Focus on Labor Law – 3rd Quarter 2024

In light of the many challenges at present, it remains to be seen whether the legislators can be expected to take any significant action in the field of labour law during the current legislative period. Federal Labour Minister Hubertus Heil recently presented a draft bill for the long-announced Act on Compliance with Collective Bargaining Agreements (Tariftreuegesetz) in order to stop the decline in collective bargaining coverage. With this Act, he simultaneously wants to grant trade unions a digital access right to companies and restrict the possibilities for evading collective bargaining. However, this draft law is currently becoming a bone of contention for the coalition government. Its implementation therefore remains uncertain.

In contrast, we can report on constant new developments and interesting judgements from labour court jurisprudence. This third edition of our Focus on Labour Law contains the most important decisions in this area.

On 7 November 2024 we will be holding our 16th Labour Law Day at our offices in Cologne. Following its great success over the last few years, the event is also being held in hybrid form again this year, which means that online participation is also possible. Further details can be found in this Focus on Labour Law.

1. New case law

1.1 Receipt of termination problematic - date of receipt in case of registered post delivered to the recipient’s letterbox

1.2 Appropriateness of the probationary period in fixed-term employment relationships

1.3 Caution with secondments: invalid fixed term for intra-group secondments

1.4 Dismissal for forwarding work emails to a private email address

1.5 Working time fraud by works council members released from their work duties

1.6 Exclusion of employees in the passive phase of partial retirement from the inflation compensation bonus may be invalid

1.7 Overtime bonuses - no discrimination for part-time employees

1.8 Company pension scheme - deviations in deferred compensation by way of collective agreement?

1.9 No binding effect of a status determination in the event of a transfer of business

1.10 No right of the works council to information on the resolution of collective bargaining conflicts

1.11 The clean desk and the works council's right of co-determination

2. New legislation

2.1 Growth Opportunities Act - amendment to the one-fifth rule

2.2 Hubertus Heil presents draft of a new law on compliance with collective bargaining agreements

2.3 Future Financing Act II - protection against dismissal in the financial sector

2.4 Growth initiative - new economic dynamics for Germany

3. Labour law day at Oppenhoff on 7 November 2024

1. New case law

1.1 Receipt of termination problematic - date of receipt in case of registered post delivered to the recipient’s letterbox 

Disputes between the parties to an employment contract in connection with the receipt of a notice of termination are not uncommon. For companies, the date of the receipt of the notice of termination is important as, first of all, it triggers the start of the notice period and, secondly, it is decisive for the question of whether the waiting period under the German Unfair Dismissals Act (Kündigungsschutzgesetz, KSchG) or the probationary period has expired or whether special protection against dismissal exists. The German Federal Labour Court (Bundesarbeitsgericht, BAG) recently addressed the matter of the date of receipt of a registered letter delivered to the recipient’s letterbox (Einwurf-Einschreiben) (judgement of 20 June 2024 - 2 AZR 213/23) and has provided companies with a little more clarity in this respect.

The plaintiff, whose employment contract provided for a quarterly notice period to the end of the quarter, disputed that the letter of termination had been posted into her letterbox during normal postal delivery times. She could no longer have been expected to remove it from the letterbox on the same day, which meant that she had not received the letter until the day after it had been put into the letterbox. This in turn meant that the notice period had expired one calendar quarter later than intended by the employer.

The Federal Labour Court initially emphasized that a letter of termination delivered to the recipient by posting into the letterbox is received as soon as the next removal can be expected according to public opinion. This depends on the working hours of the postal employees, however, and not on the usual - and in actual practice highly varying - exact time of delivery in the local postal district. General experience shows that the letterbox is then emptied by the recipient on the same day after the usual local delivery times, which are determined by the working hours of the postal employees. The receipt of delivery of Deutsche Post AG could be taken as prima facie evidence of this. It was then up to the plaintiff to present facts that would suggest a serious possibility that events took a different course. The plaintiff had failed to do so and thus the prima facie evidence had not been undermined.

The Federal Labour Court has thus created a little more legal certainty for companies as far as deliveries by Deutsche Post AG are concerned. When delivering notices of termination by means of posting to the recipient’s letterbox, companies should keep the proof of delivery, which can be downloaded within 15 months, in addition to the proof of posting, so that they are able to prove complete documentation of the dispatch and day of posting into the letterbox by the employees of Deutsche Post AG.

If the employee cannot represent and prove any atypical circumstances to suggest a serious possibility of a different course of events, the notice of termination is deemed to have been received on the day on which it is placed into the letterbox. However, the Federal Labour Court explicitly left open whether prima facie evidence still applies if other delivery services have a significant share in the delivery of letters at the respective delivery location and such services also deliver letters outside the normal working hours of Deutsche Post AG.

