Employment Law25.03.2024 Newsletter
Focus on Labor Law 1st Quarter 2024
Labour law is currently showing its most dynamic side:
On 13 March 2024, the European Parliament adopted the world's first statutory regulation on artificial intelligence (AI). The AI Regulation provides the legal framework for the future use of AI in Europe and ensures that manufacturers and users of AI systems respect fundamental rights, security and ethical principles in the European Union. The use of AI has long been a concern for companies in almost all sectors. It was therefore only a matter of time before the first court ruling on labour law issues relating to the use of AI was pronounced.
There was good news for HR practice from the Federal Ministry of Justice [Bundesministerium der Justiz, BMJ] on 21 March 2024: in future, it will be possible to conclude employment contracts digitally. The written form for employment contracts, as introduced through the back door by the new version of the German Act on the Notification of Conditions Governing the Employment Agreement [Nachweisgesetz, NachwG] in 2022, is being abolished. As part of the German Bureaucracy Relief Act IV [Bürokratieentlastungsgesetz IV, BEG IV], the written form is being replaced in the NachwG by the simple text form, which means that in future it will be possible to conclude contracts by e-mail. To date, only a notification from the BMJ is available.
In this first issue of our Focus on Labour Law 2024, we present the most practice-relevant labour law decisions and news. In our next issue, we will be updating you on the progress of the legislative process.
1. New case law
1.1 The use of ChatGPT without the works council’s co-determination
1.2 Companies can breathe a sigh of relief - the end of anonymity on employer review portals
1.3 Undermining the probative value of certificates of incapacity for work
1.4 Short-time work zero: no holiday in case of illness
1.5 So-called “AGG-Hopping 2.0” - applying for jobs as a “Sekretärin”
1.6 Errors in the mass dismissal notification process - submission to the ECJ
1.7 Company pension scheme - effects of the marriage term on a survivor's pension
1.8 No recourse to the works council member for costs of works council work
1.9 Assumption of costs for works council training - web seminar instead of face-to-face training?
1.10 Business closure in stages - social selection in winding-up measures
2. New legislation
2.1 Short-term employment of foreign employees possible
2.2 Good things do not always come to those who wait: Platform Work Directive on the home straight
2.3 Legal Tech tool "External Personnel Compliance Check" - update
1.New case law
1.1 The use of ChatGPT without the works council’s co-determination
ChatGPT is probably one of the most popular AI applications at the moment. This technology is also being used increasingly and inexorably in the professional environment. However, works councils in particular have major reservations about the use of artificial intelligence in the workplace. A decision by the Labour Court [Arbeitsgericht, ArbG] of Hamburg dated 16 January 2024 - 24 BVGa 1/24 shows how employers can structure the use of AI without the consent of the works council.
By way of interim relief, the works council demanded that the employer prohibit the use of ChatGPT, among other things, as long as no framework shop agreement had been concluded on the subject of AI. The employer had enabled employees to use ChatGPT as a new tool to support their daily work without involving the works council and had published accompanying guidelines on the use of this and other AI applications. ChatGPT was not installed on the employer's computer systems. Employees used it via a web browser. In order to do so, they had to create private accounts on the manufacturer's server. There were no business accounts of the employer. A shop agreement on the use of web browsers already existed. The employer did not obtain any information about who was using ChatGPT, when and in what context.
The Hamburg Labour Court negated a violation of co-determination rights. Section 87 (1) No. 1 of the German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG] was not affected, as the requirements for using ChatGPT fell under work behaviour that was not subject to co-determination. ChatGPT was a new work tool that the employer had made available subject to specific conditions. Section 87 (1) No. 6 BetrVG also had not been violated. Even if ChatGPT was a "technical device" within the meaning of the provision, it was not being used on the employer's computer systems. There was no pressure of monitoring by the employer when the application was used via the web browser, as the employer had no access to any data that might have been collected by the manufacturer. The right of co-determination had already been exercised regarding the use of web browsers. The works council had not provided any specific information on a possible health risk that could trigger the right of co-determination under Section 87 (1) No. 7 BetrVG.
