Employment Law26.06.2020 Newsletter
With this "Focus on Labor Law", we are pleased to present you the new design of our previous newsletter. Our Focus on Labor Law will continue to inform you in the usual manner at the end of each quarter about current labor court decisions and legal developments of particular relevance to your company’s personnel work. This issue also contains a "Corona Update" with the most important current labor law aspects of the pandemic.
1.1 Claim to the implementation of a social plan
1.2 The normative continued validity of a group shop agreement after the company leaves the group
1.3 Transfer of business without the assumption of operating resources
1.4 No precautionary participation of the representative body for severely disabled persons
1.5 Receipt of a notice of dismissal on the same day as it was dropped into the house mailbox
1.6 Obligation of employers to introduce a system to record working time
1.7 Employer’s liability in case of insufficient parental benefit due to the belated payment of wages
Can the works council have differences of opinion on the application of a social plan resolved at the employer's expense? This question has now been decided by the German Federal Labor Court (Bundesarbeitsgericht - BAG) (BAG dated 25 February 2020 - 1 ABR 38/18).
The parties disputed the interpretation of a social plan that capped the possible severance payment at € 300,000.00 gross. The provision capping the severance payment was followed by two paragraphs that regulated supplements for dependent children and employees with severe disabilities. This was followed by a further capping provision, according to which the severance payment was limited to the maximum compensation up to the earliest possible receipt of an undiminished statutory old-age pension. The employer was of the opinion that the supplements for dependent children and employees with severe disabilities fell under the capping limit of € 300,000.00 gross. In addition to lawsuits filed by individual employees for the payment of higher severance payments, the central works council itself requested the resolution of this difference of opinion in administrative decision proceedings.
In its decision dated 25 February 2020, the BAG deemed the procedure of the central works council admissible. The central works council was not engaging in any "inadmissible litigation", rather, it was pursuing its own implementation claims under shop constitution law. In the context of such an implementation claim, it was also entitled to seek the application of a social plan provision that was subject to interpretation. Since, in the opinion of the BAG, the wording, system and purpose of the relevant social plan provision indicated that the supplements did not fall under the cap limit of € 300,000.00 gross and therefore also had to be disbursed even if the factored severance pay was already subject to a cap insofar, the motion of the central works council was successful overall.
The BAG's decision once again makes it clear that great care needs to be taken when defining the cap limit in a social plan. In particular, it must clearly show which components of possible cash benefits to employees under the social plan are subject to the respective cap. However, probably of even greater relevance is the fact that the works council can, on its own authority, have legal issues which would otherwise have to be resolved by employees at their own risk in the context of payment actions decided by the courts - and that is to say at the employer’s expense. The BAG has expressly permitted this "support"; this will not only help the pending payment claims of employees to a successful conclusion, but will possibly also motivate other employees who have so far refrained from taking legal action due to uncertainty to do so.
Dr. Alexander Willemsen
A group shop agreement applicable at the business of a company belonging to a corporate group also continues to apply as a norm if the company leaves the corporate group due to a share deal and does not fall under the scope of a group shop agreement with the same regulatory content applicable at the new corporate group (BAG dated 25 February 2020 - 1 ABR 39/18).
At the MK-AG Group, a group shop agreement on company pension schemes had existed since 1988. This applied to all employees who were in an employment relationship with a company of the group when reaching retirement age. MK-AG was also one of the companies that fell under the scope of the group shop agreement. The shares of MK-AG were transferred to a non-group company in 1999. In 2001, MK-AG transferred the assets necessary for the production of cast aluminium wheels, consisting of 300 employees and several machines and workplaces, to the newly established complainant. In February 2017, the complainant terminated the group shop agreement as of 31 December 2017 as a precautionary measure vis-à-vis the works council established there.
The works council took the legal view that the group shop agreement continued to apply as an individual shop agreement after MK-AG had left the group and also after its transfer to the complainant. As a result of the termination, the pension scheme was only closed to employees who had joined the company after the termination date and to those who would still join the company.
In its decision, the BAG states that, in the event that the company leaving the group operates several businesses, the group shop agreement continues to apply as a central shop agreement and in the event that it only operates one business, it continues to apply as an individual shop agreement. Even a reference to the group in the contents of the agreement does not alter this fact. The only exception to this rule is if the content of the provision in question necessarily requires membership of said group or if a group shop agreement with the same regulatory content already exists at the new group.
