Newsletter Employment Law I/2017
With the adoption of the Act to Strengthen the Participation and Self-Determination of Severely Disabled Persons [Bundesteilhabegesetz, BTHG] mid December 2016 and its entry into force already on 30 December 2016, the legislator has introduced into the German Social Code Book IX [Sozialgesetzbuch IX, SGB IX], virtually unnoticed, amendments to employment legislation on severely disabled persons that are of major relevance in employment law. Now, the dismissal of a severely disabled employee without the prior involvement of the severely disabled person’s representative officer is invalid. In our first employment law newsletter of 2017 we are informing of the most important revisions of the SGB IX, as well as further regulations of significance to everyday business operations and the most important decisions of the employment courts.
1.1 Works council has no right to refuse its consent to the fixed-term deployment of temporary workers in permanent employment positions
1.2 Relevant activity for calculating the comparable remuneration pursuant to Sec. 10 Subsec. 4 AÜG; burden of representation and proof
1.3 Applicability of the assessments of the German Working Hours Act to activities on the works council
1.4 Scope of the employer’s notification and provision obligation in connection with the personnel planning
1.5 Obesity a disability?
1.6 Protection from collective redundancies – Discrimination of employees on parental leave
1.7 Grading of entitlement to vacation according to age – discrimination of younger employees
2.1 Amendments to SGB IX [German Social Code Book IX) – Employment law for severely disabled persons
2.2 Proposed legislation: Act Advancing the Transparency of Pay Structures (EntgTranspG-E)
2.3 Amendments to the rules of procedure regarding Sec. 159 SGB III (suspension period) of the Federal Employment Agency
The Regional Employment Court [Landesarbeitsgericht, LAG] of Hesse had to resolve the issue of whether the works council can refuse its consent to the deployment of temporary workers in permanent employment positions if the assignment is for a fixed term (LAG Hesse dated 25 October 2016, docket No. 15 TaBV 251/15).
The applicants ran a joint business. They intended to use temporary workers for tasks which undisputedly arose on a permanent basis. The assignment was to be limited to a term of just over 18 months. The works council refused its consent. The applicants’ petition for replacement of consent was granted by the employment court.
The appeal brought by the works council was unsuccessful. The LAG confirmed the decision of the employment court. The works council had wrongfully refused its consent. Although it can be assumed, along with the Federal Employment Court [Bundesarbeitsgericht, BAG] (dated 30 September 2014, docket No. 1 ABR 79/12), that Sec. 1 Subsec. 1 sentence 2 German Temporary Employment Act [Arbeitnehmerüberlassungsgesetz, AÜG], as a prohibition norm within the meaning of Sec. 99 Subsec. 2 No. 1 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG], that the works council has a right to refuse its consent to the provision of a temporary worker that is not made only on a temporary basis, the provision was indeed on a temporary basis since the temporary workers’ assignment was for a fixed term. This was not opposed by the fact that they were assigned to permanent employment positions. The criterion “temporarily” within the meaning of Sec. 1 Subsec. 1 sentence 2 AÜG must be interpreted in relation to the employee as opposed to the employment position. This is supported by the wording, which focuses on the temporary provision of employees and not the temporary occupation of employment positions, as well as the earlier time limitation in Sec. 3 Subsec. 1 No. 6 AÜG as amended 1 January 2002, which likewise was to be understood in relation to the employee.
Whether the criterion “temporarily” within the meaning of Sec. 1 Subsec. 1 sentence 2 AÜG is to be understood in relation to the employment position or the employee was disputed thus far. With its decision, the LAG Hesse rules in accordance with the statutory revision in Sec. 1 Subsec. 1b sentence 1 AÜG, which will enter into force on 1 April 2017: according to this, a temporary worker may not be assigned to the same hirer for longer than 18 consecutive months. Accordingly, the revised wording resolves the dispute over the criterion “temporarily” in the sense that it refers to the person: it is irrelevant whether the provision of manpower is to cover only a temporary or a permanent labour requirement. In the opinion of the LAG Hesse, the same applies to the provision that still applies until 31 March 2017. Accordingly, the works council is therefore unable to oppose the fixed-term deployment of temporary workers on grounds that they are assigned to permanent employment positions.