Anja Dombrowsky

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1.2 Appropriateness of the probationary period in fixed-term employment relationships

If a four-month probationary period is agreed in an employment contract although the employment relationship is limited to one year, the probationary period is not proportionate to the total duration of the fixed term. According to a recent decision by the Regional Labour Court (Landesarbeitsgericht, LAG) of Berlin-Brandenburg, the provision regulating the probationary period breaches Section 15 (3) of the German Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz, TzBfG) and is invalid in its entirety pursuant to Section 307 (1), (2) No. 1 of the German Civil Code (Bürgerliches Gesetzbuch, BGB).

In consideration of Recital 28 of the EU Working Conditions Directive (Directive 2019/1152/EU), the member states of the European Union must ensure that the probationary period for fixed-term employment relationships of less than twelve months’ duration is appropriate and proportionate to the expected duration of the employment contract and the nature of the work. This requirement was implemented by the German legislator with the new regulation of the German Act on the Verification of Working Conditions in the Employment Relationship (Nachweisgesetz, NachwG), which came into force on 1 August 2022. In a recent ruling, the Regional Labour Court of Berlin-Brandenburg declared as invalid a provision regulating a probationary period that did not comply with these principles (ruling dated 2 August 2024 - 19 Sa 1150/23).

The decision was based on an unfair dismissal action concerning the validity of an ordinary dismissal. The parties had concluded an employment contract for a period of one year with effect from 22 August 2022, which provided for a probationary period for the first four months of employment. The defendant employer terminated the employment relationship by letter dated 9 December 2022 during the probationary period, applying the short notice period of two weeks. The plaintiff employee held the view that the termination was invalid because the agreed four-month probationary period was not proportionate to the duration of the fixed term.

In its judgement, the Regional Labour Court confirmed the first-instance decision of the Berlin Labour Court in the plaintiff’s favour and stated that the agreed four-month probationary period was invalid as a general term of business pursuant to Section 307 (1), (2) No. 1 BGB as it breached Section 15 (3) TzBfG. In its reasoning, the court stated, among other things, that although neither Section 15 (3) TzBfG nor Art. 8 (2) of Directive 2019/1152/EU stipulated a rigid ratio of fixed term to probationary period duration, for reasons of manageability certain quotas - in the case of a one-year fixed term a quota of 25% - could regularly be regarded as appropriate. The duration of the fixed term and the duration of the probationary period must be in relation to each other and be in reasonable proportion - this is expressed both in Section 15 (3) TzBfG and in Article 8 (2) of Directive 2019/1152/EU. Agreements deviating from this were only permissible if the employer could explain why a higher ratio of fixed term to probationary period was necessary and ultimately appropriate due to the nature of the work. However, in the opinion of the Regional Labour Court, the defendant employer had not adequately done so in the case at hand.

What is particularly interesting about the Regional Labour Court’s decision is that the court makes no reference whatsoever in its judgement to the much-noticed decision of the Regional Labour Court of Schleswig-Holstein of 18 October 2023 - 3 Sa 81/23, in which a probationary period of six months is certainly always deemed appropriate if the duration of the probationary period is designated accordingly in the contract and the intended permanent employment relationship is specifically regulated. The Regional Labour Court of Schleswig-Holstein has allowed the appeal on points of law due to its fundamental importance; a decision by the Federal Labour Court (case no. 2 AZR 275/23) is expected on 5 December 2024. Employers should therefore continue to exercise caution when agreeing probationary periods in fixed-term employment relationships that are to withstand (judicial) scrutiny – for the time being, their appropriateness will continue to be assessed on an individual case basis.

Lisa Striegler

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1.3 Caution with secondments: invalid fixed term for intra-group secondments

Carelessness when drafting contracts can have unexpected consequences. For example, employers may become obliged to second employees indefinitely - even if the (usually intra-group) "hirer" no longer needs the employee. This was decided by the Regional Labour Court of Düsseldorf in its judgement of 24 April 2024 - 12 Sa 1001/23.

In the present case, the plaintiff had been working for the defendant since 2008. In 2009, the plaintiff and the defendant agreed to second the plaintiff to a group company in Great Britain, initially for six months. The plaintiff was to remain an employee of the defendant, which also paid the plaintiff’s remuneration. The secondment was extended on an ongoing basis until the end of 2020, with the plaintiff receiving various letters in this regard. During the secondment period, the plaintiff’s career advanced in terms of salary and position. In June 2020, the British group company informed the defendant that the secondment was not going to be extended beyond 31 December 2020. The defendant, which had no employment needs with regard to the plaintiff, subsequently declared various notices of termination.

In court, the plaintiff subsequently sought a declaration to the effect that the secondment did not end on 31 December 2020, but continues indefinitely. The Regional Labour Court considered the recurring secondment letters to be general terms and conditions (GTC), which in turn did not stand up to a legal review of their content. Pursuant to Section 307 (1) sentence 1 BGB, provisions in general terms and conditions are invalid if they unreasonably disadvantage the contractual partner. The court considered the continuous fixed-term extension of the plaintiff's secondment for more than 11 years to constitute such a disadvantage for the plaintiff: the assessments of the Part-Time and Fixed-Term Employment Act (TzBfG) perceived the indefinite-term contract to be the standard case of an employment relationship, whilst fixed-term contracts were to remain the exception. This also applies to individual aspects of the employment contract such as working hours, position and remuneration. The stipulation of a limited term for individual working conditions also contradicts Section 2 KSchG, which provides for the instrument of a dismissal pending a change of contract for such constellations. According to the Regional Labour Court, these aspects give the plaintiff a legitimate interest in an indefinite agreement on their current position and salary.