First of all, it is pleasing to see the Hamburg Labour Court describing ChatGPT as precisely what it is: a new work tool that can make employees' work easier and poses no obvious risk to employees. Employers should always accompany the introduction of these and other AI applications with guidelines on their use, at least as long as and to the extent that general familiarisation with such technologies in the workforce has not yet further advanced. Shop agreements on the use of web browsers ought now to exist in most companies, which means that the use of ChatGPT via a web browser and, above all, without business accounts to which the employer could (theoretically) have access for data analysis purposes, does not trigger the otherwise evident right of co-determination under Section 87 (1) No. 6 BetrVG. However, it is also clear that the employer may not disregard the co-determination rights expressly contained in the BetrVG in connection with AI (Sections 80 (3) sentence 2, 90 (1) No. 3, 92a, 95 (2a) BetrVG). Depending on the scope and function of AI systems in the company, the rights under Section 111 sentence 3 Nos. 4 and 5 BetrVG might also have to be taken into consideration in future.
Kathrin Vossen
1.2 Companies can breathe a sigh of relief - the end of anonymity on employer review portals
Have you ever been annoyed by a bad company review on Kununu or other employer review portals? Employers no longer have to simply accept such reviews. In order to be able to check whether reviews are genuine, review portals such as Kununu may have to disclose the real names of the reviewers to the employer. Otherwise, there is even a right to deletion (Higher Regional Court [Oberlandesgericht, OLG] of Hamburg dated 8 February 2024 - 7 W 11/24).
An employer that was rated poorly on the employer review portal Kununu objected to the negative reviews. The employer requested information about the reviewers from the review portal in order to verify whether the reviewers were actually (former) employees of the company. As part of the procedure, the review portal requested evidence from the reviewers of their employment at the company. The employer did not consider this - anonymised - evidence to be sufficient to identify the individuals.
The Higher Regional Court of Hamburg shared the employer's opinion and ruled in interim injunction proceedings that Kununu had to verify the authenticity of reviews and, in cases where the authenticity of the reviews was disputed, remove the anonymity of the persons in question, if applicable. It was not sufficient to provide the employer with just anonymised data, which made it impossible to verify the person providing the review. The portal operator had to remove the anonymity and even permanently delete the review if there were doubts about its authenticity. According to the Higher Regional Court, the fact that negative reviews could lead to reprisals in the current employment relationship did not justify taking a different view. Nor could the review portal rely on data protection aspects. The risk of whether or not the review portal was allowed to name the author of the review was to be borne by the portal.
The decision of the Higher Regional Court of Hamburg shows once again that employers would always be well advised to take precautions when terminating employment relationships. For example, it can be useful to agree an official-wording clause in termination agreements or court settlements. Especially in times of a shortage of skilled labour, negative reviews are damaging to employers' reputations and should be avoided at all costs.
However, if the damage has already been done, the course of proceedings has to be considered on a case-by-case basis, depending on the content and tone. In all events, the decision of the Higher Regional Court of Hamburg allows employers to breathe a sigh of relief. In future, they will be better able to defend themselves against anonymous reviews. The said decision is unprecedented and massively improves employers' defence options. However, it remains to be seen whether the decision will also be confirmed in the main proceedings.
Alexandra Groth
1.3 Undermining the probative value of certificates of incapacity for work
The probative value of a (follow-up) certificate of incapacity for work may be undermined if the employee who is unable to work, after receiving notice of termination, submits follow-up certificates that cover the exact duration of the notice period and then takes up new employment immediately after termination of the employment relationship (German Federal Labour Court [Bundesarbeitsgericht, BAG] dated 13 December 2023 - 5 AZR 137/23).
The plaintiff had been employed by the defendant since March 2021. On 2 May 2022, he submitted a certificate of incapacity for work for the period from 2 to 6 May 2022. The defendant gave the plaintiff timely notice of termination with effect from 31 May 2022 by letter dated 2 May 2022, delivered to the plaintiff on 3 May 2022. The plaintiff's incapacity to work was extended until 31 May 2022 with several uninterrupted follow-up certificates. As of 1 June 2022, the plaintiff was able to work again and took up new employment. The defendant refused to continue to pay his salary due to doubts about his incapacity for work. The probative value of the certificate of incapacity for work had been undermined. The plaintiff objected to this, as his incapacity for work had already existed prior to receipt of the notice of termination.
