Employment Law Newsletter IV/2018
In 2018, following initial difficulties in forming the government, the German legislator has actually instigated some further developments in employment law that cannot be welcomed. In particular, the introduction of a claim to fixed-term part-time work (so-called “bridging part-time” [“Brückenteilzeit”]) at businesses with more than 45 employees will increase the administrative workload of personnel departments even further from 2019 onwards. It will doubtlessly be a while before the first decisions of relevance are pronounced by the employment courts on this new legislation. Meanwhile, the European Court of Justice has made several landmark decisions during the last quarter of 2018 which will have considerable impact upon business holiday practice in Germany and which do not appear to be reconcilable with the previous understanding of employees’ holiday claims. Our last Newsletter for 2018 informs you of these and other decisions of the employment courts.
1. Current case law
1.1 Unlimited transferability of holiday
1.2 Claims to payment in lieu of holiday also in the event of the employee’s death?
1.3 Parental leave – period of actual work performance?
1.4 Requirements for hearing the employee in case of an intended dismissal on grounds of a suspicion
1.5 Travelling time as remunerable work time?
1.6 Codetermination obligation in case of MS Office products – the “Excel – Attendance List”
1.7 Union activities on the business premises can be permissible
1.8 The lack of reference to the bodies responsible for the rehabilitation in the BEM invitation letter
2. Legal developments
On grounds of the judgements passed by the ECJ on 6 November 2018, docket Nos. C-684/16 and C-619/16, employees’ holiday claims do not automatically expire at the end of the year if the employer failed to inform the employee in good time about his existing claim.
In the one proceedings the employer had asked the employee to take his residual holiday before the end of the employment relationship, without any obligation as to a set date. The employee merely took two days of holiday and claimed payment in lieu for the remaining holiday not taken by him. In the other proceedings a legal trainee, who had not taken any paid holiday during the last months of his legal traineeship, claimed financial remuneration for the outstanding holiday. In both cases the employer refused to pay the remuneration in lieu of the holiday.
Through its judgements of 6 November 2018, the ECJ has again deemed German holiday law (Sec. 7 para. 3 sentence 1 German Holiday Entitlement Act [Bundesurlaubsgesetz, BUrlG]) not to comply with European law. It is not permissible pursuant to European law for an employee to lose his (minimum) days of holiday to which he is entitled pursuant to Union law and to correspondingly lose his claim to financial remuneration for the holiday not taken by him because he failed to apply for the holiday beforehand. In the opinion of the ECJ judges, holiday claims should only expire automatically if the employee was actually put into a position in which he was able to take his annual holiday. If need be, the employer must order the employee in good time to take his holiday; he must also notify him that his holiday will otherwise expire at the end of the reference or carry-forward period, respectively at the end of the employment relationship. Without such a notification, even in case of the statutory carry-forward period, the holiday does not lapse with the expiry of 31 March of the following year (Sec. 7 para. 3 sentence 3 BUrlG); on the contrary, it continues to exist indefinitely.
In future, employers are well advised to inform employees in writing, at the latest after the summer months, which holiday claims they still have for the ongoing calendar year and that they must take this holiday by 31 December. The ECJ judgements also make the distinction between the statutory minimum holiday and the additional contractual holiday entitlement even more indispensable, since the contractual holiday claim otherwise shares the same fate as the statutory holiday claim.
In two further decisions dated 6 November 2018 (docket Nos. C-569/16 and C-570/16) the ECJ has ruled that, pursuant to Union law, an employee’s claim to paid annual holiday is not lost upon the employee’s death. In such cases, the heirs of the deceased employee can assert a claim to financial remuneration.
The subject matter of the judgements was two cases from Germany. Both cases concerned the claims of two sole heirs to financial remuneration for outstanding annual holiday following the death of their husbands during the course of ongoing employment relationship. One of the deceased husbands had worked at a private employer, the other at a state employer.
In both cases the wives, in their capacity as sole heirs, had demanded from their husbands’ former employers financial remuneration in settlement of the paid annual holiday that had not been taken by their husbands prior to their deaths.
Following a request for a preliminary ruling by the German Federal Employment Cour[Bundesarbeitsgericht, BAG], the ECJ confirmed its previous case law (ECJ dated 12 June 2014, docket No. C-118/13) and established anew that an employee’s claim to paid annual holiday does not lapse upon his death. The heirs of the deceased employee can demand financial remuneration from the employer for the claim to paid annual holiday. A national regulation which excludes or limits the heirs’ claims to financial remuneration is – according to the latest case law of the ECJ - irreconcilable with Union law. The ECJ also made it clear that the heirs can directly plead Union law. This applies both vis-à-vis private employers and state employers.