In its judgement dated 23 November 2016 (docket No. 5 AZR 53/16) the BAG ruled that the activity expressly or impliedly assigned to the temporary worker by the hirer is relevant for the comparable remuneration pursuant to Sec. 10 Subsec. 4 AÜG.
The claimant was employed as a temporary worker at the defendant from 11/2008 to 6/2010 and had been supplied to the hirer on a temporary employment basis throughout this entire time. Thereafter, she worked at the hirer as an employee from 7/2010 to 6/2012. By pleading Sec. 10 Subsec. 4 AÜG, the claimant demanded from the defendant payment of the difference in remuneration for the period 11/2008 to 6/2010.
The BAG states that, in order to determine the claim amount under Sec. 10 Subsec. 4 AÜG, an overall comparison must be made of the remuneration during the period of her temporary employment. In this respect, a comparable remuneration of a regular worker at the business of the hirer and the remuneration paid to the temporary worker by the temporary employment agency had to be offset against each other. The calculation basis was to be the employment remuneration received by a comparable regular employee or, alternatively, the remuneration the temporary worker would have received if she had been employed at the hirer for the same work. As a rule, the burden of representation and proof of the amount of the claim lies with the claimant. The claimant can demand corresponding information pursuant to Sec. 13 AÜG from the hirer.
The decision takes as a jurisdictional basis the judgement of the BAG dated 13 March 2013 (docket No. 5 AZR 146/12). The BAG had at that time already made it clear that the burden of representation of the amount of the claim under Sec. 10 Subsec. 4 AÜG is borne by the temporary worker, but that he can plead the disclosure of information that is granted to him pursuant to Sec. 13 AÜG and introduced into the proceedings. Within the scope of the graduated burden of representation, it is then the obligation of the manpower supplier to contest the decisive circumstances of the information in a relevant and detailed manner. In the present decision the claimant – unlike in that case – actually based her claim on information obtained pursuant to Sec. 13 AÜG. The hirer must now – to the extent it has no regular employees who conduct the same activity as the claimant – endeavour to make a fictitious calculation of the employment remuneration (including any bonuses, etc.) it would have granted to the claimant if it had employed her as an employee during the period in dispute.
By judgement dated 18 January 2017 (docket No. 7 AZR 224/15) the BAG ruled that assessments under German working hours legislation also have to be taken into consideration for activities on the works council.
The claimant is a member of the works council at the defendant’s business and works there in three-shift rotation. In the night of 16 July 2013 he was assigned the night shift from 10:00 p.m. to 6:00 a.m. (with a break from 2:30 a.m. to 3:00 a.m.). Referring to a planned works council meeting on 17 July 2013 scheduled from 1:00 p.m. to 3:30 p.m., the claimant stopped work at 2:30 a.m. and went home. The employer subsequently only proportionately credited the night shift to his working hours account. With his complaint, the claimant demanded that his account be credited with the missing hours.
The claimant was successful before the BAG – as already in the prior instance. The 7th senate stated that, pursuant to Sec. 37 Subsec. 2 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG] members of the works council released from duties must also be released from their professional activities without incurring a reduction of their remuneration in cases where the required works council activity lying outside of their working hours renders the execution of their work services impossible or unreasonable. Because the works council meeting had been scheduled for 1:00 p.m., it was in all events unreasonable to expect the claimant to render his work services from 3:00 a.m. onwards. Although the court did not clarify whether the execution of the works council activity represented working hours within the meaning of Sec. 2 Subsec. 1 German Working Hours Act [Arbeitszeitgesetz, ArbZG], as far as the unreasonableness of a rendering of services is concerned, however, it stated that the assessment of Sec. 5 Subsec. 1 ArbZG on rest periods must at least be considered.