While the lower courts initially upheld the claim to continued remuneration in full, the defendant's appeal on points of law against this ruling before the Federal Labour Court - relating to the period from 7 to 31 May 2022 - was successful. In principle, it is the employee who bears the burden of representation and proof of the fulfilment of the conditions for the continued payment of remuneration. The statutory means of proving the existence of an incapacity for work due to illness is a properly issued certificate of incapacity for work. However, the employer can undermine the probative value. To do so, it must present and prove factual circumstances that create doubts as to the employee’s incapacity for work. It is irrelevant in this respect who issued the notice of termination and how many certificates of incapacity for work were submitted. One must always assess the overall circumstances of the individual case. Accordingly, the probative value of the certificate of incapacity for work dated 2 May 2022 was not undermined. The plaintiff had not known about the dismissal at the time of submitting the certificate. There was no temporal coincidence between the dismissal and the certificate of incapacity for work. However, the probative value of the certificates of incapacity for work up to 31 May 2022 was undermined. The certificates had covered the exact duration of the notice period. Furthermore, the plaintiff had taken up new employment immediately after the termination of the employment relationship. This cast serious doubt on the plaintiff's inability to work. The plaintiff therefore bore the full burden of representation and proof of the existence of the incapacity to work due to illness for the period from 7 to 31 May 2022.
The Federal Labour Court has further developed its previous case law on undermining the probative value of certificates of incapacity for work (BAG of 8 September 2021 - 5 AZR 149/21) and is also extending it to cover so-called follow-up certificates. No excessively high requirements are placed on the employer's objections in this respect. Rather, a certificate of incapacity for work for the duration of the entire notice period with a subsequent recovery exactly in time to take up new employment can already be sufficient. This already seems appropriate because the employer generally does not have any information about the employee's illness.
Lisa Striegler
1.4 Short-time work zero: no holiday in case of illness
In its decision of 5 December 2023 - 9 AZR 364/22, the Federal Labour Court clarified that employees who are already ill before short-time work "zero" do not acquire any holiday claim during the short-time work.
With short-time work, employees' working hours are reduced due to a temporary significant loss in the workload. In this case, they can receive a short-time allowance. Short-time work plays an important role in company practice. The treatment of holiday and holiday pay during short-time work is regularly a source of conflict.
The underlying case concerns an employee of a metalworking shop who was continuously ill from March to December 2020. On 23 March 2020, the parties agreed on short-time work on an individual contractual basis for the period from 1 April 2020 to 31 December 2020, with a working week of zero hours. In the following year, the employee requested compensation from the company for 15 days of holiday that he had been unable to take due to illness. He argued that his absence due to illness was to be treated as actual working time for purposes of calculating his holiday claim. The company refused to make the payment, resulting in a lawsuit.
The Federal Labour Court agreed with the previous judgement of the Regional Labour Court [Landesarbeitsgericht, LAG] of Schleswig-Holstein and rejected the plaintiff's view. The basis for calculating the annual holiday claim was the work performance contractually owed during this period - in this case zero hours in accordance with the short-time work agreement. The Federal Labour Court stated that the holiday claim pursuant to Section 3 (1) German Federal Holiday Entitlement Act [Bundesurlaubsgesetz, BurlG] was to be calculated on the basis of the days on which the employee was obliged to work. An exception did exist in cases where the employee was unable to work due to illness. However, this exception was obviously not intended to give sick employees a privileged status compared to employees who were able to work. In particular, the loss of workload was not due to the employee's illness, but solely due to the agreed short-time work. The fact that the employee had already been incapacitated for work prior to the introduction of the short-time work also did not lead to any different consideration. Although the employee had not fulfilled the personal requirements for being granted the short-time allowance, he was entitled to sick pay in the same amount.
The decision conforms to the entire systematics of the legislation on illness and short-time work: according to Section 4 (3) of the German Continued Payment of Remuneration Act [Entgeltfortzahlungsgesetz, EFZG], the continued payment of remuneration must be adjusted accordingly if illness and short-time work coincide. The same must also apply to the holiday entitlement.
With its judgement, the Federal Labour Court once again confirms that illness does not protect against the consequences of short-time work. In November 2021, the Federal Labour Court had already ruled that there is no holiday claim in the event of illness during "zero" short-time work (BAG, 30 November 2021 - 9 AZR 225/21). In a parallel legal dispute, the Federal Labour Court ruled that this also applies if short-time work was introduced by shop agreement (BAG, 30 November 2021 - 9 AZR 234/21). With its new judgement, the Federal Labour Court has now created further legal certainty and clarified that the employee's prior illness does not justify a different decision. For companies, this decision now means further clarification of open legal questions on holiday and short-time work.
Fatoumata Kaba
1.5 So-called “AGG-Hopping 2.0” - applying for jobs as a “Sekretärin”
Applications for a multitude of jobs as a “Sekretärin” – the feminine form of the German word for “secretary” – that were advertised in violation of the German General Equal Treatment Act [Allgemeines Gleichbehandlungsgesetz, AGG] with the sole aim of making considerable profits through compensation claims under the AGG constitute an abuse of law. According to the Regional Labour Court of Hamm (judgement of 5 December 2024 – 6 Sa 896/23), this especially applies to the business model developed by the plaintiff.