The defendant argued that it would not be able to employ the plaintiff accordingly, which would cause damages in a six-figure range. In addition, it was being burdened with the risk of the ability to employ the employee at the hirer. The Regional Labour Court sharply rejected these arguments. Uncertainty about future labour requirements was part of the entrepreneurial risk, which could not be shifted to the employees.

The judgement shows that ongoing fixed-term secondments can cost employers dearly. Intra-group secondments should therefore always be made on an ad hoc and temporary basis. Especially in the case of long-term assignments, this judgement makes it clear that transferring the employment relationship to the company where the employee is being deployed is the better option.

Dr. Alexander Willemsen

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1.4 Dismissal for forwarding work emails to a private email address

The forwarding of work emails to a private email account constitutes a breach of the GDPR, which can justify extraordinary termination without notice, according to the Higher Regional Court (Oberlandesgericht, OLG) of Munich in its recent ruling of 31 July 2024 (case no. 7 U 351/23 e).

A long-standing management board member of a public limited company repeatedly forwarded work emails to his private email account. The emails partially contained sensitive information about salaries, commission statements and company transactions, e.g. a bank enquiry pursuant to money laundering law. After the supervisory board became aware of this, it immediately dismissed the management board member and terminated the employment contract without notice. The Higher Regional Court of Munich dismissed the action brought against this dismissal by the former management board member. 

The central legal question was whether the forwarding of work emails to a private email account constitutes good cause (“wichtiger Grund”) within the meaning of Section 626 (1) BGB. The forwarding and storage of emails on the private account constituted an unauthorised processing within the meaning of Art. 4 No. 2 GDPR, as this was not covered by a consent of the data subjects pursuant to Art. 6 (1) lit. a GDPR.

However, not every breach of the GDPR justifies the assumption of good cause within the meaning of Section 626 (1) BGB. In this case, the Higher Regional Court of Munich affirmed the good cause with reference to the fact that the data contained in the emails was of a particularly sensitive nature and that the plaintiff had repeatedly and therefore seriously violated the GDPR. The Higher Regional Court of Munich did not accept the plaintiff's argument that the intention behind his forwarding of the emails was to protect himself in the event of a subsequent liability case, making reference to the right of inspection pursuant to Section 810 BGB, among other things. It also did not accept the argument that he had put his private email address in "cc" and thus that his forwarding of the emails had been visible to the other persons on the distribution list.

The Higher Regional Court of Munich also confirmed - in addition to the extraordinary termination of the employment contract - the plaintiff’s immediate dismissal from office as management board member. Good cause for the extraordinary termination of the employment contract without notice within the meaning of Section 626 (1) BGB always also constitutes good cause for the dismissal of the management board member from office within the meaning of Section 84 (4) sentence 1 of the German Stock Corporation Act (Aktiengesetz, AktG). Thus, the limits under which an extraordinary termination may be pronounced pursuant to Section 626 (1) BGB are narrower than the range of reasons that permit a dismissal from the position on the board.

The decision can also be applied to the growing relevance of data protection in an employment relationship as well. This applies equally to employees and - from a compliance perspective - to companies. In the event of GDPR violations, it is not only labour law sanctions against employees that need to be examined. Rather, employers may also face severe fines. Companies would therefore be well advised to organise training courses and formulate clear guidelines for handling personal data to ensure that managers in particular behave in a GDPR-compliant manner.

Dr. Johannes Kaesbach

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1.5 Working time fraud by works council members released from their work duties

Works council members released from their work duties must either carry out works council activities or be present at the company. If a member is sent to a training course, they are obliged to attend. Unjustified absence from the training can therefore justify an extraordinary dismissal. This was decided by the Lower Saxony Regional Labour Court in its ruling of 28 February 2024 - 13 TaBV 40/23.

In the underlying case, the employer asked the works council to approve the extraordinary dismissal of the works council chairman who had been released from his duties. He had been released from his duties for the three-day German Works Council Conference. The employer had agreed to cover the costs. According to the other participants, the chairman left the event after the first day and no longer took part. Instead, he is said to have visited his ex-wife and pursued leisure activities. Despite this, he entered works council activities in his time sheets. When asked by the employer, he explained that he had spent the afternoons and evenings "exchanging expertise" and "carrying out research tasks" for the works council. The employer considered this to be a serious breach of contract and intended to dismiss him. However, the works council refused to give its consent, with the result that the employer initiated proceedings to replace its consent in accordance with Section 103 of the German Shop Constitution Act (Betriebsverfassungsgesetz, BetrVG).

