Newsletter Employment Law IV/2014

 

IV/2014

 

In the field of employment law and social welfare law the legislator is currently far more active than it has been for some time. As we approach the end of 2014 we can report on a number of legislative amendments which will be entering into force in 2015. Whether and which version of the tariff unity act just passed by the Federal Cabinet and now entering the parliamentary process will also enter into force in 2015 remains to be seen. However, it is already foreseeable that individual details of this act will certainly be keeping the labour courts and even the Federal Constitutional Court [Bundesverfassungsgericht, BVerfG] busy. This will probably also include the question of whether and how the specific union membership of individual employees can be determined in cases where, for example, the majority relations at a business are decisive. The Federal Labour Court [Bundesarbeitsgericht, BAG] could already have addressed the issue of a right of the employer to enquire about the union membership in a decision of November 2014. Why it did not do so and which other decisions have been important over the last few months are issues discussed in this last Newsletter for 2014.

 

1. Current Case Law
1.1 Employees bear the burden of proof of any above-average performance appraisal in reference letters
1.2 BAG reinforces jurisprudence on the requirements of an authorisation to declare a termination
1.3 Costs of training a works council member to act on the conciliation committee
1.4 Employer’s right to ask its employees which union they belong to

 

2. Legal Developments
2.1 German Minimum Wage Act [Mindestlohngesetz, MiLoG]
2.2 Act to introduce the extra child-raising benefit “Elterngeld plus” with partnership bonus and more flexible parental leave in the German Federal Act on Child-Raising Benefit and Parental Leave
2.3 Act for a better reconciliation of family life, home caregiving and work [Gesetz zur besseren Vereinbarkeit von Familie, Pflege und Beruf] (planned entry into force on 1 January 2015)
2.4 Amendment of the German Workplace Ordinance (planned entry into force 2015)

 

 

1. Current Case Law
1.1 Employees bear the burden of proof of any above-average performance appraisal in reference letters

 

If, in a dispute over a reference, an employee seeks a better performance appraisal than the school grade “satisfactory”, such employee bears the burden of representation and proof to this effect. According to the BAG in its most recent judgement dated 18 November 2014 (docket No. 9 AZR 584/13), nothing other than this can be derived from the fact that almost 90% of the reference letters issued in the relevant branch contain the overall performance appraisal “good” or “very good”.

 

In the said case the employee had worked for a year as a receptionist at the dental clinic of the sued employer. At the end of her employment relationship her employer gave her a reference in which she appraised her employee’s performance with “to our utmost satisfaction”. The employee took legal action to obtain a reference containing the appraisal “always to our utmost satisfaction”, as her performance had been above-average throughout. The sued employer countered this by arguing that her work had only been average due to various mistakes and the employee had also not represented or proven anything to the contrary.

 

The BAG repealed the previous decisions of the Labour Court [Arbeitsgericht, ArbG] and Regional Labour Court [Landesarbeitsgericht, LAG] which had both granted the action for a correction of the reference, and referred the case back to the LAG for review and decision. Despite the fact that, on grounds of a study applied by the LAG, almost 90% of the references issued in the branch in question gave overall grades of “good” or even “very good”, this did not lead to a reallocation of the burden of representation and proof. The basis to be taken insofar was the grade “satisfactory” as the middle grade on the scale of satisfaction and not the grade that was most frequently awarded in practice. If an employee seeks a grade in the upper part of the scale, then such employee bears the burden of representation and proof insofar. Moreover, the BAG did not deem the study applied by the LAG to determine an average grade to be sufficiently representative since one could not exclude the possibility of several courtesy references being included in the study. The claim to a reference pursuant to Sec. 109 Subsec. 1 sentence 3 German Industrial Code [Gewerbeordnung, GewO] only focuses on a “true” reference in terms of content, however, and only has to be “benevolent” within the scope of the truth.

 

Isabel Hexel

 

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1.2 BAG reinforces jurisprudence on the requirements of an authorisation to declare a termination

 

In enterprises with their own personnel departments it is not a rare occurrence for terminations by the employer not to be declared by the employer itself, respectively by an organ acting on its behalf. From the employee’s perspective, such delegation – mostly to the personnel manager – presents an obvious weak point if the employer in turn fails to observe the requirements stipulated by law and developed by jurisprudence. The crux of a conceivable rejection of a termination on grounds of the lack of proof of corresponding power of representation is Sec. 174 German Civil Code [Bürgerliches Gesetzbuch, BGB]. If the employer has a party represent it when declaring the termination, the employee is correspondingly entitled within a narrow temporal margin to reject the termination if no original power of attorney encompassing the declaration of termination is attached to the termination letter. One of the consequences of this can be that it is no longer possible to declare the termination within the period relevant to the course of the termination notice period, with the result that the time at which the employment relationship ends is further delayed. From the employer’s perspective, the exemption from the requirement to include an original power of attorney contained in Sec. 174 sentence 2 BGB is of great interest not least due to the considerable administrative effort that this otherwise involves; accordingly, the employee’s right to reject the termination is ruled out if he was informed of the corresponding authorisation to declare terminations beforehand.

