Employment Law29.06.2022 Newsletter
Focus on Labour Law – 2nd Quarter 2022
In the second half of this year there are once again going to be important labour law reforms that will keep HR departments on their toes. The Act on the Implementation of the EU Working Conditions Directive [Gesetz zur Umsetzung der EU-Arbeitsbedingungenrichtlinie] is due to come into force on 1 August 2022 and includes numerous amendments to the Act on Proof of Working Conditions Governing an Employment Relationship [Nachweisgesetz, NachwG] and the Act on Part-Time and Fixed-Term Employment [Teilzeit- und Befristungsgesetz, TzBfG]. Furthermore, the Act on Increasing the Protection provided by the Statutory Minimum Wage and on Changes in the Area of Marginal Employment [Gesetz zur Erhöhung des Schutzes durch den gesetzlichen Mindestlohn und zu Änderungen im Bereich der geringfügigen Beschäftigung] is anticipated to enter into force on 1 October 2022. Both reforms will cause enormous changes in the area of HR contract management.
We have summarised the most important innovations for you in this Focus on Labour Law. We also report on a multitude of other important decisions of the labour courts of relevance to company HR work.
1. New case law
1.1 Beware of holiday (remuneration) claims!
1.2 Training costs - invalidity of repayment clauses in the event of termination by employee
1.3 Mandatory information in a mass dismissal notice
1.4 Scanned signature and written form requirement in fixed-term contracts
1.6 No remuneration in lieu of holiday in case of employee’s uninterrupted illness
1.7 Regulatory competence of local works councils with regard to annual bonuses
1.8 (No) entitlement of works council to conclusion of a social plan
1.9 No co-determination in the event of hazards at company
1.10 Entitlement of works council to a tablet or notebook
2. Legal developments
2.1 Minimum wage and forthcoming changes for mini-jobbers and midi-jobbers
1. New case law
1.1 Beware of holiday (remuneration) claims!
ECJ Advocate General De la Tour has published his proposed decision of 5 May 2022 (case C-120/21) on the question of the statute of limitations for holiday (remuneration) claims. If his opinion is followed, claims to annual holiday and thus also the claim to remuneration in lieu of holiday only lapse upon termination of the employment relationship if the employer has complied with its obligations to notify the employee of his holiday entitlement and requested that employee take such holiday.
The ECJ had already issued a landmark ruling in 2018 on the expiry of holiday claims (6 November 2018 - case C-684/16). The German Federal Labour Court [Bundesarbeitsgericht, BAG] implemented this in its ruling of 19 February 2019 - 9 AZR 423/16. According to this, the claim to the statutory minimum holiday expires at the end of the calendar year or a permissible carry-over period only if the employer has previously requested the employee - formally if necessary - to take his holiday and has informed him clearly and in good time that the holiday will expire at the end of the calendar year or carry-over period if he does not apply for the holiday. Since then, the automatic expiry of holiday claims has already been passé.
On grounds an order by the BAG to the refer the matter dated 29 September 2020 - 9 AZR 266/20 (A), it is now up to the ECJ to decide whether the German statute of limitations is compatible with the European Working Time Directive (Directive 2003/88/EC) or whether the entitlement to recreational leave is inadmissibly limited by the statute of limitations. The ECJ is expected to endorse the statements of the Advocate General. This would mean that the limitation period for unused statutory holiday (remuneration) claims would also only begin to run if the employer had – in the past - complied with its aforementioned notification obligations. Otherwise, employees would still be able to assert unfulfilled holiday claims even decades later. Even employees who have left the company or their heirs could claim compensation for unfulfilled holiday claims.
Employers should therefore - if they have not already been doing so since 2018 - issue regular and proper notices to the workforce about individual holiday claims and point out the consequences of not taking the holiday. Termination agreements should contain a standard statement to the effect that all holiday claims have been granted in kind, and employment contracts should contain effective provisions on preclusion periods. Should the ECJ agree with the Advocate General's final submission, we can expect this to be a standard issue arising in the future, particularly in termination disputes. Employee representatives will then try to use means such as the right to information under data protection law and compensation for unfulfilled holiday claims to drive up the severance payment.