The Lower Saxony Higher Labour Court shared the opinion of the lower court and agreed to replace the consent to the extraordinary dismissal of the works council chairman. Both instances considered the works council chairman's misconduct to be sufficient to justify termination without notice. Instead of performing work, works council members who have been released from their duties are obliged to perform or be available for works council activities at the employer's headquarters. These times may therefore be documented as working time as part of the company's working time recording system. The same applies to times during which the works council member participates in authorised training or further education events. There must be serious reasons for leaving the event and carrying out other works council work outside the company and outside the venue of the event.

The decision of the Lower Saxony Higher Labour Court emphasises that working time fraud can also have serious consequences under labour law for a works council member, although the employer must provide clear evidence of the offence. During their working hours, even works council members who have been released from their work duties may only carry out activities that are objectively necessary for the work of the works council or must be available to do such work. Leaving the company without authorisation constitutes a breach of their legal and contractual obligations and can justify working time fraud. Difficulties often arise in business practice in case of mobile working. Ultimately, this must also be possible for members of the works council who have been released from their duties, although it must also not be used as a pretext for private activities. Employers should therefore proceed with particular care when wanting to penalise working time violations by works council members. It is important that there is sound evidence of fraud before labour law measures are taken.

Alexandra Groth

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1.6 Exclusion of employees in the passive phase of partial retirement from the inflation compensation bonus may be invalid

Since its introduction in October 2022, many employers have paid their employees the inflation compensation bonus of EUR 3,000. Employees who are excluded from this benefit naturally feel particularly disadvantaged. In the case of the plaintiff, who was in the passive phase of partial retirement, the Regional Labour Court of Düsseldorf ruled in its judgement of 19 July 2024 - 7 Sa 1186/23 that this was (partly) justified.

In December 2022, the defendant published an information letter in which it announced the payment of the inflation compensation bonus to all employees who "were in an employment relationship that was not terminated on 1 December 2022 and were also entitled to remuneration on at least one day between 1 January 2022 and 30 November 2022". In addition, part-time employees were paid in accordance with their level of employment. Among others, employees who were in the passive phase of partial retirement on the cut-off date were excluded from the benefit. The plaintiff had worked in the active phase of partial retirement at 50% until the end of August 2022 and had then entered the passive phase of partial retirement from the following month. He was not paid an inflation compensation bonus. He sued for this, most recently in the amount of EUR 1,500.

The Düsseldorf Higher Labour Court assessed the information letter as an overall commitment which, unlike a shop agreement, is not excluded from the examination of general terms and conditions in accordance with Section 310 (4) sentence 3 BGB. The exclusion of those employees who were in passive partial retirement on the cut-off date constituted an unreasonable disadvantage within the meaning of Section 307 (1) sentence 1 BGB. This is because the cut-off date regulation deprives employees of remuneration they have already earned and is therefore contrary to the basic idea of Section 611a BGB.

This assessment of a cut-off date regulation for payments that have the character of remuneration corresponds to established case law of the Federal Labour Court and therefore comes as no surprise. Interesting in this context, however, is how the Regional Labour Court of Düsseldorf arrives at the assumption that, in the present case, the inflation compensation bonus "at least also" has the character of remuneration. The employer's intention to also pay the inflation compensation bonus as a reward for work performance is evident from the interpretation of the information letter. In particular, the pro rata payment for part-time employees is a strong indication of its remuneration character, as is also in line with the regular case law of the 10th Senate of the Federal Labour Court. The Regional Labour Court of Düsseldorf consequently awarded the plaintiff part of the inflation compensation bonus in the amount of EUR 1,000, as he only worked part-time at 50% for the defendant for two thirds of the year. However, the 9th Senate of the Federal Labour Court - in its judgement of 25 July 2023 - 9 AZR 332/22 - considered the pro rata payment for part-time employees to be a mere payment modality without indicative effect. Due to the disagreement between the case law of the various Federal Labour Court senates, the Regional Labour Court felt compelled to allow an appeal on points of law for final clarification of this legal issue.

The judgement makes it clear that not just the inflation compensation bonus needs to be thoroughly examined, but also remuneration commitments of any kind, especially as the requirements vary depending on the form of regulation (overall commitment, shop agreement or collective agreement). This case shows how supposedly harmless regulations such as the pro-rata consideration of part-time employees can have undesirable consequences.

Roman Braun

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1.7 Overtime bonuses - no discrimination for part-time employees 

An entitlement to overtime pay may only be made dependent on the individual working hours being exceeded, but not on the (sometimes significantly) higher full-time working hours being exceeded. A collective agreement that only provides for overtime pay for hours worked in excess of full-time working hours breaches the EU Part-Time Directive. This was clarified by the ECJ in its judgement of 29 July 2024 - C-184/22 and C-185/22.

The company collective agreement in question with Ver.di provided for regular full-time employment of 38.5 hours per week. The overtime premium of 30% was to be paid for hours worked in excess of the monthly calendar working hours of a full-time employee. The two plaintiffs work part-time at 40% and 80% respectively and demanded the bonuses for the overtime they worked as well as compensation in accordance with Section 15 (2) of the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz, AGG) for unlawful discrimination based on gender.

