Employment Law22.03.2021 Newsletter

Focus on Labor Law - 1st quarter 2021

It was to be expected that, due to the increased use of home offices during the pandemic, the courts would also increasingly have to deal with this form of work. Not only are issues arising directly from the use of the home office, such as employees’ reimbursement claims or employers’ recall options, the home office is also increasingly finding its way into legal assessments of unfair dismissal actions, as a decision of the Labour Court [Arbeitsgericht, ArbG] of Berlin shows. However, in our first "Labour Law Focus" of 2021 we also present other interesting decisions, such as those of the Federal Labour Court [Bundesarbeitsgericht, BAG] on "blank" dismissals or of the Regional Labour Court [Landesarbeitsgericht, LAG] of Düsseldorf on the reduction of holiday entitlement during short-time work. Of course, we also inform you as ever of important legal developments. 

1. New case law

1.1 The extraordinary "blank" notice of termination

1.2 Home office employment as a less severe measure than dismissal?

1.3 No commuting accident when working in the home office

1.4 Automatic reduction of the holiday entitlement in the event of zero short-time work

1.5 BAG guidance on prior employment when limiting the term of a contract without material reason

1.6 Action for equal pay - presumption of discrimination on grounds of gender

1.7 Non-company employees on the central works council

1.8 Unlawful regulation of child supplements in social plans

1.9 No adjustment of pension commitments for accounting reasons

1.10 Works council membership does not expire when an employee is released from work duties 

2. Legal developments

2.1 Postings to the United Kingdom - what you need to know now

2.2 Implementation of the “Whistleblower” Directive: attack on trade secrets? 

1. New case law                                                                                                   

1.1 The extraordinary "blank" notice of termination

For the effectiveness of an extraordinary termination within the meaning of § 626 German Civil Code [Bürgerliches Gesetzbuch, BGB], it is not necessary that the employer has knowledge of a good cause [“wichtiger Grund"] at the time of declaring the termination. It can also declare a “blank” dismissal. The decisive factor is that such a cause already at least objectively exists at the time in question.

In the context of a ruling on a complaint against denial of leave to appeal, the BAG clarified that the employer can also effectively declare a termination without notice if, at the time of receipt of the notice, it could only hope that a good cause for the extraordinary termination would still "come to light" in the course of the anticipated unfair dismissal dispute (decision of 12 January 2021 - 2 AZN 724/20). The legal system does not in any way disapprove of the employer’s initially giving notice of dismissal without there being even the slightest viable reason for it. This is due to the fact the employer may indeed hope for the fiction of the termination’s validity on grounds that the employee has failed to lodge a complaint in due time pursuant to §§ 4 and 7 German Unfair Dismissals Act [Kündigungsschutzgesetz, KSchG] or also hope for a court settlement. Since the only decisive issue is whether a good cause at least objectively existed at the time of the dismissal, the employer’s subjective knowledge of such cause at the time of the employee’s receipt of the dismissal is irrelevant. A boundary only has to be drawn where the dismissal seems unethical, reprimanding or discriminatory. Accordingly, it is also irrelevant whether the originally invoked reason for the termination was already time-barred when notice of termination was given (§ 626 (2) BGB).

The decision is welcomed not least because of its clarity. It considerably increases the employer's options for action. Cases are certainly conceivable in which the employer, at the time of declaring an immediate dismissal, is not (yet) certain about individual misconduct on the part of the employee and where the prerequisites for a dismissal on grounds of suspicion do not (yet) exist, but where the employer already wishes to declare an immediate dismissal at short notice for a wide variety of reasons. According to this case law, the employer can use the duration of the unfair dismissal dispute to uncover serious breaches of duty that have already been committed by the employee and to introduce them into the ongoing proceedings. Of course, one should not forget that this also requires the prior involvement of any existing works council.  

Kathrin Vossen

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1.2 Home office employment as a less severe measure than dismissal?

