Decision of the German Federal Labor Court: Company disability pension only applies if employment relationship has ended

  • 10/26/2023
  • Reading time 3 Minutes

Is a clause in a supplementary pension scheme effective according to which a company disability pension requires the receipt of a statutory pension for reduced earning capacity and is only paid if the employment relationship has ended? The German Federal Labor Court (Bundesarbeitsgericht, “BAG”) ruled on this issue on October 10, 2023 (case no. 250/22).

The BAG decided: It is effective

An employer granting a company disability pension may generally make the benefit in a pension scheme containing pre-formulated contractual terms and conditions (GTC) for a large number of employees dependent on the employee receiving a statutory pension for reduced earning capacity and having legally ended the employment relationship.


An employee had received temporary disability benefits from November 2020 for a limited period until the end of August 2022. Pursuant to Section 7 (4) of the employer's supplementary pension scheme (“Section 7 (4) ZVO”), an employee who receives a pension from the statutory pension insurance due to occupational disability or incapacity for work and leaves the employer's company receives a company disability pension. On the basis of a pension approval certificate by the German Pension Insurance Association dated January 2021, the plaintiff received a pension for full reduction in earning capacity upon his application in May 2020 with effect from November 1, 2020 for a limited period until August 31, 2022. In a letter dated January 19, 2021, the employee submitted the pension approval certificate to the defendant and applied for a company disability pension to be granted from January 2021. However, he did not terminate his employment relationship until August 20, 2021, with effect from March 31 of the following year.

Accordingly, the employer paid the company disability pension pursuant to Art. 7 (4) ZVO (Supplementary Pension Ordinance) only from April 2022 and not from January 2021 as requested by the employee. The former employee did not want to accept this and filed a complaint. He argued that he was already entitled to the company disability pension from January 2021. Art. 7 (4) ZVO did not clearly require the legal termination of the employment relationship. Furthermore, the regulation was ineffective anyway as he was unreasonably forced to terminate his employment relationship in order to receive company disability pension benefits.


The courts held a different view. Both the Düsseldorf Regional Labor Court (decision of May 4, 2022 – 12 Sa 73/22) and the German Federal Labor Court (decision of October 10, 2023 – 3 AZR 250/22) denied a claim as early as January 2021. For the BAG, the interpretation of Section 7 (4) ZVO as a provision of the General Terms and Conditions showed that the ZVO requires the legal termination of the employment relationship for a claim to the company pension.

The provision, which is subject to content review (Art. 305, 305a BGB), did not unreasonably disadvantage the plaintiff. It was generally not unreasonable to make the payment of a company disability pension dependent on the granting of a statutory pension for reduced earning capacity and the termination of the employment relationship. Taking into account the mutual interests, this did not put unreasonable pressure on the employee to terminate his employment relationship.

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Author of this article

Nastassja Tramer


Attorney-at-Law (Rechtsanwältin), Specialist Lawyer in Labor Law

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