Newsletter Employment Law III/2016

III /2016

We have already extensively reported in our newsletters on the developments in the reform of the German Temporary Employment Act [Arbeitnehmerüberlassungsgesetzes, AÜG]. Once the draft bill amending the AÜG, which is to be put before the Federal Government over the next few weeks, has passed through the legislative process and the provisions governing the flexi-pension have also been adopted, no further important legislative measures are expected during the current legislative period now drawing to a close. The parliamentary election in 2017 is beginning to cast its shadow and experience has shown that the actors on the political stage will refrain from forging ahead with any noteworthy legislative projects. In contrast, the case law of the employment courts is constantly providing us with interesting decisions, the effects of which will need to be considered in day-to-day personnel work.

 

1. Current case law

1.1 Preclusive periods for minimum wages in general business terms and conditions are invalid 
1.2 The (to all intents and purposes - familiar) problem of the one-week deadline of Sec. 102 Subsec. 1 BetrVG
1.3 Effects of an obligatory internal conciliation procedure on the permissibility of applying for court order proceedings
1.4 Discrimination by excluding a termination during parental leave from protection against mass dismissal
1.5 Covert case of temporary employment – “safety-net solution” initially retained

2. Legal developments

2.1 Planned flexi-pension
2.2 Revision of Sec. 309 No. 13 BGB

3. 8th Employment Law Day at Oppenhoff & Partner

 

1. Current case law

 

1.1 Preclusive periods for minimum wages in general business terms and conditions are invalid

By judgement dated 24 August 2016 (docket No. 5 AZR 703/15) the Federal Employment Court [Bundesarbeitsgericht, BAG] deemed invalid a preclusive period which was included by an employer in its standard employment agreement, as it expressly did not exclude from forfeiture statutory minimum wage claims pursuant to the German Employee Secondment Act [Arbeitnehmerentsendegesetz, AEntG].

In the case to be decided by the BAG the claimant, who worked in the care sector, asserted claims to the continued payment of her salary during illness and applied for the minimum wage owed pursuant to Sec. 2 German Ordinance on Working Conditions in the Care Sector [Pflegearbeitsbedingungsverordnung, PflegeArbbV]. The employer rejected her claim in reference to the preclusive period agreed in her employment agreement, pursuant to which all mutual claims under the employment relationship lapse if not asserted in writing within three months of maturity vis-à-vis the other contractual party. This deadline had not been observed by the claimant.

The BAG nevertheless ruled in the claimant’s favour and declared that the preclusive clause stipulated by the defendant after the entry into force of the PflegeArbbV violated Sec. 9 sentence 3 in conjunction with Sec. 13 AEntG and was therefore invalid. Since the preclusive period agreed in the individual employment contract did not explicitly exclude from forfeiture the claim to the branch minimum wage pursuant to the AEntG, the BAG deemed the clause invalid. The clause also could not be upheld with respect to other claims, since it was opposed by the transparency requirement of Sec. 307 Subsec. 1 sentence 2 German Civil Code [Bürgerliches Gesetzbuch, BGB].

Only the press release concerning this judgement is available to date, which means that it still remains to be seen whether the BAG’s reasons for the judgement will give concrete guidance on the required transparency and consequently on the form of exclusion clauses. However, since the BAG complains of the clause’s lack of transparency, it can be assumed that this legal opinion on the lack of transparency expressed in connection with the branch minimum wage will also be transferred to the general minimum wage in future. Consequently, extensively worded preclusive periods without the express removal of legally guaranteed minimum wage claims are invalid. The same will doubtlessly apply if the exclusion clause also fails to explicitly exclude claims due to wilful intent, gross negligence or injury to life, physical wellbeing or health (pursuant to Secs. 202 Subsec.1, 309 No. 7 BGB). Employers are therefore advised to examine the exclusion and forfeiture clauses they use in their standard employment contracts and in all events to bring new contracts into line with the new case law.