Due to the corona pandemic, the use of home offices has quite strongly increased and many employees now prefer it as a working model far more than before, also and especially for the time after the corona crisis. However, this also has an impact on the provisions on protection against unfair dismissal. For example, in its decision of 10 August 2020 - 19 Ca 13189/19, the ArbG Berlin granted an unfair dismissal action, deeming the possibility of continuing the employment of the employee affected by a termination pending a change of contract in the form of home office employment to be a less severe means than having her transfer to another location of the defendant.

The dispute concerned the planned closure of a branch in Berlin where the claimant worked as a sales assistant. The employer terminated the claimant's employment by termination pending a change of contract and at the same time offered her continued employment in Wuppertal as her place of work. In the Labour Court’s opinion, however, a change in the employment conditions to the effect that the claimant continued her work from home was less drastic and thus a milder means in comparison to the declared termination pending a change of contract. Although employees do not have a fundamental right to a workplace at home, all circumstances of the individual case always have to be examined. In the said case, the employer had not explained why the claimant’s physical presence at the employer's site in Wuppertal was necessary for her to perform her duties owed under the employment contract. The employee, on the other hand, had substantiated that her work was digitised to such an extent that she could also work from home.

When granting home office work, employers should therefore not only review their previous practice in terms of unfair dismissal provisions, but should also examine the issue of home office work before any operational restructuring or dismissal scenarios in order to effectively counter comparable objections, such as the one described here.

Isabel Hexel

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1.3 No commuting accident when working in the home office

The continuous employment of many employees from the home office has repeatedly given rise to the question of whether and to what extent accident insurance protection exists for employees who work from home. An accident occurring on the way to commence work in the home office certainly does not constitute a commuting accident that would be covered by the statutory accident insurance - unlike an accident on the way to the employer's premises.

According to § 8 German Social Code Book VII [Sozialgesetzbuch VII, SGB VII], insurance cover under the statutory accident insurance scheme in principle also includes accidents on ‘routes’ within the domestic sphere. Contrary to the previous instance, however, the Regional Social Court [Landessozialgericht, LSG] North Rhine-Westphalia established in its ruling of 09 November 2020 - L 17 U 7487/19 that an employee who injures himself on the way to his study to commence home office work does not enjoy insurance protection under the statutory accident insurance.

The claimant, an area sales manager in field service, had fallen down the stairs on his way to his study at home and had sustained a fracture of a thoracic vertebra. The sued accident insurance institution did not want to recognise the accident as an occupational accident pursuant to § 8 (2) SGB VII, since the fall had occurred in a private stairwell. The LSG North Rhine-Westphalia agreed with this conclusion. In order to be covered by the insurance protection, the accident had to occur either on the way to or from the place of work connected with the insured activity or on an insured business-related route [“Betriebsweg”]. According to the established case law of the Federal Social Court [Bundessozialgericht, BSG], recognition as a commuting accident required that the employee passed through the outer door of his home. The judges also rejected an accident on a business-related route, as this would require that the ‘trip’ was made during the course of an insured activity, was part of the insured activity and was therefore equivalent to work. Since the claimant was only on his way to commence work in his home office when he fell, this was not such a business-related route.

The decision is in line with the case law on accident insurance coverage in the home office and thus comes as no surprise. Although the boundary of the outer door does not apply to business-related routes in case of work in the home office, it remains the decisive threshold for accident insurance protection in the event of a commuting accident.

Alexandra Groth

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1.4 Automatic reduction of the holiday entitlement in the event of zero short-time work

An employee's holiday entitlement is automatically reduced proportionately in the event of zero short-time work. This was recently decided by the LAG Düsseldorf in its ruling of 12 March 2021 - 6 Sa 824/20.