1.2 Training costs - invalidity of repayment clauses in the event of termination by employee
The BAG is tightening the requirements for effective repayment clauses in training agreements. Companies run the risk of being left with the costs of training due to invalid agreements if employees give notice of termination during the envisaged binding period. It is therefore imperative that the BAG’s ruling of 1 March 2022 - 9 AZR 260/21 is observed when drafting training agreements.
The claimant, the operator of a rehabilitation clinic where the defendant was employed as a geriatric nurse, assumed costs of EUR 4,090 for the defendant’s participation in a training event. The defendant undertook to remain in the employment relationship for at least six months after the end of the training. Additionally, the training contract contained the following repayment clause:
“If the employee leaves the employer's services through his own ordinary termination that is not attributable to the employer or through his own extraordinary termination that is not attributable to the employer, or through an ordinary termination or extraordinary termination declared by the employer on grounds of the employee’s conduct, before the expiry of the binding period referred to in para. (1), the employee shall repay to the employer the total costs assumed by the employer".
The defendant successfully completed the training on 3 December 2019, but already terminated the employment relationship with effect from 1 February 2020 by letter dated 29 November 2019. The claimant subsequently demanded the (proportionate) repayment of the training costs from the defendant.
The BAG ruled that the claimant cannot reclaim the training costs. The repayment clause led to an unreasonable disadvantage for the employee and was therefore invalid.
An agreement pursuant to which an employee must contribute to the costs of training financed by the employer if he leaves the employment relationship before the expiry of certain periods is generally permissible. However, the employee's commitment to remain in the employment relationship and, correspondingly, also the repayment obligation in the event that the commitment is not realised, must correspond to a justified interest on the part of the employer. Hence, also in cases where the employee terminates the employment relationship, the repayment agreement has to differentiate according to the reasons for his leaving. In the present case, the repayment obligation was linked to all terminations declared by the employee not based on a reason attributable to the employer. This also included a termination by the employee because, for example for health reasons, he is permanently no longer able to perform his work through no fault of his own. In the opinion of the BAG, the employer cannot have a justified interest in the continuation of an employment relationship which can no longer be fulfilled.
The decision emphasises the high requirements set by the BAG for the effective drafting of repayment agreements for training. The further training and qualification of employees is currently a pressing issue in labour law practice, not least against the backdrop of advancing digitisation and a shortage of skilled workers. In future, therefore, companies are likely to be kept even busier addressing the requirements of case law on the legally secure structuring of training contracts with repayment clauses.
1.3 Mandatory information in a mass dismissal notice
Last summer, the Regional Labour Court [Landesarbeitsgericht, LAG] of Hesse caused great commotion because it took the view in two decisions that certain information in the mass dismissal notice which, according to the wording of the law, only “should" be included there, mandatorily had to be included, because otherwise the underlying dismissals for operational reasons would be invalid (LAG Hesse dated 18 June 2021 - 14 Sa 1225/20, LAG Hesse dated 25 June 2021 - 14 Sa 1228/20). Now, the Erfurt judges have given the all-clear.
The claimant had asserted that her dismissal was null and void under Sec. 134 of the German Civil Code [Bürgerliches Gesetzbuch, BGB] because the defendant had failed to notify the Employment Agency of the information that "should” be contained in the mass dismissal notice pursuant to Sec. 17 (3) sentence 5 of the German Unfair Dismissals Act [Kündigungsschutzgesetz, KSchG]. The defendant had in fact not sent the Agency this "should-be-provided information" until after the notices of termination had been issued. From the forms of the Employment Agency at the time and from the instructions of the Employment Agency on filling out mass dismissal notices, it could be inferred that the information pursuant to Sec. 17 (3) sentence 5 KSchG was voluntary.