 

The BAG dealt with the question of when such knowledge within this meaning is gained in its decision dated 25 September 2014 (docket No.: 2 AZR 567/13) and in doing so confirmed its previous jurisprudence. In the underlying case a personnel manager, who simultaneously had joint general commercial power of representation [Gesamtprokura], had used the addition “ppa” customarily used by officers vested with general commercial power of representation [Prokurist]. An original power of attorney was not attached to the termination. The person signing the termination had been appointed to the position of personnel manager, which had also been notified to the claimant. Firstly, the BAG corroborated that an employee cannot plead a lack of knowledge of the authorisation if the declaring party is registered as Prokurist in the Commercial Register [Handelsregister, HR]. Secondly, in the case at hand the BAG held that the recipient of the declaration also had knowledge excluding the right of rejection if the personnel manager was known to have authorisation to establish and terminate employment relationships. This applied irrespectively of whether or not the person signing the termination declaration validly represented the employer in his position as Prokurist.

 

This decision is a good example of the fact that, if the corresponding structures exist, a delegation of the power of termination is possible and thus the considerable administrative efforts of attaching an original power of attorney can be avoided. One must ensure, however, that the corresponding structures are actually implemented at the HR level and that the establishment and termination of employment relationships by the acting person is actually implemented in practice. In all other events, in order to avoid risks it is advisable to have an (individual) Prokurist or the managing director with sole power of representation sign the termination, thus ruling out the risk of rejection on grounds of the lack of proof of power of representation.

 

Tobias Mommer

 

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1.3 Costs of training a works council member to act on the conciliation committee

 

As is generally known, pursuant to Sec. 40 Subsec. 1 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG] the employer must bear the costs accruing through the activities of the works council. This includes the costs of attending training and educational events insofar as the knowledge imparted is necessary for the work on the works council. In a decision dated 20 August 2014 (docket No.: 7 ABR 64/12) the BAG has now clarified the extent to which training costs in connection with the activity of a works council member on the conciliation committee must be borne by the employer.

 

The works council had sent a works council member to a conciliation committee on the topic of “risk evaluation”. This works council member also attended a seminar on “procedures for risk evaluation pursuant to Sec. 5 German Employment Protection Act [Arbeitsschutzgesetz, ArbSchG]”. The training was conducted by the two other external committee members sent to the conciliation committee by the works council. The employer refused to assume the costs of this training.

 

The BAG concurred with the employer and pointed out that Sec. 37 Subsec. 6 BetrVG only envisaged an obligation of the employer to bear costs for training courses in which knowledge that was “necessary” for the work on the works council was imparted. The BAG emphasised that the activity as a committee member on the conciliation committee was neither one the tasks of the works council and its members nor one of their official duties. According to the BAG, the necessity for training could at best be justified if the works council member must be able to critically deal with the proposals of the conciliation committee within his own sphere of competence. In the specific case at hand, however, the BAG negated the necessity of such training, despite the topic’s relevant to the subject matter of the conciliation committee on grounds that, in its opinion, training that is organised by the other – external – member of the works council is unsuited to promote the capacity to critically and independently deal with proposals made by the conciliation committee.

 

The BAG’s decision gives employers further clarity on the scope of their costs obligation, in particular in connection with conciliation committee proceedings. The costs of the conciliation committee are conclusively regulated in Sec. 76a BetrVG. They cannot simply be increased via Sec. 37 Subsec. 6 BetrVG. This is especially the case where an external conciliation committee member determined by the works council conducts the training. The frequently found “identicalness of persons” between conciliation committee member and speaker is cause here for a refusal to bear the costs. Employers are therefore well advised to continue closely checking the topics and speakers of the sought-after training events.

 

Kathrin Vossen

 

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1.4 Employer’s right to ask its employees which union they belong to

 

The German train drivers’ union GDL has not only been active in the fiercely fought wage rounds conducted with the German Railway over the last few weeks. A litigation commenced in 2010, in which the union wanted to prohibit an urban transport enterprise from asking its employees which union they belonged to, has since been decided by the BAG on 18 November 2014 (docket No.: 1 AZR 257/13). Its judgement refrained from setting what would have been a welcome precedent which could have clarified the practical consequences of the relinquishment of tariff unity. Because of the possible parallelism of several collective agreements in a single enterprise, the employer is only able to stipulate the collective agreement applicable to the individual employment relationship if it knows which union its employee belongs to.