In the case at issue, the claimant, who worked part-time, sought a declaratory judgement to the effect that she was entitled to the unreduced holiday entitlement of 14 working days for the calendar year 2020, despite the fact that zero short-time work had been introduced at the defendant in June, July and October 2020 because of the corona pandemic. The Düsseldorf Regional Labour Court, like the lower court, dismissed the action. In the court’s opinion, the claimant had not acquired any holiday claims pursuant to § 3 German Federal Holiday Act [Bundesurlaubsgesetz, BUrlG] during the months of zero short-time work. The employee was therefore only entitled to a reduced proportion of her annual leave. For each full month of zero short-time work, the holiday was to be reduced by 1/12 as the mutual performance obligations of the parties had been suspended during the short-time work. Employees on zero short-time work therefore had to be treated as temporarily employed part-time workers, whose holiday leave also had to be reduced proportionately.

The LAG granted the appeal on points of law to the BAG on grounds of the fundamental importance of the matter. However, the BAG is also expected to agree to the automatic reduction of annual holiday in the case of zero short-time work. However, we are proceeding on the assumption that the BAG will carry out the conversion to the exact day using the formula already developed in its ruling of 19 March 2019 - 9 AZR 315/17. The fact that the LAG Düsseldorf assumes an automatic reduction of the holiday entitlement is to be welcomed. Employers who were forced to introduce zero short-time work as a result of the corona pandemic therefore only have to fulfil a proportionately reduced holiday entitlement for their employees. This is also in line with a ruling of the ECJ which, in 2012 - in the wake of the financial crisis – already deemed regulations on the proportionate reduction of annual leave in a social plan to be permissible in case of the introduction of zero short-time work.

Isabel Hexel

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1.5 BAG guidance on prior employment when limiting the term of a contract without material reason

According to decisions of the German Federal Constitutional Court [Bundesverfassungsgericht, BVerfG], the ban on limiting a contractual term without material reason following an employee’s prior employment with the same employer as standardised in § 14 (2) sentence 2 German Part-Time and Fixed-Term Employment Act [Teilzeit- und Befristigungsgesetz, TzBfG] does not apply if its application would be unreasonable (decision dated 06 June 2018 - 1 BvL 7/14 and 1 BvR 1375/14). This can be the case if the prior employment was of a completely different nature, e.g. in the event of a change of occupation in the meantime or the completion of training and further educational measures. The BAG has now clarified in its decision of 16 September 2020 - 7 AZR 552/19 that not every type of further education meets this requirement, but that an interruption in the content of the employment biography is required.

The suing employee had completed a university degree in the field of technical building equipment in 1988, gaining the graduate engineer qualification “Dipl.-Ingenieur”. After various jobs at other companies, the claimant worked for the defendant for a fixed term of two years until 13 April 2011 at Staatsbetrieb Sächsisches Immobilien- und Baumanagement, inter alia processing the preparation and execution of construction contracts. After completing a course of study parallel to work, with which the claimant gained a degree in "administration and business management", and after working for another company, he was re-employed by the defendant for a fixed term of two years as of 01 June 2015 as an advisor in the "operational safety" unit. The claimant then asserted the invalidity of the limitation of his contractual term on the basis of his prior employment.

The BAG ruled in the claimant’s favour and established that, in case of a constitutionally conform interpretation of § 14 (2) sentence 2 TzBfG, not every training and further educational measure led to an interruption of the employment biography which would make the prohibition of the repeated limitation of the contractual term without material reason unreasonable. Rather, it is necessary that the new activity requires the knowledge or skills acquired in the course of the further educational measure and that these differ substantially from those which were required for the prior employment. In the case up for  decision, however, the claimant's employment biography did not take a new direction as a result of the further educational measure, as his prior employment had already provided him with skills which he also needed for the new activity.

In view of the requirements of the BVerfG, the BAG’s decision comes as no surprise. However, it should be noted that it places extraordinarily high requirements on the unreasonableness of the application of § 14 (2) sentence 2 TzBfG. Employers should therefore carefully consider limiting the term of a contract, even if employees have acquired new qualifications as a result of further training, and should check whether this training actually causes an interruption in the employment biography and is reflected in the new job.

Anja Dombrowsky

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1.6 Action for equal pay - presumption of discrimination on grounds of gender

If a woman sues for the same remuneration for the same work or work of an equal value and if, according to information provided by the employer, the comparative pay of the male colleagues is higher than the woman’s pay, this circumstance alone regularly justifies the refutable presumption that the discrimination in pay is on grounds of gender (BAG, judgement dated 21 January 2021 - 8 AZR 488/19).

