Definition and Legal Significance of Reward
The term reward refers in the legal context to a voluntary benefit granted to honor specific behavior, a performed action, or the rendering of a special service. In contrast to an owed remuneration (e.g., wage, salary, fee), the granting of a reward is generally at the discretion of the promisor and is not based on a contractual payment obligation. The legal classification of the reward is primarily applied in the German Civil Code (BGB) and various sector-specific provisions, such as in labor law, civil law, or company law.
Reward in Civil Law
Reward under § 657 BGB
A central provision regarding rewards is § 657 BGB. According to this regulation, a reward publicly offered to the general public, for example for finding a lost item, is legally binding.Key Characteristics:
- Public Offer: The reward is publicly announced, usually through a public notice, for the performance of a specific act.
- Binding Promise: Anyone who performs the specified action (e.g., returns a lost watch) can claim the reward.
- No Service Obligation: The reward arises independently of any contractual relationship between the promisor and the finder.
Claim and Legal Consequences
Anyone who performs the required act acquires, according to § 657 BGB, a claim to the reward against the promisor. The claim is enforceable and subject to the general civil law regulations, such as limitation periods (§§ 195 ff. BGB) and unjust enrichment claims if the reward is wrongfully withheld.
Revocation and Restrictions of the Offer
According to § 658 BGB, the offer of a reward can be withdrawn before the required act has been performed, provided that no legitimate trust of third parties is violated. If the act has already been performed, revocation is legally excluded.
Reward in Employment Law
Distinction from Wages
In employment law, a reward is used to honor exceptional services that exceed the normal standard. It is distinct from contractually owed remuneration such as salary or wages. Typical forms of reward in employment relationships include bonuses, gratuities, incentives, or special payments.
Legal Individual Issues
- Voluntariness: Rewards are usually granted voluntarily. This means there is no enforceable legal claim to future, recurring rewards, unless otherwise regulated by company practice or contractual agreement.
- Company Practice: If rewards are granted regularly without reservation, a claim to a reward may develop over time—this is known in employment law as company practice.
- Principle of Equal Treatment: In granting rewards, employers are bound by the principle of equal treatment in employment law, which means arbitrary favoritism of certain employees may be unlawful.
Taxation
From a tax perspective, rewards given to employees by employers are generally considered taxable employment income (§ 19 EStG). Certain types of rewards can be tax-free or tax-privileged under specific conditions.
Reward in Tort and Property Law
Reward for Finding and Returning
Reward also plays an important role in connection with the finding and returning of lost or stolen property. Under § 971 BGB, the finder of a lost item has a statutory claim for a finder’s reward against the owner of the item, with its amount regulated by law. This claim must be distinguished from the reward offered as an offer under § 657 BGB.
Requirements for the Claim
- Successful Finding: The found item must be handed over to the owner or the appropriate authority in accordance with statutory regulations.
- Amount of the Reward: The amount of the reward for lost property is generally 5% of the value of the item up to 500 euros, and 3% for any excess value.
Reward in Criminal and Tax Law
Reward for Information on Criminal Offenses
In the field of law enforcement, rewards are frequently offered by government authorities or private parties for information leading to criminal offenses or wanted persons. Legally, this is often an offer under § 657 BGB. The acceptance and payment of such rewards may, depending on the circumstances, raise tax and data protection issues.
Tax Law Aspects
Rewards may also constitute taxable income under tax law—for example, when a reward is offered and paid out for reporting certain incidents (such as tax evasion). These are classified as other income according to § 22 No. 3 EStG and are subject to income tax.
Distinction from Remuneration and Tips
Remuneration
In contrast to a reward, remuneration is payment for the performance of a contractually agreed main obligation. A reward, by contrast, does not result from a contractual obligation but is a unilateral benefit for a special act or service.
Tips
Das Tips arise as a voluntary recognition of a service and differ from a reward due to the context of personal service and their typically small amount. Tips are also subject to specific legal regulations, e.g., § 107 GewO to protect the employee.