With its decision, the BAG has now made a Supreme Court ruling on a difference of opinion that has been disputed over in the legal literature for years. In practice, this means that corporate groups that take over companies with one business from an external corporate group must continue group shop agreements that are in force at the external corporate group as individual shop agreements. This only does not apply, however, if the provision in question necessarily requires membership of said group or if a corresponding group shop agreement already exists at the new group.
The European Court of Justice (ECJ) recently decided that a business with a high level of operating resources can also be transferred by way of a transfer of business according to § 613a German Civil Code (Bürgerliches Gesetzbuch - BGB) if a substantial part of the workforce, but not operating resources, are taken over.
In a procedure referred to the ECJ for preliminary ruling, the Cottbus Labor Court (Arbeitsgericht - ArbG) raised the question of whether a transfer of a business could be assumed if a substantial part of the workforce, but not the operating resources used (in this case, buses), were taken over by another bus company. The ECJ had previously negated this in a similar case (docket No. C-172/99). However, the two cases differed significantly in one respect: in the present case up for decision, the bus company OSL had been awarded the contract after the transport services of a rural district had been put out to tender again and the previous operator SBN had not submitted a new bid. SBN ceased operations and dismissed all employees, some of whom were given follow-on employment with OSL. The SBN buses, on the other hand, were not taken over because they did not meet the tender requirements (age, environmental standards, etc.) and were therefore not economically viable for OSL.
The ECJ ruled on 27 February 2020 (docket No. C-298/18) that the assumption of operating resources is not absolutely necessary for the transfer of a business with a high level of operating resources. The ECJ states in somewhat unfortunate wording that it had economically not been sensible for the new operator to take over the existing bus fleet. However, the decisive factor is not the economic considerations of a decision to assume assets, but the actual transfer of an economic entity preserving its identity. However, the ECJ did specify that SBN also would not have been able to meet the tender requirements with its buses, so that these operating resources cannot be part of an entity preserving its identity. Ultimately, however, the ECJ assumed a transfer of business on grounds of the assumption of a substantial part of the workforce.
The decision makes it clear once again that an overall consideration of the situation always needs to be carried out when examining the economic entity, which must be continued whilst preserving its identity in order to qualify as a transfer of business. In this respect, it is not sufficient to rely on the assumption of supposedly identity-defining operating resources.
If a decision has not yet been made on an employee's application for equal treatment, no precautionary involvement of the representative body for severely disabled persons is required for a valid transfer of the employee to another workplace. This also applies if the employee has informed the employer of his application.
The employee had a degree of disability of 30. In February 2015, she applied to the German Federal Employment Agency (Bundesagentur für Arbeit) for equal treatment with a severely disabled person and informed the employer about her application. In November 2015, the latter transferred the employee to another job for a period of six months. There was no prior involvement of the representative body for severely disabled persons (Schwerbehindertenvertretung - SBV) pursuant to § 178 (2), sentence 1, German Social Code Book IX (Sozialgesetzbuch IX - SGB IX). By decision dated April 2016, the Federal Employment Agency established the equality pursuant to § 151 (2) SGB IX with retroactive effect as of the date of application in February 2015.
With reference to its participation rights under § 178 (2), sentence 1 SGB IX and the retroactive effect of the equality decision, the SBV sought forbearance from transferring the employee to another job without the prior participation of the SBV during the ongoing equal treatment proceedings.
In its decision dated 22 January 2020 (docket No. 7 ABR 18/18) the BAG states that the scope of application of § 178 (2) sentence 1 SGB IX does not include employees whose equality has not yet been established. In contrast to severely disabled employees (schwerbehindert) protected by law, for whom existing legal protection is just established through their recognition as a severely disabled person, the protection of less than severely disabled employees (einfach behindert) is first established through the equal treatment. The retroactive effect of the decision does nothing to change this. There were no indications whatsoever to suggest an obligation to involve the SBV as a precautionary measure.
The BAG's decision is to be welcomed as helpful clarification. It eliminates a previously existing potential for conflict with the SBV and thus also indirectly with the less than severely disabled employee affected by a measure. It is good to know that the BAG has rejected bringing forward the employer's participation obligations vis-à-vis the SBV to an earlier time in the case of applications for equal treatment that have not yet been decided. It is also helpful that the BAG is refraining from making the necessity of SBV participation dependent on the employer’s mere knowledge of an application for equal treatment by a less than severely disabled employee.
