefits. If an employer creates groups of favoured and disadvantaged workers, there must be legitimate reasons for doing so that are based on reasonable, obvious considerations and do not conflict with higher-priority value decisions. Differentiation is therefore not inherently prohibited, but it must be justifiable and not arbitrary.
In this case, the employer argued that minimum wage recipients would have more money available due to the wage increase and therefore less need for compensation. They also claimed that, due to their already low standard of living, they were less affected by inflation. The BAG rejected this argument. It found that the purpose of the inflation compensation premium – namely to offset rising living costs – is particularly important for low-income earners. Those with low incomes suffer more from inflation because a larger portion of their income is spent on basic needs such as rent and food.
Why the Inflation Compensation Premium for Minimum Wage is Impermissible
The Federal Labour Court emphasized that the inflation compensation premium should be paid in addition to the already owed salary, under § 3 No. 11c of the Income Tax Act (EStG). For minimum wage recipients, the already owed salary is the statutory minimum wage. The premium should therefore be an extra benefit that cannot be offset against regular wage increases. Excluding minimum wage recipients from the premium because they have more money due to the minimum wage increase undermines the legislative objective of the Minimum Wage Act: to ensure minimum protection through appropriate minimum working conditions and to enable participation in social life.
Excluding minimum wage recipients from the inflation premium violates these value decisions. The BAG made it clear that the employer’s arguments do not hold water: The increase in the minimum wage only partially offsets general price developments and does not provide the affected workers with additional financial leeway. The inflation compensation premium for minimum wage should therefore not be seen as compensation for a supposedly lower burden, but as necessary support in a difficult economic time.
What the Ruling Means for Affected Workers
For workers affected by a similar regulation between 2022 and 2024, the ruling opens up new possibilities. Those who only received a smaller one-off payment despite being entitled to the monthly inflation lump sum may be able to claim the difference. However, it should be noted that claims arising from employment relationships can regularly expire – the statutory limitation period is three months if the claim is not enforced through a lawsuit. Affected workers should therefore act quickly. Information on further entitlement to payment is available in our Guide to Entitlement to Payment.
The ruling also sends a signal for other voluntary benefits: Employers may not simply exclude certain groups from special payments, performance bonuses or other benefits without having a legitimate reason. The inflation compensation premium for minimum wage is just one example. Those who feel disadvantaged should have their claims reviewed and, if necessary, take legal action.
How to Defend Against Unjustified Discrimination
If you are one of the workers affected by such a regulation, you should first write to your employer demanding full payment. Reference the ruling of the Federal Labour Court. Set a reasonable deadline of around two weeks. If the employer does not respond, you can file a lawsuit with the Labour Court. The limitation period for lawsuits is three weeks for termination protection claims, but there is no such period for payment claims, though the statute of limitations still applies.
An experienced employment law specialist can assess your chances of success and draft the lawsuit. The costs of a lawsuit may be covered through legal aid or by a litigation funder like RechtStark. RechtStark checks if financing your legal proceedings is possible and then covers the costs for the lawyer and court – you bear no financial risk. If in doubt, seek independent advice, as the inflation compensation premium for minimum wage is an important tool for enforcing your rights. Professional support may also be useful for other employment law issues, such as severance pay – for more on this, see our article Severance Pay and Hartz IV: Termination.
Conclusion: Your Rights to Voluntary Benefits – What You Should Know Now
The Federal Labour Court’s ruling is an important step for the rights of minimum wage recipients. It clarifies that employers may not discriminate when granting voluntary benefits. Those who earn more due to the increase in the statutory minimum wage may not be excluded from an inflation compensation premium granted to other workers. The decision shows that the principle of equal treatment in employment law is consistently applied even in times of economic crisis.
If you are affected, do not hesitate to review your claims. Seek legal assistance and find out about your options. The inflation compensation premium is an example of how a look at employment law pays off – and that as a worker, you do not have to accept everything the employer decides. For more information on similar topics, see our article on the Value of Work for People with Disabilities.
Note: This article is for general information purposes only and does not replace individual legal advice. For a free initial assessment of whether litigation funding may be an option for your case, you can contact RechtStark.