The LAG Hesse deemed the mass dismissal notice invalid because the information required under Sec. 17 (3) sentence 5 KSchG was missing. The court reasoned that the employer is not allowed to differentiate between information that must and information that should be provided and that, in all events, the information that should be provided mandatorily also has to be provided if it is available to the employer.
The BAG’s ruling on the appeal on points of law is equivalent to a complete dismantling of the decisions of the LAG Hesse (BAG dated 19 May 2022 - 2 AZR 467/21, see also BAG, press release No. 18/22). For example, the LAG Hesse had already been erroneous in its determination of whether the requirements for filing a mass dismissal notice pursuant to Sec. 17 KSchG had been fulfilled. With its opinion that the employer is also obligated to provide the information that “should” be provided pursuant to Sec. 17 (3) sentence 5 KSchG, the LAG Hesse had disregarded a clear legislative decision. In addition, it had already been clarified under European law that the information envisaged in Sec. 17 (3) sentence 5 KSchG did not have to be included in the notice.
The BAG's decision is remarkable in two respects: first of all, taking just eleven months, the appeal on points of law procedure was comparatively short, doubtlessly to dispel the considerable uncertainty in practice as quickly as possible. Secondly, the reasons for the decision show an unusual sharpness vis-à-vis the LAG Hesse. This illustrates how little the Erfurt judges were "pleased" about the LAG Hesse's further development of the law. The BAG’s decision has been gratefully received in practice: properly filling out a mass dismissal notice is already no easy task. The BAG’s clarifications are a small but nevertheless welcome consolation.
1.4 Scanned signature and written form requirement in fixed-term contracts
The scanned signature on a fixed-term employment contract is not sufficient for a valid limitation of the term of an employment relationship. Written form within the meaning of Sec. 126 of the German Civil Code [Bürgerliches Gesetzbuch, BGB] requires a handwritten signature or a qualified electronic signature, according to a recent decision by the Berlin-Brandenburg Regional Labour Court (LAG Berlin-Brandenburg dated 16 March 2022 - 23 Sa 1133/21).
The claimant had concluded a number of short-term fixed-term employment contracts with the defendant, a company operating in the field of personnel recruitment. These temporary employment contracts were supplemented by the defendant with scanned signatures of the managing director, personally signed by the claimant and then returned to the defendant by post.
In her action, the claimant objected to the last fixed-term agreement and asserted a violation of the statutory written form requirement of Sec. 14 (4) German Part-Time and Fixed-Term Employment Act [Teilzeit- und Befristungsgesetz, TzBfG].
The LAG Berlin-Brandenburg confirmed this opinion and found the mandatory written form required under Sec. 14 (4) TzBfG to be lacking. Pursuant to Sec. 126 (3) BGB, written form may be replaced by electronic form unless otherwise stipulated by law. According to Sec. 126a (1) BGB, when replacing the legally required written form with electronic form, the issuer must provide the electronic document with a qualified electronic signature. A scanned signature does not meet these requirements.
According to EU Regulation No. 910/2014 (the so-called eIDAS Regulation), a qualified electronic signature must meet particularly strict technical requirements. The eIDAS Regulation distinguishes between three types of electronic signatures. Only the qualified electronic signature (Art. 3 No. 12 eIDAS Regulation) replaces the written form according to Sec. 126 BGB.
However, providers of programmes for creating a qualified electronic signature in the Federal Republic of Germany must obtain certification from the Federal Network Agency [Bundesnetzagentur, BNetzA]. A list of providers can be found on the homepage of the BNetzA.
Understandably, employers try to fulfil the written form requirement in creative ways, especially in the case of particularly short-term and short-term fixed-term contracts. However, such an approach entails considerable risks. If an employee asserts an invalid fixed term in court, this can quickly give rise to considerable claims, for example, for default of acceptance wages, as well as to indefinite employment relationships.