 

The litigation was triggered by wage rounds conducted by the GDL and the urban transport enterprise which also involved the multi-service trade union ver.di. Whilst agreement could be reached with ver.di, the GDL declared the breakdown of the negotiations and announced a ballot on strike measures to enforce its claims. The urban transport enterprise – the subsequent defendant – then ordered its employees to inform it, giving their name and personnel number, whether they were a member of the GDL so that it could check whether claims existed under the collective agreement with ver.di. The GDL subsequently demanded the general prohibition of this question, which it considered illegal on grounds that it violated its coalition right under Art. 9 para. 3 German Constitution [Grundgesetz, GG] in every conceivable configuration. The defendant justified its conduct with its interest in avoiding relevant legal disadvantages such as, for example, subsequent payment obligations vis-à-vis the tax administration and social insurance bodies if a collective agreement that was not relevant was applied. Moreover, with a view to industrial action plurality, a selective lock-out could only be only conducted if the employees’ union membership was known.

 

After the Labour Court granted the GLD’s motion and the Regional Labour Court subsequently concurred with it only subject to limitations, the BAG has now dismissed the case in its entirety. In the decision, which is thus far only available as a press release, the Senate initially states that the information demanded violates the collective freedom of coalition in connection with ongoing wage rounds, since this would frustrate the union’s negotiating pressure; but that at the same time the motion covering all case configurations was not successful “on grounds of tort law” since it was simply worded too extensively. For this reason the BAG did not clarify the important question of whether the employer of a business with tariff plurality is fundamentally denied a right to ask its employees which union they belong to.

 

Hence, at least in connection with industrial action, one should now refrain from asking the corresponding question. However, it is doubtful that - in times of an obligation to keep industrial peace – it will be possible to implement several parallel collective agreements in a single enterprise without a corresponding right of enquiry. This was taken into due consideration by the LAG Hessen in the prior instance (docket No.: 12 Sa 654/11) when it negated a general prohibition of the question. The fundamental permissibility of an enquiry as to an employee’s union membership will require clarification at the latest when the envisaged Act on Tariff Unity enters into force, pursuant to which the collective agreement of the union with the most members at a business shall be the applicable agreement. Since it is highly unlikely that the right of enquiry will obtain statutory legitimisation, we can hope that the BAG will take a clear stand on this at this time at the latest.

 

Dr. Alexander Willemsen

 

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2. Legal Developments

 

The Federal Government has, as announced in the Coalition Agreement in 2014, already implemented significant points, respectively initiated the legislative process. This most recently also included the draft bill on the equal placement of women and men in managerial positions in private industry and the public sector, which will introduce a gender quota. Further planned legislation has been announced for 2015, inter alia concerning the supply of temporary workers.

Below, we have summarised the essential legislative amendments, some of which are or should already become effective on 1 January 2015:

 

2.1 German Minimum Wage Act [Mindestlohngesetz, MiLoG]

 

As of 1 January 2015 a minimum wage of 8.50 euros per hour will fundamentally apply to employees in all branches. Until 31 December 2016, however, it will be possible to deviate from this and fall short of the minimum wage through collective agreement on the basis of the German Employee Secondment Act [Arbeitnehmerentsendegesetz, AEntG]. This primarily affects branches in which a (lower) collectively agreed minimum wage currently already exists.

 

The minimum wage will also apply to trainees, insofar as the trainee relationship is not excluded from the scope of application of the Act pursuant to Sec. 22 Subsec. 1 MiLoG.

 

A key provision of the Minimum Wage Act is, in our opinion, Sec. 13 MiLoG. This provision creates an extended compliance obligation, for the principal bears the liability for the fact that the contractor pays the minimum wage. In case of sub-contractor chains, this can mean liability as far as the last link in the chain.

 

What is clear is that the MiLoG contains numerous criteria which are currently the subject of intensive legal debate. Clarification is now expected from the labour courts.