In 2018, the claimant, who is employed by the defendant as a department head, received information from the defendant pursuant to §§ 10 et seqq. German Act on Transparency in Wage Structures [Entgelttransparenzgesetz, EntgTranspG]. This showed that the comparative pay (median pay) of the male heads of department employed by the defendant was higher than that of the claimant in terms of both basic pay and bonus. In her action, the claimant claimed payment of the difference between the basic remuneration and bonus paid to her and the median remuneration notified to her. The lower court had dismissed the action, arguing that there was a lack of sufficient indications within the meaning of § 22 German General Equal Treatment Act [Allgemeines Gleichbehandlungsgesetz, AGG] to justify the presumption that the claimant had experienced the pay disadvantage because of her gender.

The BAG did not agree with this, stating instead that the claimant had experienced a direct disadvantage within the meaning of § 3 (2) sentence 1 EntgTranspG vis-à-vis the male comparison person notified to her, as her remuneration was lower than that of the comparison person. This circumstance also justified the presumption - which could be refuted by the employer - that the claimant had experienced the pay disadvantage "because of her gender". The BAG was unable to determine on the basis of the previous findings whether the defendant, who bore the burden of representation and proof in this respect, had refuted this presumption in accordance with the requirements of § 22 AGG as interpreted in conformity with Union law, and therefore referred the proceedings back to the court of appeal. 

This much noticed case law of the BAG, as well as the new proposed EU directive to ensure wage transparency and better access to justice in cases of wage discrimination, lead us to conclude that equal pay will become an increasingly important issue in the future. Employers should therefore review existing pay structures in good time and be aware of any pay differences between male and female colleagues in order to equalise them or, in case of doubt, be able to prove that these are not cases of pay discrimination on grounds of gender.

Jennifer Bold

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1.7 Non-company employees on the central works council

Normally, members of the representative bodies of shop constitution law are employees of the company. The LAG Baden-Württemberg has now clarified that this does not have to be the case with a central works council.

If several companies jointly run a business, it is referred to as a joint venture. If a works council is elected there, it is usually made up of employees from the participating companies; however, depending on the election results, it is also possible that employees of a participating company are not elected. If the founding companies of the joint venture have central works councils, this then raises the question of who the works council of the joint venture should delegate to them.

In its decision of 05 November 2020 - 14 TaBV 4/20, the LAG Baden-Württemberg clarified that the works council of a joint venture may also delegate "non-company" employees to the central works councils of the companies participating at any time. An effective delegation to the central works council pursuant to § 47 (2) German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG] does not require an employment relationship with the respective founding company for which the central works council was formed.

Thus, there is a growing list of regional labour courts that do not make membership of the central works council dependent on the respective delegated member actually being an employee of the founding company (cf. LAG Hesse dated 11 December 2017 - 16 TaBV 95/17 and LAG Munich dated 22 December 2017 - 9 TaBV 93/17). The specialist literature, on the other hand, is divided on this issue: many voices criticise this as a breach of the system when employees from outside the company have a say in the affairs of employees with whose employer they have no legal relationship.

As the appeal to the BAG has been admitted, this dispute will soon be clarified by the highest court. The BAG is likely to confirm the decision of the LAG Baden-Württemberg. In future, this should open up additional strategic opportunities for works councils in joint ventures of companies which themselves have central works councils: the secondment of a "non-company" member to the respective central works council can, for example, increase the flow of information from one participating founding company to another founding company of the joint venture. In such cases, the protection of secrets under shop constitution law (cf. § 79 BetrVG) will be of particular importance.

Dr. Alexander Willemsen

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1.8 Unlawful regulation of child supplements in social plans

In its decision of 28 October 2020, the LAG Hesse ruled that the general attachment of a child supplement to the child’s entry on the income tax card within a social plan constitutes an indirect discrimination against women and is therefore inadmissible.