The plaintiff is a trained industrial clerk and is studying business law full-time. The plaintiff had already applied in the past for a multitude of jobs as a “Sekretärin” all over Germany, with essentially identical communications, in order to assert compensation claims following an anticipated rejection. In Berlin alone, the plaintiff conducted 22 proceedings following this procedure over a period of 15 months. In January 2023, he applied for a position as “Bürokauffrau/Sekretärin” – the feminine forms of the German words for “office clerk” and “secretary” - at the defendant, which was located 170 km away from his place of residence. He did not submit any informative application documents.
The Regional Labour Court of Hamm rejected a compensation claim pursuant to Section 15 (2), 1 AGG, as this was certainly precluded by the objection of an abuse of the law. This is the case if a person's sole purpose in applying for a job is to obtain the formal status of an applicant according to Section 6 (1) sentence 2 AGG with the sole aim of asserting compensation claims. It was evident to the court that the plaintiff had proceeded systematically and purposefully with a view to "earning" comfortable profits through compensation claims with the job applications. In this specific case, the distance between the place of residence and the job, the incompatibility of a full-time job with full-time studies and the style of the application, which was designed to provoke a rejection based on its objective appearance (spelling and grammatical errors, no certificates, etc.), all supported this. The peculiarity of the case, however, was that the Regional Labour Court of Hamm was able to trace in detail the plaintiff's (judicially known) efforts to remove the features that constituted an abuse of rights from his application documents on grounds of the experience he had made in proceedings before the labour courts. For example, he removed from his cover letter the explicit question as to whether the employer was only looking for a woman, and no longer signed it "Mr. ...". The fact that he simultaneously changed nothing in terms of the quality of his application documents, however, was evidence of a "business model" that was now in its second generation.
Leaving aside such extreme cases, employers should take great care to ensure that selection and appointment decisions are carried out in a non-discriminatory manner in compliance with the provisions of the AGG. The hurdles for assuming an abuse of rights are high. The employer generally bears the burden of representation and proof that the requirements have been met (BAG dated 31 March 2022 - 8 AZR 238/21). If it is unsuccessful in doing so, the applicant can claim compensation of up to three months' salary if not hired (Section 15 (2) sentence 2 AGG). In the case of severely disabled persons, the violation of procedural and/or promotional obligations, such as the failure to notify the representative body for severely disabled persons upon receipt of an application (Section 164 (1) sentence 4 of the German Social Code Book X [Sozialgesetzbuch X, SGB X]), can also give rise to the (rebuttable) presumption of discrimination on grounds of a severe disability (BAG dated 25 November 2021 - 8 AZR 313/20).
Marko Vraetz
1.6 Errors in the mass dismissal notification process - submission to the ECJ
In our Focus on Labour Law III 2023, we reported on a possible "turning point" in the case law of the Federal Labour Court on errors in mass dismissal notification procedures. In the meantime, the Federal Labour Court has since paved the way for a change in case law with two further important procedural steps – albeit that it first seeks backing from the ECJ.
In its sensational ruling of 13 June 2023 (C-134/22), the ECJ negated the employer's notification obligations towards the employment agency in the context of mass dismissals having the characteristic of protecting the individual. In a judgement that also attracted a great deal of attention, the Federal Labour Court’s Sixth Senate then announced that it was changing its previous case law: In future, a breach of Section 17 (1), (3) of the German Unfair Dismissals Act [Kündigungsschutzgesetz, KSchG] would no longer lead to the invalidity of a dismissal.
However, as this step meant a divergence between the opinion of the Sixth Senate and the case law of the Second Senate of relevance to the decision, the Federal Labour Court must internally clarify whether mediation between the two senates is necessary. In a so-called enquiry due to conflicting precedences dated 14 December 2023, the Sixth Senate therefore formally asked the Second Senate whether the latter would adhere to its previous opinion or would also change its case law (case No. 6 AZR 157/22 (B); 6 AZR 155/21 (B) and 6 AZR 121/22 (B)).