 

In connection with the minimum wage, the Federal Cabinet most recently initiated on 19 November 2014 the Ordinance on the Modification of the Obligation to Record Working Hours pursuant to the Minimum Wage Act and Employee Secondment Act [Verordnung zur Abwandlung der Pflicht zur Arbeitszeitaufzeichnung nach dem Mindestlohngesetz und Arbeitnehmerentsendegesetz] as well as the Ordinance on Notification Obligations pursuant to the Minimum Wage Act, Employee Secondment Act and Temporary Employment Act [Verordnung über Meldepflichten nach dem Mindestlohngesetz, Arbeitnehmerentsendegesetz und dem Arbeitnehmerüberlassungsgesetz]. With these Ordinances, inter alia the recording of working hours of employees with mobile activities will be far easier. Both Ordinances have partially come up against strong criticism from the unions, since they would make it possible to undermine the Minimum Wage Act and the recording duties set forth therein.

 

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2.2 Act to introduce the extra child-raising benefit “Elterngeld plus” with partnership bonus and more flexible parental leave in the German Federal Act on Child-Raising Benefit and Parental Leave

 

The Act not only contains new regulations on child-raising benefit, but also substantial amendments to parental leave pursuant to the German Federal Act on Child-Raising Benefit and Parental Leave [Bundeselterngeld- und Elternzeitgesetz, BEEG], which enters into force on 1 July 2015:

 

  • As previously, parents can take an unpaid leave of absence from their work until the 3rd birthday of their child; in future, 24 months as opposed to previously 12 months may be taken between the child’s 3rd and 8th birthday (Sec. 15 Subsec. 2 sentence 2 BEEG new version). This will no longer require the employer’s consent.
  • According to the new regulation, parental leave after the child’s 3rd birthday must be notified 13 weeks in advance; parental leave before the child’s 3rd birthday still only has to be notified 7 weeks in advance, Sec. 16 Subsec. 1 sentence 1 BEEG (new version).
  • Additionally, both parents can divide their parental leave up into three sections each, as opposed to previously two, Sec. 16 Subsec. 1 sentence 6 BEEG (new version).
  • The commencement of the protection against dismissal is being extended in case of parental leave between the 3rd birthday and 8th completed year of the child’s life to a maximum of 14 weeks prior to the start of the parental leave applied for, Sec. 18 Subsec. 1 sentence 1 BEEG (new version).

 

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2.3 Act for a better reconciliation of family life, home caregiving and work [Gesetz zur besseren Vereinbarkeit von Familie, Pflege und Beruf] (planned entry into force on 1 January 2015)

 

The Federal Government has presented a draft bill to improve the reconciliation of family life, home caregiving and work, which should likewise become effective on 1 January 2015. The aim of the Act is to further develop the German Home Caregiving Leave Act [Pflegezeitgesetz, PflegeZG] and the German Family Caregiving Leave Act [Familienpflegezeitgesetz, FPfZG]. The key contents of the draft bill are as follows:

 

  • For the ten-day caregiving leave which can already be claimed at present by employees pursuant to Sec. 2 PflegeZG, a wage compensation benefit will be paid as of 1 January 2015. As a care support benefit, the statutory nursing care insurance pays 67 percent of the lost gross income.
  • A person who in future wholly or partially leaves his occupation for six months pursuant to Secs. 3, 4 PflegeZG to look after a close relative will in future have a legal claim to an interest-free loan. Unchanged is the fact that the legal claim to a release from employment duties does not exist vis-à-vis employers with 15 or less employees.
  • In future, pursuant to Sec. 2 FPfZG (new version), a legal claim to the 24-month family caregiving leave will exist. Here, caregiving employees can reduce their work hours to as much as a minimum working period of 15 hours per week. The legal claim to family caregiving leave does not apply vis-à-vis employers with 25 or less employees.

 

The draft is currently being handled by the committees of the Bundestag. The Federal Government proceeds on the assumption, however, that the Act will enter into force on 1 January 2015.

 

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2.4 Amendment of the German Workplace Ordinance (planned entry into force 2015)

 

The Federal Cabinet passed a new Workplace Ordinance in October 2014. The amendment still requires approval by the Bundesrat. The new German Workplace Ordinance [Arbeitsstättenverordnung, ArbStättV] contains important new provisions.

The German VDU Workstations Ordinance [Bildschirmarbeitsplatzverordnung, BildscharbV] has been completely integrated into the new Workplace Ordinance with the result that telework unquestionably falls under the Workplace Ordinance in the future, Sec. 1 Subsec. 3 draft Workplace Ordinance [ArbStättV-Entwurf].

The definitions in Sec. 2 ArbStättV-Entwurf are far more specific. For example, inter alia the definition of visual display unit in Sec. 2 Subsec 6 ArbStättV-Entwurf is redefined.

The risk evaluation to be conducted pursuant to Sec. 5 of the German Employment Protection Act [Arbeitsschutzgesetz, ArbSchG] must include all physical and psychological stress in future, Sec. 2 ArbStättV-Entwurf.

 

Jörn Kuhn

 

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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