Occupational Pensions: Partial retirement is to be treated as part-time work

By judgment of 21 January 2020 (docket number: 3 AZR 281/18) the Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled that for the calculation of pension benefits partial retirement (Altersteilzeit) is to be treated as part-time work (Teilzeitarbeit). The employer and the former employee were in dispute over the question of whether periods of partial retirement must be treated as part-time work and, thus, should be assessed with a part-time factor as determined in the pension plan. The plaintiff was granted a pension commitment which stated that the pension benefit level was to be reduced pro rata for periods of …

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Occupational Pensions: Employer’s obligation to carry out pension adjustments according to occupational pension law does not apply to non-occupational pension benefits

By judgment of 19 November 2019 (docket number: 3 AZR 281/18) the Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled that, in the event that an employer has granted a total pension (Gesamtversorgung) which consists of both occupational pensions and other types of pension benefits, the employer’s obligation to carry out pension adjustments according to Section 16 of the German Occupational Pensions Act (Betriebsrentengesetz) does only apply to occupational pensions. The employer and the former employee were in dispute over the level of pension adjustments. The employee had been granted a special pension commitment according to which he received a …

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Occupational Pensions: European Court of Justice confirms protection of employees in the event of employer insolvency

By judgment of 19 December 2019 (docket number: C-168/18) the European Court of Justice has ruled that employee’s pension entitlements which are based on so-called captive pension insurance schemes (Pensionskassenzusagen) are (to a certain extent) protected from benefit reductions in the event of employer insolvency. The plaintiff participated in a captive pension insurance scheme (Pensionskasse). From 2000 on he received benefit payments. In 2003 the captive pension insurance ran into financial difficulties and had to reduce its level of benefit payments. As a result, the employer became liable for the difference in benefits resulting from the reduction. In 2012 the …

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Occupational Pensions: Information provided by the employer to the employees must be correct, clear and complete

By judgment of 18 February 2020 (docket number: 3 AZR 206/18) the Federal Labour Court has ruled that if an employer provides information on occupational pensions such information must be correct, clear and complete. However, there is no general obligation to provide information on the social security treatment of pension benefits. The plaintiff participated in a captive pension insurance scheme (Pensionskasse) which was funded by himself via salary conversion. Prior to the conclusion of the corresponding insurance policy in 2003 he attended a works meeting on which an external advisor informed the employees about the financial chances such participation in …

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Update on local legislation implementing the Directive on the Posting of Workers

On 12 February 2020 the German Federal Cabinet adopted a draft law to implement the revised European Directive on the Posting of Workers in the framework of the provision of services. The revision of the Directive entered into force on 29 July 2018 after lengthy negotiations in Brussels (Directive 2018/957/EU amending Directive 96/71/EC). The revision of the Directive aims to improve the working conditions of posted workers while protecting the economy from wage dumping and unfair competition. The draft law implements the revised Directive. In the future, posted workers will benefit to a greater extent from working conditions that are …

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Crowdworkers are not employees under German Labour Law

Crowdworkers are not considered employees under German labour law under a ruling by the Higher Regional Labour Court of Munich on 4 December 2019 (docket number: 8 Sa 146/19). What are Crowdworkers? Crowdworkers are persons to whom so-called microjobs are offered via an Internet platform which they then carry out independently, if they accept the offers. According to the “Crowdworking Monitor” of the Federal Ministry of Labour and Social Affairs (BMAS) from 2018, around 4.8 percent of the eligible voters in Germany work as crowdworkers. The case The defendant operates an Internet platform and, among other things, carries out checks …

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Occupational pensions: Deviation from employer’s (contractual) obligation to adjust pension benefits requires detailed statement of reasons

By judgment of 21.06.2019 (docket number: 7 Sa 92/18) the State Labour Court Hamburg has ruled that a deviation from the employer’s obligation to adjust pension benefits in accordance with an increase in state pension benefits – as provided for in the employer’s pension plan in the event that the employer considers an adjustment “not justifiable” – requires a detailed statement of reasons. The employer must describe all relevant factors for his decision, the company’s economic status quo and the assumed negative development which would arise from the pension adjustment. The parties were in dispute over the adjustment of the …