The BAG had already decided in its judgement dated 7 June 1989 (docket No. 7 AZR 500/88) that a claim to the paid release from duties pursuant to Sec. 37 Subsec. 2 BetrVG exists in cases where a works council member attends a works council meeting outside of his individual working hours and this renders impossible or unreasonable his adherence to his working hours before or after the meeting. The LAG of Lower Saxony (decision dated 20 April 2015, docket No. 12 TaBV 76/14) had established that the rendering of work services is deemed unreasonable if, when one adds the time required for the works council activity to the personal working hours, the daily maximum working hours pursuant to the Sec. 3 ArbZG are exceeded. The present judgement now also extends the application of the assessments of the ArbZG to Sec. 5 Subsec. 1 ArbZG. In particular within shift-work systems, therefore – depending on the scheduling of a planned works council meeting – the period of the release from duties can be considerable, not only for attendance of the meeting as such, but - in consideration of Sec. 5 Subsec. 1 ArbZG - also for any rest period to be observed prior thereto.
Dr. Alexander Willemsen
In its decision dated 8 November 2016 (docket No.: 1 ABR 64/14) concerning operational codetermination in the personnel planning (Sec. 92 BetrVG), the BAG addressed the question of whether the works council can demand the provision of so-called key date surveys [“Stichtagserhebung”] from the employer.
The employer, an operator of two specialist clinics, conducted pursuant to Sec. 4 Subsec. 2 of the Psychiatric Personnel Ordinance [Psychiatrie-Personalverordnung, Psych-PV] key date surveys to determine the average number of patients. After these surveys had partially been provided to the economic committee but no further notifications had subsequently been made, the works council applied that the employer be obligated to provide it with these surveys.
Whereas the employment court granted the application, the LAG and BAG negated an obligation to surrender the documents. On the basis of two claim bases, the BAG examined whether or not the demand for the surrender of the documents was justified.
An original claim under Sec. 92 Subsec. 1 sentence 1 BetrVG, which envisages a notification “on the basis of documents”, did not exist. According to the binding findings of the LAG, the employer’s key date surveys had already been used “exclusively as a financing instrument” to obtain the highest possible grants from the funders. However, only the documents upon which the employer itself based its personnel planning, irrespective of in which connection they were collected or determined, were relevant for the notification.
The BAG negates a claim under Sec. 80 Subsec. 2 in conjunction with Sec. 92 Subsec. 2 BetrVG on grounds of the “necessity in the concrete individual case”. The works council, whose duties specifically do not include conducting “an original” personnel planning “on equal par” with the employer, could plead its right of proposal pursuant to Sec. 92 Subsec. 2 BetrVG, but a corresponding submission by the works council of the extent to which the key date surveys were actually required by it to draft its own proposals was lacking.
With this decision, the BAG has again made it clear that an obligation to hand over documents can be rejected if there is not sufficient evidence of an actual connection between the sought-after documents and the employer’s personnel planning, as well as their necessity for the preparation of proposals.
The claimant was employed as a truck driver at the defendant on the basis of a fixed-term employment contract from March 2014 to February 2016. At the time of his hiring his body mass index (BMI) was 41.67; this is classed as grade III obesity (so-called morbid obesity). A medical examination conducted at the occasion of his hiring showed, apart from increased blood pressure under strain, no health concerns or restrictions with respect to the work performance owed by him. Despite corresponding performance the claimant was subsequently not taken on in an indefinite employment relationship, as the employer feared a health risk in the medium-term in view of his high BMI. The claimant filed a discrimination complaint on grounds of a disability within the meaning of Sec. 1 General Non-Discrimination Act [Allgemeines Gleichbehandlungsgesetz, AGG].
The LAG of Lower Saxony (judgement dated 29 November 2016 - 10 Sa 216/16) did not grant the complaint but permitted the appeal on points of law to the BAG on grounds of its fundamental importance. Even severe obesity as such is neither a prohibited characteristic within the meaning of Sec. 1 AGG nor a disability which would prohibit a discrimination. According to the understanding of the LAG of Lower Saxony, which referred to the ECJ decision dated 18 December 2014 (C-354/13), a disability is a restriction which inter alia is caused by physical, mental or psychological impairments of a permanent nature and which, in interaction with various barriers, can hinder the person affected in his full and effective participation in working life on an equal par with the other participants. This is the case with severe obesity, in particular due to obesity-based mobility restrictions or the occurrence of disabling medical conditions. In the claimant’s case, however, there had been no evidence of this during his employment relationship and he had also made no concrete submissions to this effect, with the result that no disability had existed. Consequently, this also could not have been the reason for the refused removal of the fixed-term restriction.