The Federal Labour Court had referred the questions of law to the ECJ. The ECJ confirmed the position of the plaintiffs: The establishment of a standardised minimum threshold for overtime pay constituted a higher burden for part-time employees. The regulation could also lead to employers being more likely to order part-time employees to work overtime in order to avoid paying overtime pay earlier.

In particular, the aim to prevent discrimination against full-time employees does not justify discriminating against part-time employees. In its submission, the Federal Labour Court had argued that full-time employees might be put in a worse position if part-time employees were granted a supplement from the first hour of overtime, which is considered a regular working hour for full-time employees. The ECJ clearly rejected this argument.

The Federal Labour Court will have to pay particular attention to the ECJ's statements on indirect discrimination on grounds of gender: As previously, the ECJ had based indirect discrimination on the fact that more women worked part-time. Here, the ECJ only takes into account the fact that there are more women than men among part-time employees. The fact that there are also more women than men among the full-time employees in the defendant company was not deemed relevant. It is sufficient that the regulation has a de facto detrimental effect on women within the group of part-time employees. This further reduces the requirements for indirect discrimination on grounds of gender.

The ECJ's decision was not surprising, but rather a continuation of the case law of 19 October 2023 - case C-660/20 on part-time pilots at Lufthansa. In the current judgement, the ECJ tightens its case law on the objectives under which such regulations definitely cannot be lawful. The Federal Labour Court will have to take a closer look at this in its decision.

Remuneration regulations for overtime therefore need to be reviewed for possible discrimination and indirect gender discrimination and adjusted if necessary.

Fatoumata Kaba

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1.8 Company pension scheme - deviations in deferred compensation by way of collective agreement?

The German Company Pensions Act (Betriebsrentengesetz, BetrAVG) only permits deviating regulations in exceptional cases if these are not exclusively in the employees’ favour. Exceptions are permitted pursuant to the clause allowing deviations by way of collective agreement (Tariföffnungsklausel) in Section 19 (1) BetrAVG. Whether this exception covers collective agreements that were concluded before the statutory clause permitting deviations by collective agreement came into force has now been affirmed by the Federal Labour Court - according to the press release available to date - for deviating provisions on employer contributions to deferred compensation in "old collective agreements" (judgement of 20 August 2024 - 3 AZR 285/23).

The plaintiff requested from the defendant an employer contribution of 15% on the remuneration deferred by him in accordance with Section 1a (1a) BetrAVG as part of the company pension scheme by way of deferred compensation. However, the collective agreement on company pension schemes dated 9 December 2008, which was applicable to the employment relationship by virtue of the fact that both parties were bound by the collective agreement, already provided for an "additional" employer contribution of 25% of the collectively agreed basic wage for skilled workers in the case of deferred compensation. After the lower courts had dismissed the claim, the Federal Labour Court had to clarify whether a collective agreement dating from the year 2008 can regulate a deviation from the statutory employer contribution although the clause permitting such a deviation by collective agreement in Section 19 (1) BetrAVG only came into force with effect from 1 January 2018.

The Federal Labour Court agreed with the lower courts, with the result that the plaintiff's appeal on points of law was unsuccessful. The 3rd Senate of the Federal Labour Court interpreted the clause permitting the deviation by collective agreement of Section 19 (1) BetrAVG on grounds of the different dates of entry into force of the standard provisions of relevance to the dispute as outlined above. According to this, the wording of the clause permitting a deviation by collective agreement does not contain any temporal restriction to the effect that one cannot deviate from the statutory regulation on employer contributions by way of previously concluded collective agreements. The legislator, aware of the fact that deferrals of compensation on a collectively agreed basis had already been extensively practised prior to the entry into force of the clause permitting deviations by collective agreement in Section 19 (1) BetrAVG, had not standardised any requirement regarding the time of the conclusion of the collective bargaining agreement.

The Federal Labour Court's decision can most certainly be welcomed - as far as can be seen at present - it creates legal clarity for a multitude of old cases. In this respect, companies bound by collective agreements (Section 19 (1) BetrAVG) and those applying collective agreements by mutual agreement (Section 19 (2) BetrAVG) that already grant employer contributions to deferred compensation by means of collective agreements can in all likelihood breathe a sigh of relief. Nevertheless, it remains to be seen whether and what requirements the Federal Labour Court will place on "old collective agreements" in the reasons for its decision.

Moritz Coché

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1.9 No binding effect of a status determination in the event of a transfer of business

A status determination under social security law, according to which a self-employed activity is determined, does not continue to have effect after a transfer of business to a new employer via Section 613a BGB. This was recently decided by the Regional Social Court (Landessozialgericht, LSG) of Bavaria in a judgement dated 22 August 2024 (case L 7 BA 114/23).

A status determination procedure is regularly carried out if uncertainty exists as to whether a person is self-employed or employed. This may be the case for freelancers, for example. If the existence of self-employment is certified in the course of such proceedings, acquirers cannot rely on this decision in the context of a transfer of business.