Furthermore, the legislative amendment of Sec. 309 No. 13 BGB which will be entering into force as per 1 October 2016 will have to be observed. According to this, clauses for a notice or declaration of the consumer may not stipulate a more stringent form than text form in future. The demand for the written assertion of claims in employment contracts which are concluded as of 1 October 2016 will then be regarded invalid. Previously agreed written form requirements in exclusion clauses in existing contracts concluded prior to 1 October 2016 will remain valid, however, pursuant to the transitional regulation of Art. 229 Sec. 37 Introductory Act to the German Civil Code [Einführungsgesetz zum bürgerlichen Gesetzbuch, EGBGB].

Isabel Hexel

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1.2 The (to all intents and purposes - familiar) problem of the one-week deadline of Sec. 102 Subsec. 1 BetrVG 

To all intents and purposes – one should think – the secure working knowledge of any and every personnel officer should encompass the requirement of a prior hearing of the works council and the manner of dealing with the one-week deadline of Sec. 102 Subsec. 1 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG] in case of terminations by the employer’s side. That this is not always the case, however, can be seen from the decision of the BAG dated 25 May 2016 (docket No. 2 AZR 345/15).

The sued employer, a company belonging to an internationally operating group with its headquarters in the USA, had intended to end its employment relationship with the Claimant by ordinary termination pending a change in the employment contract. By letter dated 20 November 2012 (Tuesday), received by the works council on the same day, the Defendant heard the works council on the intended termination. By letter dated 26 November 2012 (Monday) the chairman of the works council requested further information, “in order to be able to make a conclusive assessment of the salary losses”. The Defendant did not provide this information. On 27 November 2012 (Tuesday) it handed the Claimant the letter of termination.

The BAG deemed this termination invalid, as it had been conducted without hearing the works council, because it had been declared prior to the expiry of the one-week deadline of Sec. 102 Subsec. 1 BetrVG. The one-week period would not have expired until 24:00 hrs. on 27 November 2012. The participation procedure can be brought to an end by the works council before such time, however, if it renders a conclusive statement prior thereto on the employer’s intention to terminate. However, the employer must be able to derive beyond doubt from the statement that it is a conclusive statement. If the statement is not expressly identified as “conclusive” then, in the opinion of the BAG, there must be special, definite indications which allow the employer to assume that this is indeed the case. In all other events the employer must follow this up with the works council and request clarification if it (the employer) wants to terminate before the expiry of the one-week period. In the case at hand there had obviously been no conclusive statement, and the employer had also failed to follow this up with the works council.

The BAG’s decision is almost a perfect example of thoughtless action on the part of the employer. The works council naturally cannot prevent the expiry of the one-week deadline with every additional question. However, in the present case it is not apparent why the employer did not wait one further day as a precautionary measure before declaring the termination, for the end of the month had certainly not yet been reached. To avoid having to tread the thin ice of interpreting statements made by the works council (are they conclusive or not?), it is advisable to let the one-week deadline pass before declaring the termination. The only way to help avoid missing a possible termination date is to plan carefully. Hoping for a conclusive premature statement of the works council will doubtlessly only be successful in exceptional cases.

Kathrin Vossen

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1.3 Effects of an obligatory internal conciliation procedure on the permissibility of applying for court order proceedings

By decision dated 23 February 2016 (docket No. 1 ABR 5/14), the BAG decided that an application in court order proceedings to clarify a difference of opinion concerning shop constitution law is impermissible if the employer’s and employee’s sides have initially undertaken to conduct internal conciliation proceedings to resolve disputes.

In the appeal proceedings before the BAG the works council making the application and the employer disagreed over the implementation of a shop agreement on working hours. Sec. 10 of the shop agreement envisaged an internal dispute mechanism in the event of differences of opinion over the application and interpretation of shop agreements. The works council, however, had tried to directly judicially resolve the difference of opinion on the interpretation of the shop agreement without a prior attempt at internal conciliation.