The clarification that severe obesity per se does not automatically represented a disability can certainly be welcomed. However, the decision nevertheless clearly highlights the consequences of the growing number of obese persons in the work force: the probability certainly exists that an employee’s severe obesity will lead to restrictions in his mobility or to medical conditions which impede him in the execution of his work or lead to an impairment in the execution of his work activities. In this case, however, a disability exists. This not only leads to the application of the AGG with the burden of proof to the detriment of the employer of Sec. 22 AGG, but also to the application of the special protection provisions contained in the SGB IX, in particular the increased protection against dismissal within the meaning of Sec. 85 SGB IX.
Under previous case law the employer was only required to give notice of collective redundancies if it dismissed a certain number of employees exceeding the threshold value pursuant to Sec. 17 German Protection against Dismissal Act [Kündigungsschutzgesetz, KSchG] within 30 calendar days. Notices of dismissal given outside this 30-day period for whatever reason were thus not considered as dismissals in context with the collective redundancies. Correspondingly, the Federal Employment Court found in its judgement of 25 April 2013 (ref. no. 6 AZR 49/12) that the dismissal for operational reasons of an employee on parental leave was not subject to notification and thus considered it effective because the notice of dismissal was only given after the responsible authority had given its consent and therefore outside the 30-day period.
However, the Federal Constitutional Court [Bundesverfassungsgericht, BVerfG] ruled that a fundamental right of the employee was infringed as she had been unlawfully discriminated against because of taking parental leave and because of her sex and set aside the judgement of the Federal Employment Court of 25 April 2013 (BVerfG of 8 June 2016, ref. no. 1 BvR 3634/13). We reported about this decision of the Federal Constitutional Court in our newsletter of 29 September 2016.
The Federal Employment Court then had to decide again on the effectiveness of this dismissal for operational reasons and ruled in its judgment of 26 January 2017 (ref. no. 6 AZR 442/16) that it was ineffective. The 30-days period pursuant to Sec. 17 KSchG was also deemed observed if the application for the consent by the responsible authority to the dismissal of the employee on parental leave was filed within this period. The Federal Employment Court thus submitted to the judgment of the Federal Constitutional Court – however, from what can be concluded from the press release it did so reluctantly and against its own conviction. The reason is that this extension of the term “dismissal” in case of collective redundancies under national law defined by the Federal Constitutional Court can lead to problems if the consent by the responsible authority is given only outside the 90-day dismissal period pursuant to Sec. 18, Subsec. 4 KSchG or if the dismissal of an employee on parental leave as such is at the same time part of a second wave of collective redundancies pursuant to Sec. 17 KSchG.
Nevertheless legal practice will have to adapt to this change in protection in case of collective redundancies. Therefore, all employees with special protection against dismissal whose dismissal requires the previous approval by the responsible authority should be listed both in the notification of collective redundancies and in the notification of the works council pursuant to Sec. 17 KSchG if they are part of collective redundancies and an application for the consent of the authority has been filed within the 30-day period.
If according to a collective agreement the number of days of vacation to which an employee is entitled depends on age and the collective agreement treats employees over 50 better than younger employees this provision of the collective agreement is ineffective. In such a case younger employees are entitled to the same number of days of vacation as the employees over 50 (“upward adjustment”) (Federal Employment Court, judgement of 18 October 2016, ref. no. 9 AZR 123/16).
The parties are in dispute about the number of days of vacation to which the plaintiff is entitled pursuant to the collective agreement. At the time when the plaintiff claimed “more vacation” he was 45 years old. As both parties are committed to a collective agreement, the General Collective Agreement of the Hotel and Catering Industry [Manteltarifvertrag, MTV] is applicable to the employment contract. Sec. 7, Subsec. 2 (Vacation) of the General Collective Agreement provides for the grading of the days of vacation depending on age. According to the General Collective Agreement, employees from the age of 40 had 27 days of vacation, employees from the age of 50 had 30 days of vacation. For 2013, the defendant calculated that the plaintiff was entitled to 27 days of vacation. The plaintiff requested that three more days of vacation be granted. The defendant refused his claim. The plaintiff claimed in court that it was an objectively unjustified discrimination to grade the days of vacation depending on age. The defendant claimed that the differentiation according to age was justified because of the physically demanding work in the hotel industry.