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Entitlements on company pension are subject to particular protection in the event of a transfer of business according to Section 613 a German Civil Code

By judgment of 22 October 2019 (docket number: 3 AZR 429/18) the Federal Labour Court has extended its settled case law regarding the replacement of pension plans in the event of mergers and acquisitions. A replacement of a pension plan by a pension plan existing at the acquirer a must be in accordance with the principle of protection of legitimate expectation and the principle of proportionality. For occupational pensions, the Federal Labour Court has developed a special three-stage examination that reflects these principles. In the present case, the Federal Labour Court stated that these principles and requirements also apply in …

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Employee Leasing: Deviation from Equal Pay

According to a judgement of the Federal Labour Court employers (agency) who lease employees (agency workers) to a third party (client) can deviate from the principle of equal treatment (“Equal Pay”) by virtue of a reference clause in the contract of employment only if, for the period of the lease, the relevant collective bargaining agreement for employee leasing fully, and not just partially, applies (judgement dated 16 October 2019, docket number 4 AZR 66/18). The plaintiff was employed by the defendant and leased out to a client as a driver for the period from April 2014 to April 2015. The …

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Time Recording Systems Jumpstarted by the Works Council?

In an earlier ruling this year, the European Court of Justice held that European member states must require employers to introduce systems for recording the working time of their employees. However, since there is no German law stipulating time recording( with the exception of overtime recording duties) yet, typically it is up to the employer whether or not to introduce consistent time recording mechanisms. In the underlying case, the works council wanted to force the employer into negotiations for an electronic time recording system within the company. The employer argued that the works council did not have the right to …

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A cycling accident with fatal consequnces – Regional Labour Court rules over injury and dismissal

The problem Around 20% of all dismissals of employees are subject to legal action. Therefore it is reasonable that employers want to make sure that dismissals are legally sound. One of the most important points in such lawsuits is whether the letter of notice has reached the employee, since the employer must not only prove that he sent the letter of notice, but also that this letter reached the employee, i.e. that he or she had the opportunity to take note of it. This often leads to uncertainty as to whether or when the letter reached the employee. Such an …

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Bad handwriting – dismissal invalid?

The problem Bad handwriting – a problem that is of little importance in times of computers, smartphones, etc. However letters of dismissal may not be sent via mail but have to be signed by hand; therefore even in our modern times, bad handwriting can affect the invalidity of a such a notice and thus lead to a defeat in court. The plaintiff, an employee of the Berlin-Schönefeld airport , filed a lawsuit against her dismissal. This dismissal was based on her numerous absences due to illness. First, she argued, that her absence was not so severe as to justify the …

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(Not) nice seeing you again? Federal Labour Court decides on fixed-term employment

The problem In the year 2018 8,3 % of all German employees worked on the basis of a fixed term employment contract. Various rules apply to this kind of employment and breaching one of them often leads to the employment contract being indefinite. One of the most important rules is the time limit on fixed-term employment contracts. If the time limitation is not justified by factual reasons (e.g. needing a substitute for an employee being on maternity leave) the duration of the time limitation may not exceed 2 years. Furthermore this time-limitation is invalid if the employee has already been …

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Parental leave and vacation entitlement – a complex matter for employers

The problem Vacation entitlements – a matter that has undergone so many changes lately that the author can no longer even think of a suitable introduction. However this article focuses on a recent decision of the Federal Labour Court (19 March 2019, docket number: 9 AZR 495/17) in which the court explained the connections between holiday and parental leave. The applicant was a former employee who was on parental leave for six years before terminating her employment at the end of her leave. Following her dismissal, she claimed compensation for leave over the last six years, since she had not …

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New German law shall prevent crisis in labour market

For years, the German labour market prospered, mass unemployment was not at all a problem, in fact it was difficult to find qualified employees. However, the times of sustained growth may soon be over. The ifo business climate index has been decreasing for the last couple of months and the German economy shrank slightly in the second quarter of 2019 compared with the previous quarter. The German government wants to be prepared for an potential recession and therefore started elaborating a draft law especially concerning support for struggling companies and their employees. During the economic crisis 2008/2009 many companies struggled …

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