The BAG deemed the works council’s application impermissible. The agreement of a primary internal dispute resolution mechanism was valid. In particular, this was not an impermissible arbitration agreement within the meaning of Sec. 4 German Employment Courts Act [Arbeitsgerichtsgesetz, ArbGG]. The employer’s and employees’ sides were therewith merely making use of their possibility under Sec. 76 Subsec. 6 BetrVG to have their differences of opinion primarily addressed in internal dispute resolution proceedings. This offers the possibility of clarifying disputed issues quickly. To the extent the conciliation board first has to be convoked at the internal level and the dispute is over regulatory matters, the decision reached is subsequently only reviewable by the courts to a limited degree. In litigation, in contrast, the internal dispute resolution mechanism merely lead to an additional instance, as in this case a decision reached by the conciliation board is fully reviewable by the court. The two parties must therefore decide in the individual case whether an obligatory internal dispute resolution mechanism, e.g. within the framework of a shop agreement, should be agreed. Should they decide in favour of this, it also has to be observed.

Jamilia Becker

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1.4 Discrimination by excluding a termination during parental leave from protection against mass dismissal

To date, the BAG has determined protection against mass dismissal exclusively on the basis of the time of receipt of the termination declaration, also for persons on parental leave. This case law has now been deemed unconstitutional by the Federal Constitutional Court [Bundesverfassungsgericht, BVerfG] to the extent the consequence of waiting for the official declaration of permissibility is that the dismissal of an employee on parental leave can only be declared outside of the 30-day deadline relevant for a mass dismissal within the meaning of Sec. 17 Subsec. 1 sentence 1 German Act Against Unfair Dismissals [Kündigungsschutzgesetz, KSchG] and the said employee is consequently excluded from protection against mass dismissal. According to the BVerfG, this violates the general principle of equal treatment of Art. 3 Sec. 1 in conjunction with Art. 6 Sec. 1 German Constitution [Grundgesetz, GG] and leads to unjustified, indirect sex discrimination within the meaning of Art. 3 Sec. 3 GG.

In the case in dispute, the employer discontinued its business operations in Germany and declared the termination for operational reasons of all of its employees at the end of 2009. These terminations were invalid, as the consultation procedure with the general works council pursuant to Sec. 17 Subsec. 2 KSchG had not been conducted in a due and proper manner. The complainant, in contrast, was first given notice of dismissal in March 2010 and thus outside of the mass dismissal procedure, as she was on parental leave and the employer had initially awaited the official declaration of permissibility. Her termination therefore did not fall within the 30-day deadline of Sec. 17 Subsec. 1 KSchG and, in the opinion of the BAG and the prior instances, did not have to be notified. The complainant’s constitutional complaint against the judgement on the appeal on points of law filed was successful, however.

The BVerfG repealed the BAG’s judgement on grounds of an infringement of Art. 3 in conjunction with Art. 6 GG and referred the case back to the BAG for a new hearing. In the opinion of the BVerfG, the BAG’s case law - pursuant to which protection against mass dismissal also has to be determined exclusively on the basis of the time of receipt of the termination for persons on parental leave - leads to an unjustified disadvantage of the said group of persons. This disadvantage cannot also be justified by the fact that Sec. 18 German Federal Act on Parental Benefit and Parental Leave [Bundeselterngeld- und Elternzeitgesetz, BEEG] provides special protection against dismissal for employees on parental leave. Although waiting for the official administrative proceedings lifting the ban on the termination regularly leads to a later termination date, this does not compensate for the disadvantage suffered by the person concerned through the exclusion of protection against mass dismissal. Moreover, this constitutes indirect sex discrimination, as parental leave is taken by women to a considerably higher degree.

The decision is surprising. However, employers will have to adapt their practice to this change in the protection against mass dismissal. It remains to be seen how the BAG will concretely include employees enjoying special protection against dismissal into the protection against mass dismissal. Until then, however, all employees enjoying special protection against dismissal, whose terminations require a prior declaration of permissibility from the authority (such as, for example, pursuant to Sec. 18 Subsec. 1 sentence 4 BEEG, Sec. 9 Subsec. 3 German Maternity Protection Act [Mutterschutzgesetz, MuSchG], Sec. 85 German Social Code Book IX [Sozialgesetzbuch IX, SGB IX], etc.), will have to be included in both the notification of the mass dismissal and the notification of the works council (Secs. 17 Subsec. 1, 2 KSchG). This is because, in the opinion of the BVerfG, persons meriting special protection, for example, also fall within the scope of the 30-day period of Sec. 17 KSchG if the application is made to the competent authority within this period.