The introduction of a qualified electronic signature is also unlikely to help facilitate the conclusion of legal transactions that require a formal signature, which is unfortunate in view of increasing digitisation. Since the requirements for a qualified electronic signature are high, the conclusion of a written employment contract is likely to remain the safest way of fulfilling the statutory written form requirement, not least in view of the expected amendments to the German Act of Proof of Working Conditions in the Employment Relationship [Nachweisgesetz, NachwG].
Many indefinite employment contracts include a time limit of up to the standard retirement age. This time limit also requires a written form, which is often overlooked. It is therefore advisable to seek legal assistance when drafting employment contracts at an early stage, so as to minimise the risk of subsequent disputes.
1.5 Receipt of letter of termination: prima facie evidence in case of termination by registered mail delivered to recipient’s letterbox
Employers generally bear the burden of proof of the employee’s receipt of the letter of termination. In its ruling of 18 January 2022 - 1 Sa 159/21, the LAG Schleswig-Holstein ruled that if the termination notice is sent by registered mail delivered to the recipient’s letterbox, prima facie evidence supports the employee’s receipt of the termination notice. With this, it follows the opinion of the LAG Mecklenburg-Vorpommern (judgement of 12 March 2019 - 2 Sa 139/18) and the LAG Baden-Württemberg (judgement of 28 July 2021 - 4 Sa 68/20).
The defendant is an arcade operator who employed the claimant as a service employee. She terminated the employment relationship with effect from 30 November 2020 by registered mail delivered to the recipient’s letterbox dated 29 October 2020. On 29 October 2020, a postal employee confirmed with his signature that he had placed the termination letter in the claimant's letterbox. The claimant lived in an apartment building with ten floors and approximately 80 letterboxes. He claimed not to have received a notice of termination. The Elmshorn Labour Court initially upheld the claimant's action for protection against dismissal. It was of the opinion that proof of delivery of registered mail delivered to the recipient’s letterbox did not provide prima facie evidence of receipt of the letter.
The LAG Schleswig-Holstein disagreed and ruled that the claimant had validly received the notice of termination. This follows from the prima facie evidence of receipt of the notice of termination, which had not been sufficiently refuted by the claimant.
In the case of registered mail delivered to the recipient’s letterbox, the delivery is removed from the routine delivery for the postal employee, in that he peels off a so-called "peel-off label", which serves to identify the posted item, from the delivery and affixes it to the delivery receipt relating to the posted item. He then confirms the delivery of the letter on this document with his signature and the date. Applying this procedure, incorrect deliveries are so unlikely, even in large apartment buildings with many letterboxes, that prima facie evidence is deemed sufficiently brought. In addition, a postal employee is a person who is professionally entrusted with the delivery of documents and who has corresponding experience in the delivery of documents. If these conditions are met, prima facie evidence exists to the effect that the mail has been properly deposited in the correct letterbox.
Relief from the burden of proof in connection with access issues is frequently the subject of labour court decisions. Case law has been inconsistent to date. We can therefore welcome the fact that, with the LAG Schleswig-Holstein, three state labour courts have now affirmed prima facie evidence for the receipt of a notice of termination by registered mail delivered to the recipient’s letterbox. However, there will not be legal certainty until the matter has been finally decided by the highest court. For civil jurisdiction, the German Federal Court of Justice [Bundesgerichtshof, BGH] already answered the question a few years ago in the sense of the present decision (ruling of 27 September 2016 - II ZR 299/15). If employers do not want to rely on the BAG’s agreement with this opinion, their only option is to hand over the termination letter personally at the workplace or by messenger, with it being understood however that such messenger must be carefully instructed, at the employee's place of residence.
1.6 No remuneration in lieu of holiday in case of employee’s uninterrupted illness
An employee who is incapacitated for work for more than 15 months after the end of the holiday year cannot claim remuneration in lieu of the holiday. This is also the case if the employer has not fulfilled its obligation to cooperate by informing the employee of his holiday claims and their possible expiry (LAG Hamm dated 17 February 2022 - 5 Sa 872/21).