In the present case, the plaintiff was a partner in a GbR together with his father from 2008 to 2014. The object of the company was and is the operation of a restaurant, a butcher's shop and a hotel. The plaintiff's wife also worked in the business. In a decision issued in March 2011, BKK24 determined with respect to the wife that she was not obliged to pay social insurance for her work for the GbR from 1 March 2011. After the plaintiff's father left the GbR, the plaintiff continued the existing business as a sole proprietorship, in which his wife continued to work. During a subsequent tax audit, the wife stated that she has been working seven days a week in her husband's business since 1 January 2015 and receives a gross salary of EUR 2,500. She manages the hotel area and the staff, cooks and works in the administration of the butcher's shop. She is on an equal footing with the owner of the business; she makes personnel decisions on her own responsibility and is authorised to manage accounts. She is not bound by instructions and can organise her work freely. The pension insurance fund, however, deemed the characteristics of dependent employment to prevail, and thus demanded additional social security contributions of around EUR 50,000 for the period that had not yet become time-barred. The plaintiff successfully defended himself against this at first instance. The LSG Bavaria overturned the judgement granting the claim and dismissed the action.

The central legal question in the proceedings was whether the decision of BKK24 precluded the classification of the plaintiff's wife as a dependent employee. The LSG Bavaria rejected this. A possible binding effect failed because Section 613a BGB only applies to employment relationships. Accordingly, the decision from 2011 could not have any binding effect in the present case via Section 613a BGB and hence there were no valid objections to the classification of the plaintiff's wife as a dependent employee.

In practice, the decision means that, in connection with transfers of business, employers cannot simply rely on a previous determination of the status of persons working in their company as self-employed. Rather, a review of the situation is required. In view of the fact that the German Pension Insurance (DeutscheRentenversicherung, DRV) is intending to use the AI tool KIRA for company audits from 2025 onwards and therefore expects an increased probability of detecting bogus self-employment, companies should readjust their existing compliance systems in this respect.

Isabel Hexel

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1.10 No right of the works council to information on the resolution of collective bargaining conflicts

The Federal Labour Court (decision of 30 April 2024 - 1 ABR 10/23) rejects the works council's right to information about union majorities in the company and emphasises the limits of the works council's monitoring task.

The employer, a subsidiary of Deutsche Bahn AG, is a member of an employers' association that had concluded numerous collective agreements with various trade unions, including most recently a framework collective agreement.
As early as 2021, the employer informed the works council of a collective bargaining conflict that existed at the company, which was to be resolved in accordance with Section 4a (2) sentence 2 TVG to the effect that only collective agreements of the majority union were to apply. The works council then applied to the employer for information on the facts and assessments upon which the determination of the majority situation was based. The works council argued that it had to monitor the implementation of the collective agreements applicable to the employees. The employer refused to provide the information.

The Federal Labour Court agreed with the lower courts and dismissed the works council's appeal on points of law as unfounded. Compliance with Section 4a (2) sentence 2 TVG does not constitute a task pursuant to shop constitution law. The provision is not intended to protect the employee as required under Section 80 (1) No. 1 BetrVG, but rather to ensure the "functioning of collective bargaining autonomy" by resolving collective bargaining conflicts and thus creating legal certainty for the employer bound by the collective agreement (Bundestag printed paper (BT-Drs.) 18/4062, p. 8).

Insofar as the works council asserted that it needed the requested information to monitor the implementation of the applicable collective agreements in the company, the required necessity of the information for proper monitoring was also lacking. According to Section 4a (2) sentence 2 TVG, the collective agreement of the trade union that "has the most members in an employment relationship in the company at the time of the conclusion of the most recently concluded conflicting collective agreement" applies. Accordingly, the time at which the collective agreement is concluded in writing is decisive (see also BT-Drs. 18/4062, p. 13). In the present case, due to the passage of time, the required majority ratios were no longer necessary as a result of at least one collective agreement concluded at a later date. A claim relating to the past, however, is not granted by Section 80 (1) No. 1 BetrVG.

The Federal Labour Court sets clear limits for information relating to the past concerning union majorities in the company. However, works councils still have a "loophole": The works council can demand information about the pay scales applicable in the company within the scope of co-determination in accordance with Section 99 BetrVG (see BAG, decision of 27 June 2000 - 1 ABR 36/99). This also includes information on the resolution of a collective agreement conflict, as the application of the "correct" collective agreement is important for proper grouping.

Marko Vraetz

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1.11 The clean desk and the works council's right of co-determination

The introduction of a "clean desk policy" and a "desk sharing" concept does not in itself trigger any co-determination rights of the works council. Only individual requirements of the employer may be subject to co-determination. In a decision from August 2024, the Baden-Württemberg Higher Labour Court identified what these may be.

