The LAG Nuremberg has clarified that a terminated works agreement does not automatically become an established practice works agreement. Many employees hope that once-granted special payments must continue after a works agreement expires – yet the court shows exactly when that is not the case. The case concerns a specific allowance in the metal industry, but the underlying legal questions are relevant for anyone who wants to secure a contractual or company-based payment permanently.
What Is an Established Practice Works Agreement and When Does It Arise?
An established practice works agreement refers to repeated, uniform conduct by the employer from which employees may conclude that a certain benefit will also be granted in the future. The decisive factor is that the employer displays conduct that creates a corresponding intention to be legally bound among the workforce. Typical examples include annual special payments, bonuses, or the granting of additional leave.
For a one-off or repeated payment to become an established practice works agreement, three requirements must be met: First, the employer must provide the benefit in a manner that can be understood as a permanent commitment. Second, employees must be able to rely on the benefit being granted in the future as well. Third, the employer must not have expressly declared a reservation, for example that the payment is voluntary and revocable at any time.
Important: If the employer provides a benefit only because they are obliged to do so by a works agreement or collective bargaining agreement, there is no independent intention to be legally bound. They are merely fulfilling an existing duty – and precisely from that, no established practice works agreement can arise. The LAG Nuremberg made this clear once again in its recent ruling.
The Case: Forge Allowance After Termination of the Works Agreement
The plaintiff had been employed since November 2009 at a company in the metal and electrical industry and received, alongside his base salary of around €3,400 gross, a monthly forge allowance amounting to 10 % of his base salary. This allowance was based on a works agreement from 2009 that had replaced an older agreement from 1996. The works agreement stipulated that employees operating certain machines would receive an allowance of 6 to 10 %.
In March 2025, the employer terminated the works agreement effective 31 March 2025. From April 2025 onward, the forge allowance was no longer paid. The employee sued for continued payment. He argued that the allowance had been paid regularly for many years and that an established practice works agreement had therefore arisen, surviving the termination of the works agreement. The Würzburg Labor Court dismissed the action, and the Nuremberg Higher Labor Court upheld that decision in its judgment of 15 July 2026 (Ref. 4 SLa 65/26).
Why the Court Found No Established Practice Works Agreement
The LAG Nuremberg denied the existence of an established practice works agreement. The decisive point: The payments were not made at the employer’s free discretion but due to the existing works agreement. As long as such an agreement applies, the employer is legally required to provide the benefit. They are therefore not acting voluntarily but fulfilling a contractual obligation. In such a case, employees cannot rely on the benefit continuing after the works agreement ends – the intention to be legally bound for an independent established practice works agreement is missing.
The court emphasized that an established practice works agreement can only be assumed if the employer displays conduct beyond the actual obligation that suggests a permanent commitment. That was lacking here. The payments were recognizably made as implementation of the works agreement, not as a voluntary additional benefit. The fact that the allowance had been paid for years changed nothing – because during the term of the works agreement, the employer was precisely obliged to do so.
This outcome is sobering for employees but legally consistent. Anyone who receives a benefit only because of a works agreement cannot automatically expect continued payment after its termination. An established practice works agreement arises only if the employer continues to pay after termination or has already signaled beforehand that they intend to grant the benefit independently of the agreement.
Reinterpretation of an Invalid Works Agreement: When Is It Possible?
A further aspect of the ruling concerns so-called reinterpretation. In principle, an invalid works agreement can, under certain circumstances, be reinterpreted as a collective commitment or an established practice works agreement. However, this requires special circumstances justifying the conclusion that the employer wanted to commit to granting the agreed benefits to employees regardless of the works agreement.
In the present case, the court denied such reinterpretation. There were no indications that the employer would have paid the forge allowance even without the works agreement. The allowance was expressly designated as a “voluntary forge allowance” and linked to the operation of specific machines – a clear reference to the works agreement. The employer had never given any indication that they would grant the benefit independently of it.
For employees, this means: Reinterpretation is only considered in exceptional cases, for example if the employer continued to pay the benefit for a longer period even after a possible loss of the legal basis, or if they expressly stated that the benefit was “voluntary” and would be granted “permanently”. Without such special circumstances, the rule remains: With the termination of the works agreement, the claim to the benefit regulated therein also ends.
What the Ruling Means for Your Allowances and Benefits
The LAG Nuremberg’s judgment has significance beyond the individual case for many employees. Works agreements are repeatedly terminated, for instance because the employer wants to cut costs or the economic situation has deteriorated. If allowances, bonuses, or special payments regulated therein are eliminated without replacement, the question arises whether action can be taken against this.
The answer depends heavily on the circumstances. The key issue is whether the employer has also granted the benefit without the works agreement – for example through years of uncontested payments after the end of the agreement. Only then can an established practice works agreement arise. Mere contractual performance during the term of the works agreement is not sufficient.
Employees should therefore examine whether there are indications of an independent intention by the employer to be legally bound. These include, for example, written commitments not linked to the works agreement, or conduct that clearly points to a permanent benefit. The wording of the works agreement itself can also play a role: If it expressly refers to a “voluntary” benefit, that argues against reinterpretation.
Similar questions arise with other benefits, as the ruling on the inflation bonus in partial retirement shows. There, too, the issue was whether a benefit must continue after the end of an agreement. And the LAG Nuremberg ruling on overtime in part-time work also illustrates how important it is to examine the legal bases of claims carefully.
How to Secure Your Claims: Tips for Employees
If your employer terminates a works agreement and eliminates associated benefits, you should not give up immediately. There are several ways to review and enforce your rights:
- Review the termination of the works agreement: Works agreements can also be invalid, for example if the works council was not properly involved or the notice period was not observed. Have the termination reviewed by a specialist lawyer for labor law.
- Collect all documents: Keep payslips, works agreements, and correspondence carefully. They prove how long and in what amount the benefit was paid.
- Document employer statements: If the employer has verbally assured that the benefit will “continue even without the works agreement”, note this down and look for witnesses.
- Check whether an established practice works agreement has arisen: Ask yourself: Did the employer continue to pay the benefit after the end of a previous agreement? Were there periods without a legal basis? Then an established practice works agreement may exist.
- Act quickly: Claims for remuneration generally become time-barred after three years, but shorter deadlines may also apply. You should also lodge an objection if you do not accept the elimination.
- Obtain legal advice: A specialist lawyer for labor law can assess your prospects realistically. If you want to avoid the cost risk, a litigation funder like RechtStark can cover the costs of court proceedings – you then only surrender a portion of the amount awarded in the event of success.
Especially with regular allowances, a lawsuit can be worthwhile. Even if the works agreement was terminated, an established practice works agreement may have arisen – for example if the employer initially continued to pay after termination and only stopped later. In such a case, the elimination would be unlawful.
Conclusion: Your Rights When Special Benefits Are Cut
The LAG Nuremberg ruling is a clear rejection of the hope that a works agreement automatically becomes an established practice works agreement. As long as the employer merely fulfills their contractual duty, the intention to be legally bound is missing. Anyone who wants to secure an allowance or bonus permanently must therefore rely on other legal bases – for example an express contractual commitment or an established practice works agreement that arises only after the end of the works agreement.
For affected employees, this means: Don’t give up, but examine carefully. Often there are arguments for continued payment – for instance if the employer paid the benefit for years without a legal basis, or if the termination of the works agreement was formally flawed. A specialist lawyer can assess your chances realistically. And if you shy away from the cost risk of litigation, a litigation funder like RechtStark can take over the financing. This allows you to enforce your rights without risking your savings.
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.