If a notice of dismissal is put into an employee's house mailbox, it is received by him on the same day if he verifiably took it out of the mailbox on the same evening. In this case, the usual postal delivery times are irrelevant.
The Regional Labor Court (Landesarbeitsgericht - LAG) of Munich ruled in its judgment of 17 December 2019 (docket No. 6 Sa 543/18) that a notice of dismissal is received by the employee at the time when the employee indisputably actually took the letter out of his mailbox. Thus, not applicable in this case are the principles developed by the BAG for the receipt of notices of dismissal, according to which the decisive factor is when - under normal circumstances according to generally accepted standards and taking into account the usual mail delivery times - the next emptying of the mailbox can be expected (cf. BAG dated 22 August 2019 - 2 AZR 111/19). This may mean that a notice of dismissal is not deemed to have been received until the next day.
The defendant employer's notice of dismissal dated 27 November 2015 was dropped into the claimant’s house mailbox on 30 November 2015 after the usual postal delivery times. According to his own submission, the claimant took the letter out of his mailbox in the evening of 30 November 2015, but was of the opinion that the receipt of the notice of dismissal was not until 1 December 2015.
The LAG Munich confirmed that, according to generally accepted standards, the different local mail delivery times did have an influence on the next emptying of the house mailbox and the resulting receipt. However, this was irrelevant if it was established that the letter had actually been received by the employee as addressee on the date on which it was dropped into the mailbox by his emptying of the mailbox. In this case, despite the fact that it had been dropped into the mailbox after the usual postal delivery times, one could not proceed on the basis that the letter had been received on the following day.
A verifiable or undisputed emptying of the mailbox after the usual postal delivery time means that the notice of dismissal was already received at such time. Generally, however, it remains the case that the time of receipt of a notice of dismissal when dropped into the mailbox has to be assessed according to generally accepted standards and taking into account the different local delivery times. In practice, one should bear in mind that proving actual (earlier) receipt is likely to prove as difficult for the employer as detailed knowledge of local postal delivery times. The employer is therefore well advised to drop a notice of dismissal into the employee's mailbox on the penultimate possible day.
About a year ago, the ECJ made a landmark decision on the mandatory recording of working time. In the press, the decision was described as the "end of trust-based working time". For the first time, a German labor court has now attributed a direct effect to this ruling: if an employer does not have such a time-recording system, this goes to its detriment in the remuneration process.
According to the ECJ ruling of 14 May 2019 (docket No. C-55/18), the employer is obliged to set up an 'objective, reliable and accessible system for recording working time'; this is derived from an interpretation of the European Working Time Directive in the light of Article 31(2) of the Charter of Fundamental Rights. Up to now, it was disputed whether this decision has direct effect or merely imposes an obligation on the German legislator to implement it. The Emden Labor Court has now, by legally binding judgment of 20 February 2020 (docket No. 2 Ca 94/19), established facts and attributed a direct effect to said judgment.
In a legal action for remuneration, an employee had claimed that he had been paid for less hours than he had actually worked. He referred to his privately kept records of hours. The employer endeavored to defend the lawsuit by presenting a construction diary, but without success. As the employer had not fulfilled its obligation to set up an "objective, reliable and accessible system for recording working time", it could not specify what work it had given the employee and when. This lack of documentation goes to the detriment of the employer. This is because the employer is directly affected by the obligation to keep a record of working hours, with the result that there is no need to interpret § 16(2) German Working Time Act (Arbeitszeitgesetz - ArbZG) in conformity with the Directive or to transpose the Working Time Directive into German law.
Employers are therefore advised to already review their current working time recording system today and to adapt it to the requirements of the ECJ. As many companies are currently on short-time work, during which employers have to ensure correct and reliable time recording anyway, this could be a good occasion to already address the issue today, even if the details of a German implementation are not yet known.
Parental benefit is a state benefit in substitution of remuneration. However, according to the case law of the Düsseldorf Higher Labor Court (Landesarbeitsgericht - LAG), the employer is liable for culpably caused losses in the receipt of parental benefit if these losses were caused as a result of the belated payment of wages to the employee.
In April 2020 (judgement of 27 April 2020 - 12 Sa 716/19), the Regional Labor Court of Düsseldorf addressed the issue of whether the employer is obliged to reimburse the employee for the difference between the parental benefit received and the parental benefit that actually was to be received due to the failure to consider belated wage payments in the calculation of the claim to parental benefit.