Before the Second Senate intends to comment on this, it is seeking "backing" from the ECJ: By way of a so-called suspension and referral order dated 1 February 2024 (case No. 2 AS 22/23 (A)), the Second Senate has submitted several questions to the ECJ on the interpretation of the European Directive on which Section 17 KSchG is based. Essentially, these questions are intended to enable the ECJ to clarify whether errors in the mass dismissal notification procedure remain entirely irrelevant for the invalidity of the dismissal (as is presumably the view of the Sixth Senate) or whether dismissals in the event of errors in this procedure only take effect once the notification has been validly made (as would appear to be the view of the Second Senate).
In practice, this raises the question of whether we can expect a massive or "merely" a perceptible mitigation of the previous system of sanctions in the event of errors in the mass dismissal procedure. However, there is still a long way to go until then: once the proceedings before the ECJ have been concluded - this year at best - further procedural steps before the Federal Labour Court will follow. Depending on the ECJ's response, a continuing "dispute" between the Second and Sixth Senate may have to be settled by the so-called Grand Senate [Großer Senat] of the Federal Labour Court. Until then, employers would be well advised to continue to adhere to the strict requirements of the previous case law on the mass dismissal notification procedure.
Dr. Alexander Willemsen
1.7 Company pension scheme - effects of the marriage term on a survivor's pension
Not all marriages are equal - at least in the context of company pension schemes, this statement may be correct in exceptional cases. Pension codes that exclude survivors' benefits if the marriage has not existed for at least three months at the time of death of the beneficiary are valid.
According to a judgement by the Regional Labour Court of Düsseldorf, this is certainly the case if the provision contains an exception to the exception in the event of death by accident. Under GTC-law, such provisions do not constitute an unreasonable disadvantage for the beneficiary (judgement of 8 November 2023 - 12 Sa 348/23). The plaintiff sought payment of a widow's pension from the defendant after her husband, who was entitled to a pension, died due to illness. The duration of the marriage had been less than three months at the time of death. The defendant refused to grant a widow's pension, referring to an exclusion in the pension fund's statutes. According to the statutes, there was no entitlement to a widow's pension if the beneficiary had married within three months before his/her death and the death was not the result of an accident. It now had to be clarified whether this exclusion, insofar as it concerned general terms and conditions, unreasonably disadvantaged the beneficiaries or the surviving spouses.
The Regional Labour Court of Düsseldorf dismissed the claim and, in particular, clarified once again that the statutes of a pension fund can be subject to a review of general terms and conditions. For the beneficiaries and their need for protection under the law governing GTC, it does not matter whether the exclusion in question is set out in the statutes or in the general terms and conditions of insurance. However, this - from the employer's point of view - seemingly ominous statement did not lead the Regional Labour Court to assume in the next step that the exclusion clause on the "minimum marriage term“ was invalid under GTC law. Waiting periods are generally recognised by law in company pension schemes. In addition, a three-month waiting period is a relatively short period that accounts for the interests of the pension beneficiaries through the exception to the exception in case of accidents. Finally, the employer generally has a legitimate interest in limiting the financial risk arising from the promise of a survivor's pension and in excluding so-called “marriages for maintenance”.
As the Federal Labour Court’s case law on the validity of the above exclusion clauses is finely honed, employers and pension providers should not prematurely assume the validity of existing clauses or clauses that are to be drafted in the future. Rather, the clauses should always be tailored to the ever-developing case law, taking into account the minimum marriage term and any exceptions to the exception (e.g. death by accident and/or illness?). The fact that the proceedings are currently pending in the appeal instance before the Federal Labour Court shows that this story has not yet reached its conclusion for the insurance practice.
Moritz Coché
1.8 No recourse to the works council member for costs of works council work
A legal dispute on whether the employer has to bear the costs of works council work must be resolved in labour court proceedings by court order [Beschlussverfahren]. It is therefore not an option for the employer to first settle the invoice and then deduct it from the remuneration of a works council member. In this case, the Federal Labour Court denies the employer recourse. The protection of the works council would otherwise be undermined by the proceedings by court order, in which, for example, unlike in proceedings by judgement [Urteilsverfahren], the principle of official investigation applies (judgement of 25 October 2023 - 7 AZR 338/22).
The plaintiff is a bus driver and works council member at the defendant’s transport company. The works council sent him on two training courses, to which the defendant objected, however. In order to fulfil the works council's claim under Section 37 (6) sentence 1 in conjunction with (2) BetrVG, the plaintiff instructed a law firm on behalf of the works council, which subsequently invoiced the employer for the costs of its legal services. The employer did not deem the costs necessary and ordered the plaintiff to bear the costs himself. Upon his refusal, the defendant paid the invoice and deducted the corresponding net amount from the plaintiff's salary. The plaintiff successfully defended himself against the reduction of his remuneration claim.