Isabel Hexel

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1.5 Covert case of temporary employment – “safety-net solution” initially retained

In one of its most recent decisions (judgement dated 12 July 2016, docket No. 9 AZR 352/15) the BAG ruled that, also in a covert case of temporary employment, no employment relationship between the hiring company and the temporary worker is established if the hirer has a permit to commercially supply temporary workers.

The claimant worked as a technical draftswoman at the defendant, an automobile enterprise, from 2004 to 31 December 2013. She rendered her services on the basis of an agreement described as a contract for works between the defendant and the contractual employer of the claimant. The latter had a permit to commercially supply temporary workers. The claimant asserted that only a pseudo contract for works had been concluded between her contractual employer and the defendant, and claimed the existence of an employment relationship with the defendant. In her opinion, the defendant could not plead the contractual employer’s temporary employment permit.

The claimant’s action was unsuccessful. In the opinion of the BAG, no employment relationship could be established between the defendant and the claimant even if the claimant had been supplied to the defendant to render employment services as a temporary worker on grounds of a pseudo contract for works. The decisive factor is whether or not the (possible) hirer has a permit to commercial supply temporary workers. Sec. 10 Subsec. 1 sentence 1 in conjunction with Sec. 9 No. 1 German Temporary Employment Act [Arbeitnehmerüberlassungsgesetz, AÜG] stipulates that an employment relationship between the hiring enterprise and the temporary worker is only established if the hirer does not have the required permit. In the absence of unintended regulatory omissions, an analogue application of this provision also does not come into consideration in a covert case of temporary employment. The legislator has only ordained the establishment of an employment relationship in cases of a covert supply of a temporary worker if the hirer does not have a permit, and not in cases where it has such a permit.

In practice, this judgement means that, until the entry into force of the planned amendments of the German Temporary Employment Act, presumably as per 1 January 2017, the so-called “safety-net solution” [“Fallschirmlösung”] will remain in force. This will no longer be possible as of 1 January 2017, as - with the entry into force of the statutory revision, assuming that the present draft bill is adopted without changes - the contracts between the hirer and the hiring company will have to be expressly labelled as contracts for the supply of temporary employees and the possibility of pleading a precautionary temporary employment permit [“Vorratsverleiherlaubnis”] will therefore no longer exist.  

Nils-Frederik Wiehmann

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2. Legal developments

 

2.1 Planned flexi-pension 

The employment of older employees and the transition to retirement are matters that are once again keeping the legislator busy in the current legislative period. Following the introduction of, inter alia, the so-called mothers’ pension and the pension for particularly long-term insured persons with the German Act to Improve Benefits in the Statutory Pension System [Gesetz über Leistungsverbesserungen in der gesetzlichen Rentenversicherung (RV-Leistungsverbesserungsgesetz)] which entered into force on 1 July 2014, the Federal Cabinet resolved on 14 September 2016 the draft bill to increase the flexibility of the transition from occupational life to retirement and to strengthen prevention and rehabilitation during occupational life (Flexi-Pension Act [Flexirentengesetz – FlexiG]). Now to be promoted in particular is the employment of older employees who are also at retirement age.
  
The key aspects of the draft are as follows:

  • Now that the amendment of Sec. 41 SGB VI through the RV-Leistungsverbesserungsgesetz has made it possible for the time of the end of an employment contract limited to the regular retirement age to be pushed forward several times, the employment of employees beyond the regular age limit is now to be made more attractive for employers through the discontinuation of contributions towards unemployment benefit.
  • For employees, the partial pension is to be structured in a far more advantageous way. Employees will be automatically entitled to earn an additional amount of EUR 6,300 per calendar year. Any excess amount will lead to the partial pension, albeit that this will no longer be oriented on inflexible boundaries in future. The additional earnings will still be capped, however. Any additional earnings generated during retirement could also lead to higher pensions in future for the employee. .
  • In cases of planned early retirement, which generally lead to pension cuts, employees will in future already be able as of age 50, as opposed to age 55, to compensate for the pension deductions by making additional pension contributions.