The claimant, who had been employed by the defendant for over 20 years, was certified as incapacitated for work in 2010. In 2019, the claimant demanded remuneration in lieu of 60 holiday days as well as claiming holiday pay for the years 2016 and 2017. In this connection he pointed out that the defendant had only posted information about the taking of leave on the bulletin board. Because he had not been in attendance at the company, he had been unable to take note of the posted information.
Like the lower court, the LAG Hamm dismissed the action. To begin with it clarified that holiday claims generally expire at the end of the calendar year or at the end of 31 March of the following year. However, since the landmark decision of the BAG of 7 August 2012 - 9 AZR 353/10, modified requirements for the expiry of holiday have applied to employees on long-term sick leave. Accordingly, holiday claims expired at the earliest 15 months after the end of the holiday year. The obligation to request the employee to take his holiday and to inform him clearly and in good time that his holiday will expire at the latest at the end of the transitional period also still exists during a prolonged illness. However, if the employee has been sick for 15 months without interruption, the employer can invoke the expiration of the holiday claim even if it has not fulfilled its obligation to cooperate. In this case, the reason for the expiry of the holiday is not the employer's failure to cooperate. The only causal factor for the expiry of holiday was the employee's incapacity for work, which made it impossible for the employer to grant the holiday.
Considering the employee-friendly case law of the BAG and the ECJ on holiday issues over recent years, the ruling of the LAG Hamm is surprising both in its result and in its reasoning. In its ruling, the LAG Hamm itself answered the question pending before the ECJ as to whether the employer's obligation to inform and cooperate also applies to employees who have been on long-term sick leave. However, there are contradictions within the case law of the court instance. The Cologne Labour Court recently even ruled that the employer's obligations to cooperate in granting leave do not apply in case of an employee who has been on long-term sick leave (ruling dated 30 September 2021 - 8 Ca 2545/21).
Due to the unclear legal situation, employers are urgently advised to fulfil their cooperation duty also with regard to employees who have been on long-term sick leave and to also inform them in good time about any existing holiday claims and their expiry.
1.7 Regulatory competence of local works councils with regard to annual bonuses
The responsible body for the regulation in a shop agreement that ties the granting of an annual bonus to the determination of a company-wide total budget without a reference to a specific business is the central works council. The local works council lacks the regulatory competence for this. It is also not possible to reinterpret an invalid shop agreement into a company-wide commitment if there is no evidence of at least a recognisable hypothetical intention of the employer to want to be bound by individual agreement on a permanent basis (BAG dated 9 November 2021 - 1 AZR 206/20).
The claimant had left the employment relationship with the defendant by handing in his notice as per 30 November 2018. The defendant operates two businesses, which each have local works councils and a central works council. In 2007, it concluded a shop agreement with each of the two local works councils concerning, among other things, the payment of annual bonuses, for whose calculation a company-wide overall budget was provided. The shop agreements did not contain a clear reference to a specific business. However, the agreements contained cut-off date provisions under which the bonus was forfeited if employees left the company by 1 January of the following year. The defendant therefore refused to pay the claimant the bonus for 2018, against which the latter took legal action. Both lower courts dismissed the action on the basis of the cut-off date provision.
In its ruling of 9 November 2021 - 1 AZR 206/20, the BAG confirmed that the claimant was not entitled to the bonus, albeit on completely different grounds than that of the previous instances: the BAG held the view that the claim to the bonus had not arisen because the shop agreement concluded by the defendant with the local works council was invalid. Due to the company-based calculation of the bonus, the subject matter of the shop agreement did not refer to the respective business, with the result that the local works council lacked the required regulatory competence. Because this affected the entire company, the responsibility lay with the central works council.
There was also no contractual entitlement to the bonus. The judges in Erfurt thus clearly rejected the reinterpretation of the invalid shop agreement as an overall commitment. For this to be the case, there needs to be special circumstances which justify the assumption that the employer intended to make an individual contractual commitment to the employees irrespective of the shop agreement. No such intention was identifiable.