The employer did not pay a pregnant employee her gross monthly wage for October to December, to which she was entitled on grounds of an employment prohibition, until March of the following year. As a result of this, for three months the amount of 0 euros was taken as the basis for the calculation of the parental benefit.
Pursuant to § 2c (1) German Federal Parental Benefit Act (Bundeselterngeld- und Elternzeitgesetz - BEEG), income that is considered as other income for income tax purposes is not taken as a basis for calculating parental benefit. According to the case law of the Federal Social Court of Germany (Bundessozialgericht- BSG), monthly wage payments received by the employee later than three weeks after the end of a calendar year are considered to be such other income, with the result that the back pay in March of the following year was no longer taken into account in the calculation of the employee's parental benefit claim.
Confirming the lower court and admitting the appeal on points of law to the BAG, the Düsseldorf Higher Labor Court proceeded on the basis that the employer had culpably withheld the gross wage for the months October to December, with the result that it owed the employee damages for the resulting monthly difference in parental benefits. The fact that the employer had contested the employment relationship because the employee had not informed it of her pregnancy when she concluded the employment contract could not exonerate the employer in this respect.
The decision clarifies the importance of the employer's obligations when proving the eligibility conditions for employees’ parental benefit claims. The LAG thus extends the obligations under § 9 BEEG to a liability for damages in the event of incorrect payroll accounting. It can be assumed that the BAG will confirm this in the event of a possible appeal on points of law.
With the persistence of the pandemic and its particular impact on the working environment, new questions arise regarding cooperation within the company.
Effective decision-making by the works council is important for companies, since in matters subject to co-determination it is also relevant to the employer’s actions. The corona pandemic has restricted the implementation of co-determination. The legislator has reacted to this and in § 129 of the German Shop Constitution Act (Betriebsverfassungsgesetz - BetrVG) has allowed meetings of works council bodies to be held and resolutions to be adopted by means of video conferences or telephone conferences until 31 December 2020. The only requirement is the assurance that third parties are unable to access the content of the meeting.
The wording of the new regulation does not explicitly stipulate that a video or telephone conference may only be used as a last resort if a face-to-face meeting is out of the question because of the pandemic. In our view, however, the legal ambiguity leaves no room for a new understanding. In principle, face-to-face meetings must be held. Only in exceptional cases, in particular where appropriate premises for meetings are not available either at the employer's premises or externally, can the chairperson of the council revert to virtual meetings by virtue of his leadership function.
If council meetings and resolutions are conducted virtually as the standard, there is doubt as to the effectiveness of the resolutions. This also exposes the employer to the risk that its actions are not covered by effective co-determination agreements and are therefore legally contestable.
Some employees at many companies have now been working from home for more than three months. This is increasingly leading to demands upon the employer for the "reimbursement of expenses”, be it due to the increased use of the home Internet connection or other additional expenses. The everyday use of a home office is increasingly being understood as genuine teleworking, and in this context the demands for employers to set up an off-site workplace at their expense are growing louder.
Here, first and foremost, a clear differentiation has to be made as to whether the employer is only continuing to arrange the home office in order to fulfil its obligations to comply with occupational health and safety standards or whether it has already made the final decision to leave employees permanently in their home offices on a daily basis. In the latter case, the employer must address the question of whether permanent home offices can constitute a change of business that triggers an obligation to compromise interests.
The payment of additional expense reimbursements to employees must also be considered. One should not overlook the fact that the use of a home office also leads to many - in some cases not measurable, however - positive effects for employees, which could be held against a general demand for additional cash benefits.
From the employer's point of view, it is currently essential to ensure that the requirements for implementing home offices are met through existing regulations and to procure their compliance. As the employer's options for checking this are limited, this will usually be limited to information and training. This is necessary for reasons of occupational safety and data protection alone.
If it is not possible to easily transfer employees to the workplace in the event of violations of the home office regulations, in many cases only one personnel measure is currently left.
2.3 Vacation period
With the start of the school summer holidays in the first federal states, the vacation season is now also beginning. However, the corona pandemic is not yet over and many questions are becoming topical (again):
- What happens if an employee travels to a designated risk area? Is it possible to withhold payment on return if he is unable to carry out his employment duties due to quarantine?
- May employees be prohibited from taking holidays outside Germany? What applies if this requirement is violated?
- What happens if employees are subject to quarantine at their holiday destination and it is not possible for them to return home in time?
- Can employees be obliged to use the German or foreign Corona-Warn-App?
- Are employees obliged to state the country and place where they have been after their vacation?
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