The claimant, who had two dependent children, was subject to a social plan agreed between the sued employer and the works council which, in addition to the payment of severance, provided for the payment of a child supplement for each child entered on the income tax card on the qualifying date. The claimant did not receive any child supplement because she had chosen income tax class V and the income tax deduction feature "child allowance" was not taken into account in this tax class.

The LAG Hesse granted the claimant's appeal. The claimant was entitled to the child supplement under the social plan in connection with the principle of equal treatment under shop constitution law pursuant to § 75 (1) BetrVG, since the provision in the social plan was invalid. In principle, child allowance is taken into account as an income tax deduction feature under §§ 38b (2), 39 (1), (4) No. 2 German Income Tax Act [Einkommensteuergesetz, EStG]. However, the provision in the social plan would exclude those employees who had chosen income tax class V, since child allowances were only taken into account for tax classes I to IV. This provision contained unequal treatment that was indirectly based on gender, since income tax class V is chosen predominantly by women. Married couples often opt for the income tax class combination III/V if there are considerable differences in the amount of their gross earned income. It is mostly women who earn the lower income, also because of part-time work. On this basis, the distinguishing criterion, the income tax deduction feature "child allowance", has the effect of an indirectly discriminatory feature within the meaning of § 1 AGG, with it being understood that no objective justification for this exists.

When concluding social plans with the works council, the requirements of the AGG should fundamentally be examined on the basis of the principle of equal treatment under shop constitution law pursuant to § 75 (1) BetrVG, so that – in line with the case law of the Higher Labour Court of Hesse - the fundamental existence of children entitled to maintenance is taken into account when granting child supplements.

Annabelle Marceau

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1.9 No adjustment of pension commitments for accounting reasons

In its ruling of 08 December 2020 - 3 AZR 64/19, the BAG ruled on the admissibility of an adjustment of pension provisions on the basis of a disruption of the transaction basis: changes in accounting regulations and the current low-interest phase are not sufficient for this.

The claimant receives a widow's pension on the basis of a pension promise made to her deceased husband in 1976. In this pension promise, the sued employer of the deceased husband had undertaken to increase the pension payments in accordance with the relevant collective agreement salaries. It also complied with this until 2016, when it subsequently suspended the increase and invoked a disruption of the transaction basis. As a result of the German Accounting Law Modernisation Act [Bilanzrechtsmodernisierungsgesetz, BilMoG], it had had to allocate considerably higher reserves in its commercial balance sheet, with the result that the present value of the pension promise had doubled in the meantime.

Although the BAG affirmed in its decision that an adjustment of pension provisions by way of a disruption of the transaction basis was fundamentally possible, the prerequisites for this were not fulfilled in the case at hand. In all events, the change in the legal situation and the considerable additional financial burden associated with this did not justify it. Even the current low-interest phase does not lead to an equivalent interference. The asserted increase in the reserves was already included in the pension promise and was not necessarily due to statutory changes. Reserves are merely an instrument of internal financing. To the extent these have an impact on the company's balance sheet, this does not yet justify an adjustment of the pension scheme, since the statutory risk distribution in the case of occupational pensions does not provide for an adjustment of current occupational pensions on grounds of a disruption of the transaction basis, even in case of economic hardship.

As a result, companies that have made comparable pension promises in the past will have to continue to ask themselves how they can find a legally and economically viable solution during the continuing low-interest phase and with the increasing obligations from pension commitments. The options of possible "de-risking" measures are manifold. After this decision, however, the argument of a disruption of the transaction basis will have no prospects of success.

Jörn Kuhn Annabelle Marceau

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1.10 Works council membership does not expire when an employee is released from work duties

If an employee is released from his work duties during his notice period, this does not lead to the expiry of his membership of the works council pursuant to § 24 No. 4 BetrVG. Membership only ends with the legal end of the employment relationship pursuant to § 24 No. 3 BetrVG (LAG Hessen, decision dated 21 December 2020 - 16 TaBVGa 189/20).