For practical purposes, we can conclude from the BAG’s ruling that regulations on annual bonuses which are linked to the success of the company without any reference to a specific business tend to be the responsibility of the central works council and need to be negotiated with it. Furthermore, the ruling is in line with the BAG case law on the reinterpretation of invalid shop agreements (BAG dated 23 August 1989 - 5 AZR 391/88). A reinterpretation into a contractual commitment requires special circumstances - irrespective of the employer's intention to be bound under the invalid shop agreement. If no such intentions are evident, a reinterpretation is excluded. From the employer's point of view this can be welcomed, as benefits under shop agreements are not necessarily granted on the same terms as benefits under individual contracts.
1.8 (No) entitlement of the works council to the conclusion of a social plan
If a works council is formed for the first time in a company previously without a works council only after the employer has started to implement a change of business, the works council does not have an enforceable right of co-determination to the conclusion of a social plan, according to the BAG dated 8 February 2022 - 1 ABR 2/21.
The parties are in dispute over a co-determination right to conclude a social plan. The employer ran a business comprising 25 employees. After informing the employees on 22 June 2018 that she would be shutting down the business on 31 August 2018, she terminated the majority of the employment relationships three days later.
The applicant works council, which was elected for the first time on 20 July 2018, subsequently requested that the employer enter into social plan negotiations, without success. The conciliation board set up by the labour court to deal with the issue of "drawing up a social plan due to the closure of the business" declared its own lack of jurisdiction in its ruling of 17 May 2019. The works council was of the opinion that it had an enforceable right of co-determination pursuant to Sec. 112 (1) sentence 2, (4) German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG] to the conclusion of a social plan in the context of the business closure.
In the BAG’s opinion, the works council of a business previously without a works council, which is not elected until after the start of the implementation of the change of business, cannot demand the drawing up of a social plan. Its participation rights arise at the moment of realisation of the facts to which the respective right is linked. In case of the participation and co-determination rights pursuant to Secs. 111 et seq. BetrVG, this is the intended, i.e. merely planned, but not yet implemented, change of business. The works council’s participation should fundamentally always be prior to the implementation of the change of business, as the works council subsequently does not (any longer) have any possibility of influencing the employer's decision-making process.
As a result, employers are not obligated to wait until a functioning works council has been formed before implementing a measure that in itself requires participation. This even applies if its election is anticipated and the time until its constitution foreseeable. The (delay) risk is borne by the employees, who are free to elect a works council at any time, regardless of the employer's plans. If the works council’s formation is foreseeable, the following applies: the change in business should be initiated, but the "timely" election should, of course, never be thwarted.
1.9 No co-determination in the event of hazards at the business
The works council only has a right of co-determination with regard to necessary occupational health and safety measures for employees working at the business in accordance with Sec. 87 (1) No. 7 BetrVG in conjunction with Sec. 3 (1) sentence 1 German Occupational Health and Safety Act [Arbeitsschutzgesetz, ArbSchG] if a specific hazard is either established or if such a hazard has been established on the basis of previously agreed company regulations by way of a hazard assessment. This was confirmed by the BAG in a judgement on 7 December 2021 - 1 ABR 25/20.
The parties were in dispute over the validity of an arbitration board decision on the workload of the doctors employed at the employer's clinic. This was based on a survey on the mental stress situation of the doctors and a subsequent shop agreement on the implementation of the ArbSchG, including the use of risk assessments in accordance with Sec. 5 ArbSchG. Following the formation of a conciliation board to determine the psychological hazards to the doctors, this resulted in a conciliation board ruling which, for occupational health and safety purposes, obligated the employer to maintain a certain ratio between clinic beds and full-time doctor positions. As the Regional Labour Court [Landesarbeitsgericht, LAG], unlike the decision of the Labour Court [Arbeitsgericht, ArbG], did not agree with the employer's reasoning - Sec. 87 (1) No. 7 BetrVG does not regulate the right of co-determination in staffing matters - the case came before the Federal Labour Court (BAG).