The most recently passed judgements of the ECJ have been met with broad incomprehension both in practice and in the legal literature. Following these decisions, an increased assertion of heritable claims to payment in lieu of holiday is definitely to be expected in business practice. However, this only applies to the statutory minimum holiday claims. Additional contractual holiday claims remain unaffected by the ECJ’s case law until further notice. Against this background, it makes practical sense to always distinguish in employment contracts and company regulations between the statutory minimum holiday and additional contractual holiday entitlement. Only in this way can it be assumed - (also) from the judge’s perspective - that the equal treatment of statutory and additional contractual holiday claims is not intended.
The ECJ has ruled by judgement dated 4 October 2018 (docket No. C-12/17) that the national law of the member states may take the periods of parental leave into consideration when calculating the annual holiday claim with the effect of reducing the claim. This also has consequences for German holiday law.
In the underlying lawsuit, the judge of a Rumanian regional court had sought a declaratory judgement to the effect that the period of her parental leave should be treated as a period of actual work performance in the calculation of her annual holiday claim.
Following the request for a preliminary ruling by the Rumanian Court of Appeal in Cluj, the ECJ shared the employer’s opinion and explained in detail that the purpose of the claim to paid annual holiday was for the employee to recover from the duties owed under the employment contract and to have a time for relaxation and leisure. This logically presupposes that the employee has actually rendered the work performance during the course of the reference period. For this reason, claims to paid annual holiday fundamentally have to be calculated on the basis of the periods of work actually contractually rendered. At the same time, the ECJ emphasized that exceptions to this principle at best exist in case of illness or maternity leave. However, this cannot be transferred to cases of parental leave, as times of parental leave are generally foreseeable and are dependent upon the employee’s intent.
Although the matter at hand concerned the reconciliation of Rumanian law with Art. 7 of Council Directive 2003/88/EC, the judgement has relevance for a legal question that has not yet been clarified in German law. Pursuant to the German Sec. 17 para. 1 German Federal Act on Parental Benefit and Parental Leave [Bundeselterngeld- und Elternzeitgesetz, BEEG], namely, the employer is entitled to reduce the annual recreational holiday by a twelfth for each full month of parental leave. Whether or not this conforms to Union law has been a disputed issue for a considerable time in the legal literature The BAG still evaded this question in its most recent judgement on the rounding up/down of fractions of days of holiday dated 23 January 2018 (docket No. 9 AZR 200/17). On grounds of the new ECJ judgement, however, we should now be able to assume the conformity of the norm with Union law. Employers may continue to include the duration of the parental leave in the calculation of the annual holiday claim with the effect of reducing the claim in accordance with Sec. 17 BEEG.
In its judgement dated 25 April 2018 (docket No. 2 AZR 611/17), the BAG established important principles for hearing an employee in case of a dismissal on grounds of a suspicion.
The claimant worked as a bank teller at the sued savings bank. On 27 May 2015 she ordered 115,000 EUR from Deutsche Bundesbank and on the following day acknowledged its receipt and the intactness of the seal on the money container that had been delivered by a security firm. Contrary to the requirement that the seals be broken in the presence of another person, the claimant opened it alone and shortly afterwards notified a colleague that the container contained nothing but baby food and detergent.
According to an opinion of the Criminal Investigation Office [Landeskriminalamt, LKA], the seal showed no signs of manipulation. Additionally, following a search of the claimant’s flat and safe deposit box, ca. 40,000 EUR were found at the claimant. Since June 2015 the claimant had also deposited ca. 33,000 EUR onto her own accounts and accounts of her relatives. Following an internal investigation, the Defendant came to the conclusion that it was highly likely that the claimant had stolen the cash delivery. On 7 April 2016 the claimant was heard on the matter and was subsequently dismissed by extraordinary termination in the form of a dismissal on grounds of a suspicion.
According to the BAG’s decision, the dismissal was not invalid due to a deficient hearing. A reference by the defendant at the hearing to the concrete urgent suspicion against the employee was not necessary. Rather, it sufficed if it was evident to the employee from the circumstances that specific facts required clarification and that a responsibility of the party involved could be derived from this. In the case at hand, the defendant had referred to the investigations conducted by the public prosecutor’s office; moreover, the claimant knew about the search of her flat and the safe deposit box on the basis of the search warrant, which meant that she had had to assume that she came into consideration as a suspect. She had also had the opportunity to comment on the events to be clarified and on the suspicions.