The parties had concluded a termination agreement [“Aufhebungsvertrag”] in which, in addition to the termination of the employment relationship as of 31 December 2021, the employee’s irrevocable release from work duties was also agreed. Subsequently, a dispute arose as to whether the employee had also lost his works council office due to the termination agreement and the garden leave agreed therein.

The LAG Hesse decided in the employee’s favour - in contrast to the ArbG Frankfurt a.M. prior thereto: the works council office was not lost through the conclusion of the termination agreement. The time of the legal end of the employment relationship was decisive for the termination of the membership pursuant to § 24 No. 3 BetrVG. Furthermore, the garden leave did not lead to a subsequent loss of eligibility for election pursuant to § 24 No. 4 BetrVG. The parties had only regulated their individual contractual legal relationship (termination of the employment relationship, garden leave) in the termination agreement. However, this did not alter their relationship under collective bargaining law. It would easily have been possible for the parties involved to have also agreed on the employee’s resignation from the works council as per a specific date. Their silence therefore had to be understood to mean that the termination agreement was not to have any direct effect on the works council's activities. At the same time, the Higher Labour Court of Hesse clarified that the garden leave did not lead to a loss of eligibility for election pursuant to §§ 24 No. 4, 8 BetrVG. § 38 BetrVG shows that even works council members who do not perform work and are therefore not subject to any right of direction under their employment contract are part of the company. If their integration into the company were to depend on the actual performance of the main duties under the employment contract, this would oppose § 38 BetrVG.

When ending the employment relationship with a works council member by means of a termination agreement, a provision should therefore simultaneously be included on the date for his relinquishment of the works council office.

Johannes Peter Kaesbach

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2. Legal developments

2.1 Postings to the United Kingdom - what you need to know now

The United Kingdom's withdrawal from the European Union (EU) on 01 January 2021 has brought far-reaching changes. On 30 December 2020, however, the EU and the United Kingdom agreed on a Trade and Cooperation Agreement that, among other things, sets out rules for foreign workers wanting to work in the United Kingdom. The Federal Republic of Germany’s approval of the Protocol on Social Security Coordination to the Trade and Cooperation Agreement of 30 December 2020 is also imminent.

Possible applications under the Trade and Cooperation Agreement

In principle, the Trade and Cooperation Agreement distinguishes between different categories of entry into the country for business purposes:

  • The Trade and Cooperation Agreement generally allows EU citizens to enter the country for short-term business trips without a work permit or similar authorisation. The permitted duration of stay is up to 90 days within a six-month period. Permitted short-term business travel activities include attending meetings, conferences and consultations with business partners, attending trade fairs and exhibitions, and the conducting of business transactions by management and supervisory personnel. The reason for the business trip must be supported by appropriate documents upon entry.
  • Under the Trade and Cooperation Agreement, the entry of EU nationals for the purpose of providing services or freelance activities is now only possible subject to strict conditions, since, among other things, the activities are restricted to certain areas and strict requirements are placed on the characteristic as a provider of contractual services. Only those who meet all the requirements can apply for a visa to enter the country ("Temporary Worker - International Agreement Worker visa (T5)"). The length of stay may not exceed the duration of the service contract and can be a maximum of 12 months.
  • In principle, intra-corporate postings are only permitted for executives, specialists or trainees, whereby the permissible length of stay is up to three years for executives and specialists, up to one year for trainees and up to 90 days within a period of six months for business travellers entering the country to establish a business. For employees who are posted from abroad and stay in the UK for more than 14 consecutive days, the employer must take out special insurance (employers' liability insurance).

Social security and taxation

The social security implications of work-related stays by EU citizens in the UK are governed by the Protocol on Social Security Coordination in the Trade and Cooperation Agreement, whose application has yet to be approved by the Federal Republic of Germany.