The Federal Labour Court ruled that the employer did not have to bear the costs due to the lack of a proper works council resolution. However, for purely procedural reasons, the court awarded the suing works council member a claim to the full remuneration that had been withheld from his salary. This was due to the fact that disputes over the scope of the employer's obligation to bear the costs in accordance with Section 40 (1) BetrVG must be resolved in labour court proceedings by court order (Section 2 a (1) of the German Labour Courts Act [Arbeitsgerichtsgesetz, ArbGG]). Once the employer has paid the costs, it is barred from invoking management without mandate or the law of enrichment for recourse in the context of proceedings by judgement, i.e. in this case the individual legal dispute with the works council member. The two types of proceedings are based on different procedural maxims and court costs. Thus, recourse to the employee in the context of proceedings by judgement would undermine the procedural concept of the mandatory proceedings by court order insofar, which is neither in the interests of the parties involved nor appropriate.
If an employer doubts that an individual case involves necessary costs for works council activities within the meaning of Section 40 (1) BetrVG, it is therefore referred to proceedings by court order and should not settle the corresponding invoice before the outcome of such proceedings. The same should apply to disputes that repeatedly arise in practice regarding the scope of the release from work duties for works council members for them to carry out their works council activities. A deduction from wages and thus a shifting of the legal dispute to proceedings by judgement will therefore not help the employer in these cases either.
Isabel Hexel
1.9 Assumption of costs for works council training - web seminar instead of face-to-face training?
The employer must bear the costs of face-to-face training for works councils even if more cost-effective webinar training on the same topic is offered. This was decided by the Federal Labour Court in its ruling of 7 February 2024 - 7 ABR 8/23.
The applicant's employee representative body, which had been established by collective agreement, sent two of its members to a basic training course on shop constitution law lasting several days with overnight accommodation. The applicant paid the seminar fee for this, but refused to cover accommodation and catering costs. Its main argument for this was that the members of the employee representatives, whose claim to the training was based on the BetrVG on grounds of a collective agreement, could have taken part in a webinar offered by the same training provider lasting several days, at the same time and with the same content.
Like the lower courts, the Federal Labour Court also ruled in favour of the employee representatives. The decision is currently only available as a press release. In the opinion of the Federal Labour Court, the employee representatives do not have to accept instructions from the employer to attend a training course in a certain format because the employer wants to save on accommodation and catering costs. Like a works council, the employee representatives also have a certain amount of leeway with regard to the selection of training courses. This leeway also includes the choice of training format, even if face-to-face training is regularly more expensive than a webinar due to the additional costs for meals and accommodation.
In its decision, the Regional Labour Court confirms that employee representatives cannot be referred to the most cost-effective training course if they consider a certain training format to be of better quality. In practical terms, from the employee representatives' point of view, indications of a qualitative difference may lie in the susceptibility of a webinar to disruption, the lack of exchange with other course participants, but also in the lower learning effect or the lack of or more difficult interaction with the seminar leader. However, this does not mean that this principle applies without exception. Even according to the recent decision of the Federal Labour Court, a works council's claim to reimbursement of the costs must comply with the principle of proportionality. In individual cases, the works council must always check whether the costs are reasonable for the employer and proportionate in terms of the content and scope of the knowledge imparted as well as the company’s size and performance. The restriction of the works council's right to the reimbursement of costs through the principle of proportionality therefore always requires consideration based on the specific business.
Cornelia-Cristina Scupra
1.10 Business closure in stages - social selection in winding-up measures
When an employer closes down a business in stages, the employees who merit social protection the most generally have to be entrusted with the winding-up measures. According to the Regional Labour Court of Düsseldorf in its ruling of 9 January 2024 – 3 Sa 529/23, if the employer forms comparison groups, it must base this comparison on the activities involved in the winding-up measures and not on the activities originally performed. Otherwise, the dismissals for operational reasons may be invalid.
The defendant discontinued the business activities of its only business, which last had around 600 employees, on 31 December 2022. In December 2022, it issued notices of dismissal for operational reasons to the majority of the workforce. The affected employees - including the plaintiff - were irrevocably released from their employment duties as of 1 January 2023. 53 employees continued to work as part of a cleaning and winding-up team, of which the defendant then also dismissed 13 employees as of 31 March 2023, however dismissing the remaining 40 only as of 30 June 2023 with the consequence of a second termination date.