The draft bill also contains further provisions on rehabilitation and participation. The Federal Government wishes to conclude the legislative process in the near future and have the Act partially enter into force as of 1 January 2017.

From the employer’s perspective, various aspects of the statutory amendments to the pension insurance will have to be considered. Amongst other things, employers will have to check whether the Act will have effects upon the regulations governing company retirement pensions, pre-retirement part-time work or any other regulations connected with pension insurance age limits. Future social plans will also have to consider whether regulations for employees nearing retirement age will necessarily have to envisage compensation for the pension deductions, for the legislator is evidently increasingly viewing pension reductions as a disadvantage.

Jörg Kuhn

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2.2 Revision of Sec. 309 No. 13 BGB

As per 1 October 2016 the new Sec. 309 No. 13 BGB will be entering into force. Pursuant to the old version, clauses which envisaged a more stringent form than the written form for a notice or declaration of the consumer were invalid (cf. Sec. 126 BGB). With the legislative amendment it will no longer be possible to agree on a more stringent form than text form within the meaning of Sec. 126b BGB. The text form requirement is deemed to be sufficiently met inter alia by e-mail or (computer) fax. This legislative amendment will have considerable effects upon the structuring of contracts, in particular on exclusion periods, and should therefore be observed when concluding new contracts (as of 1 October 2016), respectively when amending existing contracts (concluded until 30 September 2016).

If an employment contract concluded after 30 September 2016 stipulates the written assertion of due claims, this written form requirement will be invalid pursuant to the new Sec. 309 No. 13 BGB. Hence, every notice, even an oral notice, suffices to observe the deadline. Although this should not lead to the invalidity of the entire exclusion clause, since the clause is also still comprehensible in itself without the written form requirement (so-called blue pencil test). Nevertheless, in future, preclusive periods in standard form employment contracts should only contain a text form requirement.

The new provision has no effect upon existing contracts, for pursuant to the transitional regulation in Art. 229 Sec. 37 EGBGB which is simultaneously entering into force, the amendment of Sec. 309 No. 13 BGB applies only to “contractual relationships established after 30 September 2016”. Previously agreed written form requirements in exclusion clauses therefore remain valid. However, should an existing agreement be amended after 30 September 2016, then this protection could presumably be lost. This means that the preclusive period should better be adjusted at the latest with the contractual amendment (see also under point 1.1).

Isabel Hexel

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3. 8th Employment Law Day at Oppenhoff & Partner

 

As already announced in our last Newsletter, on 10 November 2016 the 8th Employment Law Day is being held at our offices in Cologne.

This year’s topics will be Employment Law 4.0, the significance of the new General Data Protection Regulation (GDPR) for personnel work, the structuring of cancellation agreements as well as news from employment case law.

We would be pleased to welcome you to our offices on this day to hear interesting lectures and join in lively discussions.

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Dr. Gilbert Wurth

Partner

Telephone: +49 221 2091 351 / 381
Telefax: +49 221 2091 333

gilbert.wurth@oppenhoff.eu

Kathrin Vossen

Partner

Telephone: +49 221 2091 351
Telefax: +49 221 2091 333

kathrin.vossen@oppenhoff.eu

Jörn Kuhn

Partner

Telephone: +49 69 707968 140
Telefax: +49 69 707968 111

joern.kuhn@oppenhoff.eu

Isabel Hexel

Partner

Telephone: +49 221 2091 348
Telefax: +49 221 2091 333

isabel.hexel@oppenhoff.eu

Southeast Asia

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

Partner

Telephone: +49 221 2091 551
Telefax: +49 221 2091 333

alexander.willemsen@oppenhoff.eu

Jamilia Becker

Associate

Telephone: +49 221 2091 346
Telefax: +49 221 2091 333

jamilia.becker@oppenhoff.eu