In the opinion of the BAG, the decision of the conciliation board was already invalid due to the lack of a sufficiently specified regulatory subject matter. For which concrete regulatory issues of occupational health and safety the conciliation board had been established had not been sufficiently specified. In addition, there was no right of co-determination of the works council pursuant to § 87 (1) No. 7, BetrVG in conjunction with Sec. 3 (1) sentence 1, ArbSchG. Even when assessing work-related mental stress, a concrete hazard first has to be determined. Thereafter, suitable and appropriate protective measures could be stipulated in accordance with Sec. 5 ArbSchG.
The practical effect of the decision is not limited to occupational health and safety issues. Rather, the decision underlines - long before invoking a conciliation board - the need to clearly define the subject matter subject to co-determination. Employers should take this to heart in order to avoid being left without a binding ruling after time-consuming and costly negotiations with the conciliation board.
1.10 Entitlement of the works council to a tablet or notebook
If the works council wants to hold works council meetings by means of video conferencing, it can demand that the employer permanently provide one tablet or notebook per works council member. Decisive in this respect is that the works council has given itself rules of procedure that regulate participation in works council meetings using video technology. The cost of this technology is usually deemed reasonable for the employer.
The pandemic has significantly boosted the use of videoconferencing technology in a variety of ways. In many companies, maintaining internal and external coordination processes would not have been possible over the last two years without the relevant software and hardware. Against this background, the work of the works council has also changed significantly. From 2021 onwards, the principle that works council meetings must be held exclusively in person no longer applies. Sec. 30 (2) BetrVG now also gives works councils the option of holding meetings by video and telephone conference. It was anticipated that this option would involve additional costs for the employer.
The LAG Hesse has now confirmed this in its decision dated 14 March 2022 - 16 TaBV 143/21. The employer must provide all works council members with a tablet or notebook equipped with a camera so that they can participate in meetings via video conference. The employer's fundamental obligation to bear the costs pursuant to Sec. 40 (2) BetrVG also includes such technology. Above all, the works council do not have to accept being referred to less expensive telephone conferences. The payment of acquisition costs of between EUR 160 and 210 per device can reasonably be expected of the employer. The provision of a device must also be permanent and not only for the duration of each video conference. The necessity of a video conference can arise at very short notice, meaning that a timely release of a device by the employer cannot always be guaranteed.
In its decision, the LAG Hesse gave additional significance to the fact that the works council had issued rules of procedure on the holding of video conferences that satisfied the requirements of Sec. 30 (2) BetrVG. The works council had stipulated in the rules of procedure the possibility of video conferences, the implementation of which required material reasons. With this, it had had upheld the legally required precedence of face-to-face meetings.
In practice, disputes regularly arise with works councils about the extent of the employer's obligation to bear the costs. The multitude of relevant court decisions bear witness to this. With the legislator’s decision to allow works council meetings to be held digitally under certain conditions, this obligation of the employer is almost automatically extended to include the costs of the required software and hardware. However, there is at least also a positive side effect for the employer: resolutions of the works council, which the employer often has to wait for, can be passed by the works council with the appropriate technical equipment even without the physical presence of the members on site and thus without delays. This is certainly advantageous, not least against the background of the pandemic, which has still not ended.
2. Legal developments
2.1 Minimum wage and forthcoming changes for mini-jobbers and midi-jobbers
On 3 June 2022, the Bundestag finally passed the Act on Increasing the Protection provided by the Statutory Minimum Wage and on Changes in the Area of Marginal Employment [Gesetz zur Erhöhung des Schutzes durch den gesetzlichen Mindestlohn und zu Änderungen im Bereich der geringfügigen Beschäftigung]. The approval of the Bundesrat followed on 10 June 2022. This means that there will be a set statutory minimum wage of EUR 12 gross/hour from 1 October 2022.