The Regional Labour Court of Düsseldorf confirmed the invalidity of the dismissal. The social selection carried out was methodologically flawed, as the defendant had incorrectly defined the required comparison groups solely on the basis of the original employment activity. Instead, the comparison groups should have been formed on the basis of the cleaning and winding-up activities to be carried out during the winding-up phase. The decisive factor was which employees were fundamentally suitable for these activities. In practice, when a business is closed and operations are discontinued on a cut-off date, this often leads to subsequent clean and winding-up work. For a small number of employees, this leads to the possibility of employment also after cut-off date and therefore only a reduction of jobs in stages as a whole.
In this case, a legally sound and, in particular, litigation-proof social selection requires the following:
The activities to be performed during the cleaning and winding-up phase form the reference point for the social selection. Employers must define in advance which tasks are required in the winding-up phase and for how long, and which personnel requirement profiles are necessary for this. The employer must be able to substantiate this in any subsequent unfair dismissal proceedings.
Only then does the two-stage social selection take place in accordance with Section 1 (3) KSchG, on the basis of which the employer must specifically determine which employees are to remain employed the longest - even if (only) for a limited period - during the winding-up phase due to their meriting social protection the most.
For this purpose, comparison groups are to be formed according to general principles. Employees to be included are those who are horizontally comparable with each other according to job-related criteria, i.e. according to the employment contract and work performed. The actual social selection then has to be carried out within the comparison group on the basis of the criteria set out in Section 1 (3) KSchG, i.e. length of service, age, maintenance obligations and severe disability. Exceptions for service providers pursuant to Section 1 (3) sentence 2 KSchG are possible, but must be substantiated in a reliable manner.
Dr. Johannes Kaesbach
1.11 Principle of equal opportunities – invalidity of a works council election due to canvassing via WhatsApp
The unwritten principle of equal opportunities applies to works council elections. This can be violated if an election candidate uses resources that are available to them due to their position in the company or an office, but are not equally available to all election candidates. This was decided by the Regional Labour Court of Cologne in its ruling of 6 October 2023 - 9 TaBV 14/23 and which declared a works council election invalid.
The parties involved dispute over the contestation of a regular works council election. The chairman of the election committee was the chairman of the previous works council and was also employed by the employer as a dispatcher and shift planner. He stood for election to the works council as the list leader of nomination list 2. On the day prior to the election, he sent a WhatsApp message advertising the election to a group to which around 80% of the employees belonged. The chairman of the election committee apparently obtained the telephone numbers for his message due to his position as dispatcher and office as chairman of the works council.
The Regional Labour Court of Cologne declared the election invalid. By promoting his list in the message, the chairman of the election committee had violated the unwritten principle of equal opportunities. According to this principle, election candidates should have the same opportunities in the election campaign and therefore also the same chances of winning votes. The principle of equal opportunities serves the integrity of a democratic election and its violation is suitable to justify an electoral challenge. Although canvassing is in principle protected by constitutional law and is therefore permissible, the chairman of the works council had violated the principle of equal opportunities because the other candidates did not have the same means of canvassing at their disposal, He had neither made the list with telephone numbers available to the other election candidates, nor had the other election candidates had access to the WhatsApp group or the telephone numbers. Due to the proximity in time to the works council election, they would also not have been able to find out the contact details of the group members in any other way. As this violation was also capable of influencing the election result, the works council election was invalid and new elections had to be held.
In order to avoid an election challenge and thus costly re-elections, employers should ensure that incumbents do not exploit the resources available to them to engage in election advertising. Employers should also ensure that only communication channels that are open to all election candidates are used. This especially applies to messages via messenger services, where the legal implications of the message are often not recognisable at first glance. Messages in messenger services also have to be assessed as election advertising and must be measured against the same requirements for posters or other election advertising measures. Only if every election candidate has the same opportunities in the election campaign and in the election process and thus the same chance in the competition for votes can a violation of the principle of equal opportunities be ruled out.
Anja Dombrowsky
2. New legislation
2.1 Short-term employment of foreign employees possible
The second stage of the new German Skilled Immigration Act [Fachkräfteeinwanderungsgesetz, FEG] came into force on 1 March 2024. This enables so-called short-term contingent employment and thus offers employers the opportunity to hire foreign workers for up to eight months to cover bottlenecks at peak times, for example in the hotel and catering industry or at airports.