Insofar as it is approved, the social security liability will initially be based on the place of work. In deviation from the rule, in the case of postings, a worker temporarily posted abroad continues to be subject to social security contributions in the country in which his employer is established, provided that the posting lasts no longer than 24 months and the posted worker does not replace another posted worker. Proof of the existing social security obligation in the country of origin is still provided by the so-called A1 certificate. Under the UK-German double taxation agreement (DTA), income from non-self-employed work is taxed in the country in which the individual is resident. If, on the other hand, the work is carried out in the other contracting country - e. g. in the case of a posting - the income is taxable in that country. However, the exclusive tax liability in the country of residence continues to apply if the temporary work in the other country does not exceed 183 days in a tax year and the payment is made by an employer resident in the country of residence.

Annabelle Marceau

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2.2 Implementation of the “Whistleblower” Directive: attack on trade secrets?

Only recently, the German Federal Ministry of Justice presented a draft for implementing the so-called "Whistleblower" Directive. Here, time is of the essence, as the Directive has to be implemented by mid-December 2021.

On 16 December 2019, Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons reporting infringements of Union law already entered into force. The draft of the so-called German Whistleblower Protection Act [Hinweisgeberschutzgesetz, HinSchG], which has now been presented, is to transpose the Directive into German law. The draft has already received much criticism. Almost all companies will be affected by the new law. We have summarised the most important key points of the draft below: 

The draft bill of the HinSchG that has now been presented has already come up against much criticism. Here are the most important key points of the draft:

Among other things, the draft bill contains provisions on the whistleblower procedure and the protection of whistleblowers (including documentation requirements, deadlines for feedback and follow-up measures such as internal investigations), which apply to all German companies with employees. Companies with at least 50 employees and financial service providers will be obliged to set up internal whistleblower offices. In addition, external reporting offices will be established at the Federal Data Protection Commissioner and the Federal Financial Supervisory Authority. In principle, whistleblowers should be able to choose which reporting office they contact.

All employees are to be protected, even if their employment relationship has ended in the meantime or has only just begun. The scope of protection covers the oral or text-form reporting of violations of national law as well as European law provisions and their implementation, such as violations of the German Working Hours Act [Arbeitszeitgesetz, ArbZG] or violations of the establishment of reporting offices. However, whistleblower offices are not going to be obliged to follow up anonymous tips - a thoroughly positive aspect.

Regardless of the reporting channel chosen, whistleblowers must not suffer any disadvantages. For example, dismissals or non-promotions related to reporting violations are prohibited. A reversal of the burden of proof is also envisaged: for example, if a whistleblower reports a violation and is subsequently dismissed, the company must prove that this action is not related to the report or the company will otherwise be liable for damages.

The draft needs critical scrutiny with regard to the regulations on business secrets. Insofar the draft bill provides that, irrespective of the whistleblower’s motive, the disclosure of information is permissible if the whistleblower has sufficient reason to believe that such disclosure is necessary. This may open the floodgates to the unauthorised disclosure of trade secrets, whilst recourse against the whistleblower is only limited.

Should the law be passed in the form of its draft, companies with more than 50 employees and up to 249 employees will have a two-year period in which they must set up the reporting office: in this case the obligation will first apply as of 17 December 2023. These companies are therefore still given time to adapt to the new requirements. For companies with at least 250 employees and for financial service providers, however, the new legal obligations will already apply when the law comes into force.

The imminent law therefore calls for action. Internal reporting systems are part of companies’ compliance structures and need to be expanded. The close interaction of aspects of employment law and data protection law with the implications of intellectual property law should not be underestimated in this connection.

Jörn Kuhn

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Jörn Kuhn

Jörn Kuhn

PartnerAttorneySpecialized Attorney for Employment Law

Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 69 707968 140
M +49 173 6499 049

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Dr. Alexander Willemsen

Dr. Alexander Willemsen

PartnerAttorneySpecialized Attorney for Employment Law

Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 221 2091 551
M +49 173 6291 635

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Isabel Hexel

Isabel Hexel

PartnerAttorneySpecialized Attorney for Employment Law

Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 221 2091 348
M +49 172 1476 657

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Alexandra Groth

Alexandra Groth

PartnerAttorneySpecialized Attorney for Employment Law

Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 221 2091 341
M +49 152 2417 4406

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