The distinction between "work conduct" not subject to co-determination and "organisational conduct" subject to co-determination within the meaning of Section 87 (1) No. 1 BetrVG is a perennial issue in labour court rulings. With the emergence of new forms of work and organisation, the dividing lines must be determined anew each time on the basis of established principles. In a decision dated 6 August 2024 - 21 TaBV 7/24, the Regional Labour Court had to deal with the works council’s possibilities of influencing a planning concept specified by the employer for the introduction of a "desk sharing" model and an associated "clean desk policy". While, according to the established case law of the Federal Labour Court, this does concern organisational conduct if the purpose of a measure is to shape cooperation amongst staff within the company or ensure order within the company, measures that are intended to directly specify the work obligation or ensure its performance concern work conduct. If a measure affects both areas, its predominant, objective regulatory purpose is decisive.

The employer's concept in the case up for decision includes, among other things, guidelines on which private items employees may bring to the workplace (such as plants, photos, personal keepsakes, etc.) and how these are to be stored in the company before and after working hours if the employees do not take them home. According to the Regional Labour Court, although the ban on leaving these items on the desk, on company furniture or on the floor of the work area relates to work conduct, the associated instruction as to where and how the items are to be stored on the employer's premises after their removal from the work area (in this case in a personal "locker") can certainly also be attributed to organisational conduct. This also applies to the so-called overlapping use of the office space provided by the employer. According to the employer's concept, areas actually designated as break rooms could also be used for spontaneous work meetings and thus for work activities. The Regional Labour Court did not affirm any further co-determination rights; in the absence of a booking tool, Section 87 (1) No. 6 BetrVG (introduction of technical equipment) was not relevant and a co-determination right pursuant to Section 87 (1) No. 7 BetrVG (occupational health and safety) could also be ruled out, as no specific risk to employees was recognisable.

The Regional Labour Court made its decision in the context of an application by the works council to establish a conciliation board in accordance with Section 76 BetrVG, meaning that only an "obvious" lack of co-determination rights had to be examined. And yet the decision shows once again how far the works council's participation rights can extend when it comes to company organisation. It will hardly be possible to organise modern office concepts in such a way that no co-determination is triggered. However, the employer should at least have room for manoeuvre when it comes to measures with a potential double effect: the clearer the objective focus of the measure is on work conduct, the more likely it is that it can be implemented without works council involvement. 

Kathrin Vossen

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2. New legislation

2.1 Growth Opportunities Act - amendment to the one-fifth rule

From a tax perspective, the purpose of the German Growth Opportunities Act (Wachstumschancengesetz) is to implement the framework conditions for more growth, investment and innovation through targeted measures.

Of relevance to companies from a labour law perspective are the changes to the so-called one-fifth rule (see Section 34 (1) in conjunction with (2) No. 4 German Income Tax Act (Einkommensteuergesetz, EStG), which will take effect from 1 January 2025.

According to the previous legal situation, companies had to take the one-fifth rule into account for certain wages (in particular compensation and severance payments) in the wage tax deduction procedure. 

With effect from 1 January 2025, the provisions of Section 39b (3) sentences 9 and 10 EStG will no longer apply and thus the obligation to apply the one-fifth rule in the wage tax deduction procedure. However, even if the wording of the law is not clear in this respect, companies will still have to show the rate reduction under Section 34 (1) EStG separately for the wages in question (see Section 41b (1) sentence 2 No. 3 EStG).

In future - as in the past - employees will be able to claim the application of the one-fifth rule in their income tax assessment by submitting an income tax return.

The one-fifth rule is relevant in many cases in labour law practice. In particular, it applies to compensation, severance payments and remuneration from long-term incentive plans.

In practice, this essentially means that an obligation to apply the one-fifth rule can no longer be agreed from 1 January 2025. Corresponding provisions, which are also frequently found in social plans, should no longer be negotiated. Companies should also review any obligations in long-term incentive plans and adjust them if necessary.

Jörn Kuhn 

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2.2 Hubertus Heil presents draft of a new law on compliance with collective bargaining agreements 

Federal Labour Minister Hubertus Heil recently presented a draft of the planned Act on Compliance with Collective Bargaining Agreements (Tariftreuegesetz). The aim of the draft bill is that in future, public contracts from the federal government will only be awarded to contractors who adhere to the collective agreements in their sector. This will also apply to subcontracted companies and personnel leasing companies. The purpose of the draft bill is to strengthen collective bargaining coverage again, which has declined significantly in recent years. According to the draft, federal contractors are to be supported in future in monitoring compliance with the terms of the collective agreement by a newly established "Federal Collective Agreement Compliance Monitoring Centre" (Prüfstelle Bundestariftreue), which is to be based at the German Pension Insurance Fund for Miners, Railway Workers and Seamen (Deutsche Rentenversicherung Knappschaft-Bahn-See). In the event of violations, there is a risk of extraordinary termination of the contractual relationship as well as exclusion from public procurement procedures.

The draft bill also contains a digital access right to the company for trade unions. Among other things, it contains a provision stipulating that the employer must grant access to existing digital communication channels and provide the trade union with the company email addresses.

Furthermore, the possibilities of collective bargaining evasion in the event of reorganisations within a group are being restricted by extending the subsequent binding effect regulated in Section 3 (3) TVG. In future, a collective agreement will continue to apply to the acquirer when a business of a company bound by a collective agreement within a group is transferred to another group company that is not bound by the same collective agreement.