The BAG’s decision is helpful, as it clarifies that the key factor when hearing the employee prior to a dismissal on grounds of a suspicion is the clarification of the factual situation and not the notification of an urgent suspicion or even intention to dismiss the employee.
By judgement dated 17 October 2018 (docket No. 5 AZR 553/17) the BAG ruled that the time required to travel to and return from temporary foreign assignments must be remunerated by the employer as work time.
The claimant, who works at a construction firm, was obliged to work at different building sites at home and abroad. The employment relationship was governed by the framework collective agreement for salaried employees and foremen of the building industry [Rahmentarifvertrag für die Angestellten und Poliere des Baugewerbes, RTV-Bau]. At the employee’s request, a ticket was booked for him in business class for a business trip to China. However, this flight, unlike the direct flight in the economy class, required a stopover. In his complaint, the employee sought remuneration for a further 37 hours. This was to be paid in addition to the remuneration already granted to him under his employment contract for eight hours per day of travel, as the overall travelling time from this flat to the foreign place of work and back should be remunerated as work.
The complaint before the BAG was partially successful. A secondment to a foreign place of work arranged by the employer is exclusively in the interests of the employer, with the result that the necessary travelling time must at least be remunerated as work time. The necessary travelling time is fundamentally that incurred in an economy class flight.
The judgement, which is so far only available as a press release, still leaves several questions open. In particular, it is unclear on which legal basis the BAG bases its decision. In the previous instance the Regional Employment Court [Landesarbeitsgericht, LAG] solely took Sec. 7 No. 4.3 RTV-Bau as its legal basis. Insofar, it remains to be seen whether the principle of remunerating the overall travelling time is also to apply outside this collective provision according to the BAG.
According to the BAG’s previous case law, remuneration of a business trip outside of the work time only came into consideration if this had been agreed in a collective agreement (collective bargaining agreement or shop agreement) or in the employment contract, or if it was deemed tacitly agreed in accordance with the criteria of Sec. 612 para. 1 German Civil Code [Bundesgesetzbuch, BGB] because it could be expected in the circumstances. Whether the BAG now wants to establish a general remuneration expectancy for these times with this judgement and to distance itself from its previous established case law cannot be determined from the press release.
For this reason, employers should – in cases where no collectively bargained regulation exists – include in the employment contract a provision governing the remuneration of travelling time. The transparency requirement of Sec. 307 para. 1 sentence 2 BGB should be observed in this connection, and thus unclear and generalised provisions avoided. Such provision also may not lead to a shortfall of the minimum wage pursuant to Sec. 1 para. 1 German Minimum Way Act [Mindestlohngesetz, MiLoG] (BAG dated 25 April 2018, docket No. 5 AZR 424/17).
In a decision dated 23 October 2018 (docket No. 1 ABN 36/18) the BAG made it clear that the practical scope of application of Sec. 87 para. 1 No. 6 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG] is very broad and that the works council’s codetermination in case of technical surveillance devices is thus virtually boundless.
In the factual situation underlying the decision it was business practice at the employer’s clinic until 31 January 2016 for employees to document their attendance by hand in corresponding attendance lists. Within the scope of an optimisation process the employer unilaterally ordered the use of Microsoft Excel tables to record the attendance times as of 1 February 2016. A dispute subsequently arose between the employer and the works council as to whether a codetermination right of the works council should have been observed in this connection.
The BAG is of the opinion that the employer may not introduce the use of the Microsoft Excel tables for recording attendance without the prior consent of the works council. In this connection, the BAG emphasizes that the codetermination right arising from Sec. 87 para. 1 No. 6 BetrVG also applies without limitation to “everyday standard software”, since this – irrespective of the software used – could lead to a monitoring of the employees insofar. Any kind of minority threshold which, when surpassed, would lead to a provision to monitor employees which would require codetermination, could not be derived from Sec. 87 para. 1 No. 6 BetrVG.