The plan is for the law to go into effect before the end of June 2022 so employers can make preparations. At the same time, the bill implements changes for mini-jobbers and employees in the transitional area (midi-jobbers). The previous maximum limit of EUR 450 for mini-jobbers is being adjusted to the new "marginal earnings limit" of EUR 520. This allows a mini-jobber to work up to ten hours per week. At the same time, the maximum limit for midi-jobbers will be raised from EUR 1,300 to EUR 1,600. The main point here is that the employer's contribution to social security in the area above the marginal earnings threshold of up to EUR 1,600 will be reduced to the regular social security contribution in the future. This is primarily intended to relieve employees.
In our view, contractual adjustments will be required, especially for mini-jobs and midi-jobs, as the hours and remuneration are often set down in the contract.
There is also news on this from Europe: on 8 June 2022, the EU states and the European Parliament agreed on uniform standards for minimum wages in the European Union. The EU Commission had launched an initiative, which is intended to lead to a standardisation of minimum wage processes, back in October 2020. In essence, standards for setting the minimum wage are to exist in every EU country - in particular, countries where the rate of collective bargaining coverage is below 80% are to be required to set such standards. One such addressee is the Federal Republic of Germany. According to the German Federal Statistical Office [Statistisches Bundesamt, StBA], collective bargaining coverage in Germany is 44%, meaning that the Federal Ministry of Labour [Bundesarbeitsministerium, BMAS] has had to react in the wake of the European agreement. Thus, the German Act on Tariff Compliance [Tariftreuegesetz] regulated that public contracts can only be awarded to those companies that pay collectively agreed wages. This aims to ensure collective bargaining coverage via the awarding of contracts to the public sector, one of the largest contracting authorities in Germany.
Tariff compliance laws are not new and are well known to companies bidding for public contracts. One example of this is the Saarland Tariff Compliance and Fair Wage Act [Saarländische Tariftreue- und Fairer-Lohn-Gesetz, STFLG], which came into force on 17 December 2021. Companies bidding for certain public contracts or concessions - e.g. in the area of construction, supplies and services - must pay the collectively agreed wage for the contract and comply with the essential core working conditions of the industry-specific collective agreement (Sec. 3 (1) and (2) STFLG). Thus, the ultimate aim is not just payment of the collectively agreed wage, but also to force the employer into the collective agreement.
Further developments remain to be seen. The agreement has been criticised by individual EU countries, as state intervention in wage development hardly seems compatible with the laws of the market economy.
2.2 EU Working Conditions Directive: from 1 August 2022, strict obligations – subject to fines - for employers to provide proof of working conditions governing the employment relationship are to apply
The legislative reform envisaged to enter into force on 1 August 2022 to implement the EU Directive on Transparent and Predictable Working Conditions has considerable implications for HR contract management.
Among other things, it is accompanied by the biggest reform to date of the German Act on Proof of Working Conditions Governing an Employment Relationship [Nachweisgesetz, NachwG], with violations being punished in future as administrative offences incurring a fine of up to EUR 2,000 per individual case.
This will immediately trigger a considerable need for action on the part of HR departments. Almost all employment contract templates will have to be adapted. In addition, new information processes will have to be set up.
Furthermore, the reform provides for new minimum working conditions. For example, in future the schematic agreement of a six-month probationary period for fixed-term contracts will no longer be possible. This is because, with the introduction of a new Sec. 15 (3) of the draft German Act on Part-Time and Fixed-Term Employment [Teilzeit- und Befristungsgesetz-Entwurf, TzBfG-E], the law will in future require an appropriateness test, i.e. in future, the probationary period for fixed-term contracts will have to be proportionate to the expected duration of the fixed term and the type of activity.
According to the federal government, the time required to adapt employment contracts to the new legal provisions of the reform will take three minutes. However, this assumption is completely out of touch with reality.
Isabel Hexel
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