Conclusion
Die reward is a special form of voluntary benefit under German law, which has various manifestations and legal consequences in different areas of law. The key legal provisions are found in the Civil Code, employment law, and tax law regulations. For legally compliant handling of rewards, it is crucial to distinguish them from contractual remuneration and to observe the relevant legal framework. In particular, aspects such as company practice, equal treatment, and tax consequences must be carefully examined in connection with rewards.
Frequently Asked Questions
What legal requirements must be met for a reward to be validly offered?
In German law, the offering of a reward is regulated by § 657 BGB. For a reward to be validly offered, it must be publicly announced. This can be done, for example, by posting a notice, a newspaper advertisement, or via the internet. A private communication to a single individual is not sufficient. The offer is a unilateral, binding promise of performance that must not be limited to a specific group of recipients. The promisor must have legal capacity, and the reward must be offered within a legally permissible framework. In addition, it must be clearly defined for which action or result the reward is promised so that the potential claimant can recognize what is required to obtain the reward. If there are legal prohibitions or immoral content, the offer and thus the promise of a reward are void.
When does a claim for payment of a promised reward arise?
The claim for payment of a promised reward arises as soon as the act described in the offer has been completely and properly performed. According to § 657 BGB, this is a so-called unilateral legal transaction, in which the condition being fulfilled gives rise to a claim against the promisor. It should be noted that the person acting must have been aware of the offer, as otherwise the promise cannot be considered as motivation for their action. In case of dispute, the claimant must prove the fulfillment and knowledge of the offer. Statutory grounds for objection (e.g., challenge, invalidity due to illegality) and possible withdrawal of the offer are also relevant, with the latter permitted under § 658 BGB only as long as the required act has not yet been performed.
Can a reward that has already been offered subsequently be revoked?
In principle, an offer can be revoked in accordance with § 658 BGB up until the required act has been performed or the success has occurred. Revocation is made in the same manner as the original offer. However, if someone has already begun the act and could not have learned of the revocation under the circumstances, they are still entitled to reimbursement of their expenses. If the act has already been fully performed, revocation is no longer possible, and the claim to the reward arises finally. If the promisor prematurely abandons the purpose of the offer or withdraws it without complying with the formal requirements of revocation, this is legally ineffective in relation to those already entitled.
What claims exist if several people fulfill the conditions for a reward?
If several people contribute to the success required by the offer, § 659 BGB governs entitlement. The reward is due to the person who first achieves the success. If several people achieve the success simultaneously, they are entitled to the reward jointly, and it must be distributed according to their shares in the success or otherwise equally. In case of disputes, the promisor may deposit the performance until binding clarification is achieved. Proof of fulfillment and knowledge of the offer is also decisive here.
What are the legal consequences of a faulty or unclear offer of a reward?
A faulty or unclear offer can result in the claim for the reward being wholly or partially unenforceable. If the conditions for obtaining the reward are formulated vaguely, the necessary legal certainty is lacking, and the promisor may, in case of doubt, invoke the invalidity of the offer. Furthermore, unclear wording can lead to legal disputes over the interpretation and scope of the reward. In cases of textual ambiguity, interpretation is generally to the detriment of the promisor (ambiguity rule). The promisor also remains responsible for the feasibility and legality of the promised result.
What statutory restrictions apply to the amount and type of a reward?
Under German law, there are generally no fixed maximum or minimum amounts for a reward. However, its design is subject to legal restrictions. The promised reward must not violate laws or public morals (§ 138 BGB). A reward for an unlawful or immoral action, such as disclosing confidential data or committing a crime, would be void. Specific regulations, for example on youth protection or competition law, may also affect permissibility. In employment law, additional rules—especially regarding internal bonuses and bonus offers—must be observed. The reward must also be clearly defined and achievable.
Is there a tax reporting and payment obligation for offered rewards?
In principle, rewards obtained through an offer constitute taxable income and may, in particular, be classified as other income under § 22 No. 3 EStG. The recipient of the reward is obliged to declare such income in their tax return. In some cases, VAT and social security consequences may also arise, depending on the type and purpose of the reward as well as the status of the recipient (private individual vs. business). The promisor is generally not required to report, but in individual cases (e.g., companies as promisor in a business context), further tax obligations may arise. In case of doubt, a tax law review should be carried out.