The decision once again shows that the codetermination provisions for data processing systems are subject to the unimpeded development of the law. In practice, it is hardly possible to describe the escalating codetermination of the works council pursuant to Sec. 87 para. 1 No. 6 BetrVG. In particular, the legal and de facto attachment of the co-determination criteria to the data protection requirements is increasingly putting the brakes on digitisation at companies. Voluntary framework shop agreements on IT systems can certainly support the codetermination processes and ensure a certain degree of legal certainty. The effect of such agreements generally reaches its limits, however, when the employer endeavours to monitor performance or conduct by using a concrete application.
By judgement dated 20 November 2018 (docket No. 1 AZR 189/17), so far only available as a press release, the BAG ruled that a union can also use areas on the employer’s company car park in an industrial dispute to convince the employees working there to join the strike. However, this only applies if the specific local circumstances are such that no other possibility is available to contact the employees and win them over for the strike.
The business of the suing employer was located on an industrial estate outside of town, which the majority of the employees reached by car. The work force accessed the building via the main entrance, and directly in front of the entrance was a large employee car park. In September 2015 a two-day strike was conducted at the employer. On these days the union conducting the strike used an area on the car park in front of the main entrance to set up high tables and barrels and to position their represents and striking employees there. They distributed flyers to the employees arriving at the site and tried to convince those arriving for work to join the strike. No employees were hindered in taking up their work.
The cease and desist action brought by the employer was unsuccessful. The BAG was of the opinion that, in view of the required consideration of opposing constitutionally guaranteed rights, the employer must tolerate the short-term situational impairment of its property. This was due to the particular geographical circumstances, as the car park located in front of the main entrance was the sole possibility for the union to make contact with the employees called to join the strike and to convince them to participate in the strike.
With this judgement, the BAG deviates from the previous principles of case law on industrial dispute legislation in two respects: previously, property of the employer could not be utilised by the union for industrial action. For this reason, in an earlier case, an employer’s e-mail system which was exclusively for work use could not also be used for the union’s call to strike (BAG dated 15 October 2013, docket No. 1 ABR 31/12). Furthermore, the Federal Constitutional Court [Bundesverfassungsgericht, BVerfG] ruled in an earlier case that the employer is fundamentally entitled to exercise its domiciliary right to defend against industrial action and may therefore prohibit industrial measures on its land (BVerfG dated 26 March 2014, docket No. 1 BvR 3185/09). Whether the BAG’s judgement now represents a decision that it has reached on an individual case or whether it is breaking with these basic principles will only become clear once the full reasons for the judgement have become available.
Dr. Alexander Willemsen
According to a decision of the LAG Hesse dated 13 August 2018 (docket No. 16 Sa 1466/17), the lack of a reference to the involvement of the bodies responsible for the rehabilitation within the scope of the business integration management [betriebliches Eingliederungsmanagement, BEM] pursuant to Sec. 167 para. 2 German Social Code Book IX [Sozialgesetzbuch IX, SGB IX] results in an improperly attempted BEM, with the well-known consequence of a far higher burden of representation and proof on the part of the employer in an unfair dismissal action.
The parties disputed over the validity of a dismissal due to illness and the proper execution of a BEM prior thereto. At the employer’s invitation, several BEM talks were actually conducted and the possibilities of overcoming the employee’s incapacity to work discussed. However, the employer had failed to mention in the BEM invitation letter that, pursuant to Sec. 167 para. 2 sentence 4 SGB IX, the body responsible for the rehabilitation would be involved in the execution of the BEM. Since the periods of the employee’s incapacity to work did not decrease, the employer declared the employee’s dismissal due to illness.
The LAG Hesse established that the employer’s dismissal was invalid. The necessary BEM had been neither instigated nor conducted properly. The defendant had not fulfilled its notification obligations under Sec. 167 para. 2 SGB IX in the invitation letter. As a minimum requirement, it should also have included a reference to the involvement of the bodies designated by law. In the present case, the defendant’s letter did not contain any indication to the effect that it had also involved the bodies responsible for the rehabilitation in her case, insofar as any benefits for her participation in working life or any accompanying assistance therewith came into consideration, Sec. 167 para. 2 sentence 4 SGB IX. Lacking a proper BEM, the defendant should have represented that a due and proper participation of these organisations would also not have led to any appropriate support for the claimant (objective uselessness of a BEM). It had failed to do so.
With this understanding of Sec. 167 para. 2 sentence 4 SGB IX, the LAG Hesse increases the requirements for a due and proper BEM invitation letter even further in a way that is currently only familiar to legal practitioners in case of notification letters upon a transfer of business pursuant to Sec. 613a BGB. This is expedient neither for a BEM, an idea which is fundamentally to be welcomed, nor for a better understanding on the part of the employee concerned. However, business practice is well advised to include this additional reference in BEM invitation letters in future, for once the initially lodged appeal was withdrawn, the decision of the LAG Hesse became legally binding.