The Federal Employment Court found that the grading of vacation contravened Sections 1, 3, Subsec. 1 General Non-Discrimination Act [Allgemeines Gleichbehandlungsgesetz, AGG] and was therefore ineffective pursuant to Sec. 7, Subsec. 1 and 2 AGG. The plaintiff was therefore entitled to three more days of vacation. The unequal treatment was neither justified pursuant to Sec. 8 AGG nor pursuant to Sec. 10 AGG. It was not justified pursuant to Sec. 8 AGG because the grading of vacation was neither related to the nature of the duties to be performed nor the conditions of its performance. It was not justified pursuant to Sec. 10 AGG either because there was no legitimate objective required for justification. The employer’s general reference to the high physical strain in the hotel industry did not suffice to comply with the burden of setting forth the case.
The Federal Employment Court is continuing to pronounce judgements providing for an “upward adjustment". This means that if no special regulations for the restitution of equal treatment apply, equal treatment can only be guaranteed by granting the disadvantaged employees the same benefits as the privileged employees. So a regulation graded according to age always bears the risk that disadvantaged employees can claim the most favorable regulation for them if the unequal treatment is objectively unjustified.
It its session on 16 December 2016 the Bundesrat [Federal Council] adopted the Act to Strengthen the Participation and Self-Determination of Severely Disabled Persons [Bundesteilhabegesetz, BTHG]. As a comprehensive revision of SGB IX (amongst others) it will in principle not enter into force until 1 August 2018, but some amendments already became effective on 30 December 2016 after they were signed by the Federal President and published in the Federal Law Gazette. These current amendments apply in particular to the part of SGB IX relevant to employment law:
- Sec. 94 SGB IX Election and term of office of the Representative Council of Employees with Disabilities (as from 1 August 2018: Sec. 177 SGB IX)
Sec. 94 now contains a new Subsection 8 which declares that Sec. 21a German Works Constitution Act [Betriebsverfassungsgesetz, BetrVG] (Transitional mandate in the case of a split or combination of companies) is also applicable to the Representative Council of Employees with Disabilities.
- Sec. 95 SGB IX Responsibilities of the Representative Council of Employees with Disabilities (as from 1 August 2018: Sec. 178 SGB IX)
The threshold values for the appointment of deputies have been graded upwards so that the representative officers of the severely disabled persons in larger companies can appoint more deputies than the previous maximum of two. The new rule is that from each further 100 severely disabled employees the deputy member elected with the next higher number of votes can be appointed.
The rights of the Representative Council of Employees with Disabilities if a severely disabled employee is dismissed have been extended considerably: Any dismissal declared by the employer without the involvement of the Representative Council of Employees with Disabilities is ineffective. The employers can basically refer to Sec. 102 BetrVG with regard to the nature, scope and time limits of the previous involvement. It has to be borne in mind that the Representative Council of Employees with Disabilities should be involved before an application for consent is filed with the integration office (cf. Sec. SGB IX).
- Sec. 96 SGB IX Personal rights and duties of the representative officer of severely disabled employees (as from 1 August 2018: Sec. 179 SGB IX)
The representative of severely disabled employees (comparable to Sec. 38 BetrVG) is released from his or her work duties if the company employs more than 100 severely disabled employees and not, as previously, 200 severely disabled employees.
With regard to further training, the restriction has been removed that a deputy is only entitled to further training if he or she is permanently consulted, often has to substitute the representative officer for a longer period of time or is likely to follow him or her in office.
The employer’s duty to bear the costs for the work of the Representative Council for Employees with Disabilities now also comprises an office worker to the extent necessary. Here, the principles developed with regard to Sec. 40, Subsec. 2 BetrVG can be useful for reference.
The Federal Government has submitted a bill for advancing the transparency of remuneration for men and women expressly aiming at closing the statistically proven gender gap in payment through transparency of remuneration and pay structures.