In such cases, the employer itself recruits and hires new workers from abroad and applies to the Federal Employment Agency [Bundesagentur für Arbeit, BA] for a corresponding work permit or advance approval of a residence permit. Prerequisites for the granting of a work permit include domestic employment of at least 30 hours per week, the company being bound by a collective agreement and remuneration in accordance with the applicable collective agreement provisions, as well as the assumption of the travel expenses by the company. Vocational training or a degree of the worker from abroad are not required.
The new regulation in force also provides for an annual quota that is determined by the Federal Employment Agency. It has set a quota of 25,000 permits for all sectors for 2024. Harvest workers in agriculture are excluded from this.
Isabel Hexel
2.2 Good things do not always come to those who wait: Platform Work Directive on the home straight
On 11 March 2020, the 25 labour ministers of the member states in the EU Council agreed to a compromise proposal on the Platform Work Directive against the votes of the two most populous member states, Germany and France.
Digital platforms are now an integral part of our everyday lives. Platform providers offer customers various services via apps, which are provided by platform workers either locally (e.g. delivery or cleaning services) or remotely (e.g. data processing or prompting). The algorithms used on the work platforms are able to control and monitor the execution of orders. The Platform Work Directive is intended to help combat ostensible self-employment in platform work and improve working conditions. The EU Commission presented a draft Platform Work Directive back in December 2021. The core element was the legal presumption of an employment relationship between the platform worker and the work platform if the digital work platform exercises control and management over the platform worker's work performance. Platform workers should be able to demonstrate the fulfilment of these conditions using a "2 out of 5" rule based on a catalogue of criteria.
In the compromise proposal, the presumption rule and the catalogue of criteria have now been deleted. Instead, according to Art. 5 (2) of the draft Directive, the member states will introduce national regulations that standardise a rebuttable legal presumption of the employment relationship. If the work platform wishes to rebut the legal presumption, it bears the full burden of representation and proof that the contractual relationship with the platform worker is not an employment relationship under the provisions applicable in the member states.
The Directive also aims to increase transparency in the use of algorithms by digital work platforms. To this end, platform workers are granted comprehensive rights to information from the work platforms (Art. 9). Decisions made by automated systems are subject to the ultimate responsibility of a natural person (Art. 10). In particular, member states must ensure that platform workers have the right to obtain an explanation from the work platform without undue delay for any decision taken or supported by an automated decision-making system (Art. 11).
If - as expected - the EU Parliament consents to the compromise proposal, it is still possible that the Platform Work Directive can adopted in this legislative period. The member states will then have two years to transpose the regulations into national law. The result of the compromise proposal will be a patchwork of national regulations that will create new legal uncertainty. Germany has already had bad experiences with a presumption rule at the turn of the millennium. According to Section 7 (4) of the German Social Code Book IV [Sozialgesetzbuch IV, SGB IV] (old version), the existence of an employment relationship under social security law was presumed if three of five characteristics were present. However, the regulation was quickly abolished again as it did not prove its worth in practice due to the high investigation efforts required by the responsible social insurance institutions. We can therefore hope that the German government will keep an eye on the practicability of such a presumption rule when implementing the Platform Work Directive.
Marko Vraetz
2.3 Legal Tech tool "External Personnel Compliance Check" - update
In the summer of 2023, the German Federal Social Court [Bundessozialgericht, BSG] issued three landmark rulings on the question of the social security obligation of sole shareholder-managers of a one-person corporation. It has now been definitively established that the formation of a one-person corporation alone cannot prevent the shareholder-managing director from being a dependent employee of the client under social security law. The general demarcation criteria, which must be assessed as part of an overall assessment, are also decisive in such constellations. This means that the shareholder-managing director of a one-person company (e.g. limited liability company [Gesellschaft mit beschränkter Haftung, GmbH], limited liability entrepreneurial company [Unternehmergesellschaft, UG]), who actually fulfils in person the service or work contract concluded between the legal entities for the client, can also be a dependent employee of the client. According to the integration theory applicable in social security law, this is the case, for example, if the service is determined externally, i.e. the contractor is integrated into the operational processes and works hand in hand with the permanent staff, even if the contractor otherwise essentially works independently.
We have been supporting our clients very successfully for years in the drafting of contracts, in actual deployments, but also in handling the deployment of freelancers. We have developed the Legal Tech tool "External Personnel Compliance Check" for this purpose, which enables our clients to carry out their own initial risk check when using external personnel. We have updated the Legal Tech tool on the occasion of the new decisions of the Federal Social Court described above. We would be happy to provide you with access to this system and support you with any advice you may need.
Isabel Hexel, Jörn Kuhn