Changes to the BetrAVG through the BRSG applicable as of 1 January 2019
The German Act Strengthening Company Pensions [Betriebsrentenstärkungsgesetz, BRSG] entered into force on 1 January 2018. On this basis, the new provisions on deferred compensation in Sec. 1a German Company Pensions Act [Betriebsrentengesetz, BetrAVG] now enter into force on 1 January 2019.
The new Sec. 1a para. 1a BetrAVG obliges the employer, in cases of deferred compensation, to deduct the employer’s saved part of the social security contributions at a flat rate - 15% of the deferred compensation – to the relevant pension institution in its employee’s favour. With this, Sec. 1a para. 1a BetrAVG supplements the corresponding contribution obligation already applicable since 1 January 2018 pursuant to Sec. 23 para. 2 BetrAVG in case of pure contribution commitments. To be borne in mind in this respect is that the obligation does not exist in case of deferred compensation within the scope of direct pension promises and provident funds. Moreover, the contribution obligation exists analogously only in case of gross deferred compensation, since it is only in this case that social security contributions of the employer can be saved.
According to Sec. 26a BetrAVG, a transitional provision in respect of Sec. 1a para. 1a BetrAVG, the employer’s contribution obligation pursuant to Sec. 1a para. 1a BetrAVG initially only applies to new deferred compensation agreements concluded as of this time. For deferred compensation agreements which already exist at this time, the employer’s contribution first becomes obligatory as of 1 January 2022.
Individual questions currently exist on the new regulations governing deferred compensation which still require clarification. The key points of contention are the following:
- Pursuant to Sec. 1a para. 1a BetrAVG, the contribution obligation in the amount of 15% exists only “to the extent” the employer saves social insurance contributions through the deferred compensation. According to the prevailing opinion, the employer only has to pay the contribution in the amount it also actually saves in social insurance contributions through the deferred compensation. Another interpretation of the provision always proceeds on a fixed rate of 15%.
- According to the explanatory memorandum of the Act, provisions in collective agreements concluded before the entry into force of the BRSG, and which are less favourable for employees vis-à-vis the new mandatory employer’s contribution, retain their validity. Some are of the opinion that the lack of regulation of the employer’s contribution in an old collective bargaining agreement automatically also results in the contracting out of Sec. 1a para. 1a BetrAVG. Another opinion is that the silence on this issue in the collective agreement has no legal effect and that a contribution obligation exists in all events.
- Some are of the opinion that a voluntary deferral of compensation by the employee pursuant to Sec. 1 para. 2 No. 3 BetrAVG above and beyond the deferred compensation claim pursuant to Sec. 1a para. 1 BetrAVG must be included in the calculation of the contribution. However, the legislator has not included a corresponding definition in Sec. 1 para. 2 No. 3 BetrAVG. Hence, there is much in support of the fact that the 15% only refers to the amount of the maximum deferred compensation claim pursuant to Sec. 1a para. 1 BetrAVG.
Dr. Gilbert Wurth, Kathrin Vossen, Jörn Kuhn, Isabel Hexel, Dr. Alexander Willemsen, Anja Dombrowsky, Jamilia Becker, Madita Reimsbach, Cornelia-Cristina Scupra, Alexandra Groth
Dr. Gilbert Wurth
Telephone: +49 221 2091 351 / 381
Telefax: +49 221 2091 333
Telephone: +49 221 2091 351
Telefax: +49 221 2091 333
Telephone: +49 69 707968 140
Telefax: +49 69 707968 111
Telephone: +49 221 2091 348
Telefax: +49 221 2091 333
Recent matters we advised on include:
Arbitration proceedings between a Belgian and a Singaporean company concerning the delivery of parts for a big industrial complex to be erected in China.
Dr. Alexander Willemsen
Telephone: +49 221 2091 551
Telefax: +49 221 2091 333
Telephone: +49 (0)69 707968 184
Telefax: +49 (0)69 707968 111
Telephone: +49 221 2091 346
Telefax: +49 221 2091 333
Telephone:+49 (0) 69 707968 215
Telefax:+49 (0) 69 707968 111
Telephone: +49 (0) 221 2091-341
Fax: +49 (0) 221 2091-333