Isabel Hexel

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2.3 Future Financing Act II - protection against dismissal in the financial sector

The draft bill of the German Future Financing Act II (Zukunftsfinanzierungsgesetz II) of the Federal Ministry of Finance dated 27 August 2024 not only brings with it a variety of tax law issues, but also has an effect on labour law. Specifically, this is the relaxation of protection against dismissal in the financial sector.

Following the relaxation of protection against dismissal for the risk-takers of significant credit institutions in 2019 with the introduction of Section 25a (5a) of the German Banking Act (Kreditwesengesetz, KWG), the Future Financing Act significantly extends this. The existing regulations for risk-takers in systemically important banks is being extended to non-systemically important banks as well as insurance companies, securities institutions and investment companies. In concrete terms, the group of persons covered in future will be treated like executive officers (leitende Angestellte). If a dismissal is socially unjustified, companies can then file a court application to terminate the employment relationship.

It should be noted that, in addition to being linked to the function of the person concerned, the intended regulations are also linked to income. In case of low income, the general regulations on protection against dismissal apply.

The current provision of Section 25a (5a) KWG reads as follows:

(5a) Risk-takers of significant institutions whose annual fixed remuneration exceeds three times the contribution assessment ceiling in the general pension insurance scheme within the meaning of Section 159 of Book Six of the German Social Code (Sozialgesetzbuch VI) and who are not managing directors, plant managers and similar executive officers authorised to independently hire or dismiss employees shall be subject to Section 9 (1) sentence 2 of the German Unfair Dismissals Act (KSchG), with the proviso that the employer's application for termination of the employment relationship does not require justification. Section 14 (1) of the German Unfair Dismissals Act remains unaffected.

Jörn Kuhn

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2.4 Growth initiative - new economic dynamics for Germany

On 5 July 2024, the federal government adopted the so-called growth initiative. It comprises a total of 49 economic policy measures to strengthen the German economy, including nine related to labour and social law. A key objective of the growth initiative is to counteract the decline in labour supply caused by the retirement of the baby boomers born between 1955 and 1964. To this end, three key factors are to be addressed in particular:

• Existing gainful employment is to be expanded by facilitating and appropriately remunerating overtime. To this end, a possibility based on a collective agreement or shop agreement is to be created to deviate from the current regulations of the German Working Hours Act (Arbeitszeitgesetz, ArbZG) with regard to the maximum daily working hours. In addition, bonuses by employers for overtime in excess of the (collectively agreed) contractually agreed full working hours shall be exempt from tax and duty. This also applies to bonuses paid by employers for extending the working hours of part-time employees. The package is to be rounded off by evaluating the special regulations introduced during the coronavirus pandemic regarding sick leave notification by telephone, as the federal government evidently sees a correlation with the increased rate of illness.
   
• A further point of adjustment is the continued employment of employees beyond the standard retirement age. To this end, the federal government wishes to make it easier for employers to continue to employ pensioners by severely restricting the "ban on previous employment" under fixed-term employment law for this group in accordance with Section 14 (2) sentence 2 TzBfG. In future, the ban on previous employment will no longer apply if the employee is entitled to a retirement pension and the limitation of the contractual term without objective grounds does not exceed a total duration of eight years or the number of twelve fixed-term contracts. In addition, the federal government wishes to abolish employer contributions to unemployment and pension insurance and pay them to the employee as an incentive to (continue to) work after reaching the standard retirement age; however,  employer contributions to pension insurance will only be paid if the employee decides not to make voluntary contributions to the pension insurance scheme. Finally, employment is to be made more attractive for pensioners through additional remuneration options: In addition to the option of receiving monthly supplements on their future pension for deferring retirement, employees are also going to be able to opt for a tax-free "pension deferral bonus" in future. The employee will then receive a one-off payment in the amount of the lost pension payment, which also includes the health insurance contributions saved by the pension fund.
• A measure to attract international workers to the German labour market has also drawn considerable interest. Among other things, newly arrived skilled workers will be able to claim a staggered 30, 20 and 10 per cent of their gross salary tax-free for the first three years.

In principle, the federal government's package of measures addresses the right issues. On the whole, the federal government's declaration of intent - and this is precisely all that this is - remains too vague to be able to forecast its impact on the labour market.

Marko Vraetz

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3. Labour law day at Oppenhoff  on 7 November 2024

This year's Labour Law Day is being held at our offices in Cologne from 10.00 am to 5.00 pm on 7 November 2024. Once again, the event is being held in hybrid form this year, which means that online participation is also possible.

We will address the topic of internal investigations and, in particular, explain the technical possibilities and labour law pitfalls of investigating company-related breaches of the law. We will then examine the co-determination rights of the works council when introducing AI and cybersecurity tools and provide specific practical examples. We will also focus on the EU's Pay Transparency Directive and the resulting need for employers to take action. We will round off Oppenhoff’s Labour Law Day with our usual overview of current labour court rulings and relevant legislation.

We would be delighted if you could join us on this day of interesting presentations and lively discussions.

Info& registration here.

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