The bill is based on the prohibition of gender discrimination in payment (Secs. 3,7 EntgTranspG-E) and provides for the employees’ individual right to be informed (Sec. 10 EntgTranspG-E). In particular, the scope of this right is defined in Sec. 11 EntgTranspG-E: The duty to provide information on the criteria and procedures of the remuneration system covers the information how one’s own remuneration and the remuneration of employees performing comparable work are determined.
The bill differentiates between different employer groups and, in addition, further procedures provided for in the bill depend on the number of employees in the establishment or company. There are employers bound by collective agreements, employers who apply collective agreements based on written agreements and other employers. The right to be informed pursuant to Sec. 10 EntgTranspG-E is only applicable for companies with more than 200 employees (Sec. 12, Subsec. 1 EntgTranspG-E). Employees working for employers bound by collective agreements or employers who apply collective agreements based on written agreements first have to contact the works council. If they are employed by another employer they can contact the employer directly.
In companies with more than 500 employees internal review procedures are to be introduced in order to check regularly whether the payment arrangements and the different remuneration components paid and their application comply with the principle of equal pay (Sec. 17 EntgTranspG-E). In a group of companies group-wide procedures are explicitly allowed. The provision in Sec. 20 EntgTranspG-E currently only stipulates that the works council must be informed about the review procedures. Companies with more than 500 employees which are obliged to publish a management report pursuant to Secs. 264, 289 German Commercial Code [Handelsgesetzbuch, HGB] also have to produce a report on equal opportunities and equal pay pursuant to Sec. 21 EntgTranspG-E.
All in all, it has to be stated that the current bill still contains many unclear points. However, the Federal Government would like to adopt the bill in the last months of this legislative period. The right to be informed can then be claimed for the first time 6 months after the Act has entered into force (Sec. 25 EntgTranspG-E). We will keep you up-to-date.
The latest amendments to the rules of procedure regarding Sec. 159 SGB III (as of 12/2016) are of special relevance for the conclusion of termination agreements with employees. The conclusion of a termination agreement usually constitutes a violation of insurance conditions on the part of the employee and lead to a suspension of the claim to unemployment benefit, amongst others. There are only exceptions if there were important reasons for concluding the termination agreement. Now there are two material new provisions:
- According to the rules of procedure, it is now also an important reason if the employee has simultaneously terminated the employment contract by a termination agreement without a compensation for dismissal in order to avoid a dismissal on personal grounds.
- It is also considered an important reason for the conclusion of a termination agreement that otherwise there is the imminent risk of dismissal by the employer for operational reasons or on personal grounds. In addition – different from the previous provisions - a minimum compensation is no longer required. The rules of procedure regarding Sec. 159 SGB III only state now that with reference to Sec. 1a KSchG a compensation of up to 0.5 monthly salaries is paid for each year of the employment contract. It is irrelevant whether the imminent dismissal by the employer would be lawful or not. Only if the compensation is higher than 0.5 monthly salaries per year of employment the imminent dismissal would have to be lawful. The dismissal is fully assessed by the Federal Employment Agency.
With these new regulations there is now more clarity in particular in the field of termination of employment contracts due to illness. Furthermore, there is now a standard regulation with regard to the question about suspension periods in case of termination agreements for operational reasons and the application of social compensation plan formulas, which are (partially significantly) above the factor of 0.5, which has often been answered differently by the various employment agencies. This provides more certainty for all the parties involved.
We would like to make you aware of our employment law event at our Frankfurt office:
On 10 May 2017 we will present the “Employment Law Update” at our offices in Opernturm, Bockenheimer Landstraße 2-4, Frankfurt am Main, Germany.
In this new format we will present the already implemented legal changes and also the intended new legal regulations in a nutshell from 4.00 to 7.00 p.m. and will discuss the resulting consequences with you. This will be followed by an outline of current employment case law on various topics and finally we will discuss the reform of the Temporary Employment Act [Arbeitnehmerüberlassungsgesetz, AÜG] reporting about first experiences with the amendments that came into force on 1 April 2017 and giving you practical information.
You should have received a separate invitation for this event by now.
We would be pleased to welcome you on this day at the Frankfurt Opernturm.
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: +49 221 2091 346
Telefax: +49 221 2091 333