According to a judgment of the Federal Labour Court (Bundesarbeitsgericht, BAG) dated 19 December 2018 (docket number 10 AZR 231/18), part-time employees can be entitled to the payment of overtime premiums with regard to working hours that go past the agreed part-time hours but do not exceed the working hours of full-time employment.
In the case in question, the Plaintiff was a part-time employee for the Defendant. A framework collective agreement, which contained regulations on, i.a., overtime premiums and the possibility to determine annual working hours, applied to her employment relationship. Annual working hours had been set for the Plaintiff, and the Defendant paid the respective basic remuneration. However, the Defendant did not give the Plaintiff overtime premiums for the amount of time which exceeded the agreed working time, since the overall amount of time did not exceed the working hours of full-time employment. Subsequently, the Plaintiff filed a suit, claiming respective remuneration. The 10th Senate of the Federal Labour Court ruled in favour of the Plaintiff.
What is particularly remarkable is that the 10th Senate, with this judgment, has abandoned its previous opposing view: In a judgment dated 26 April 2017 (docket number 10 AZR 589/15) the 10th Senate still ruled that it was not – forbidden – discrimination of part-time employees when their entitlement to overtime premiums was conditional on the exceeding of the working hours of full-time employees. With the judgment at hand the 10th Senate agreed with the 6th Senate of the Federal Labour Court. According to the latter, the assumption of the same threshold for both part-time and full-time employees, from which overtime premiums are granted, treats part-time employees less favourably than full-time employees and thus contradicts para. 4 (1) Part-Time and Fixed-Term Act (Teilzeit- und Befristungsgesetz, TzBfG). Para. 4 (1) Part-Time and Fixed-Term Act – roughly translated – reads:
“A part-time employee must not be treated less favourably due to his part-time work than a comparable full-time employee, unless there are objective grounds justifying different treatment. A part-time employee shall be granted remuneration or another divisible non-cash benefit at least equal to the proportion of his or her working time to the working time of a comparable full-time employee.”
According to the 6th Senate’s view – which the 10th Senate now agrees with – the comparison between full-time and part-time employees has to be drawn with regard to each remuneration component individually (cf. judgment dated 23. March 2017, docket number 6 AZR 161/16). Therefore the remuneration for regular working hours on the one hand and remuneration for overtime on the other hand has to be compared separately. The 6th Senate outlined that, in principle, shorter working time may only be remunerated differently in terms of quantity, but not quality. Part-time employees would be treated less favourably than full-time employees, if the number of working hours from which on an entitlement to overtime premiums arises, was not decreased proportionally to their working hours. In particular, it would lead to the assumption of an identical limit of workload for part-time and full-time employees, which, ultimately, would result in the assumption of a higher individual limit of workload for part-time employees. Finally, the different working hours of full-time and part-time employees cannot constitute an objective reason according to para. 4 (1) Part-Time and Fixed-Term Act for a differentiating treatment.
As a result, the 10th Senate of the Federal Labour Court joined the above outlined opinion of the 6th Senate and ruled that employees who work part-time and whose working hours go beyond their respective part-time quota do not have to exceed the working hours of a full-time employment in order to be entitled to overtime premiums. This interpretation of the framework collective agreement corresponds to higher-ranking law, and is compatible with para. 4 (1) Part-Time and Fixed-Term Act.
Entitlement to overtime premiums regarding part-time employment
Occupational Pensions: Federal Labour Court confirmed its ruling with respect to so-called “age difference clauses” in pension arrangements
By judgment of 11 December 2018 (docket number: 3 400/17) the Federal Labour Court has ruled that a so-called “age difference clause” (Altersabstandsklausel) providing that a survivor’s benefit is reduced if the age difference between the spouses is more than 10 years is admissible and is not to be considered as unjustified discrimination on grounds of age.
The plaintiff was born in 1945. Her husband was born in 1930 and died in 2014. The spouses married in 1966. The plaintiff’s deceased husband was granted a survivor’s pension promise by his employer. The corresponding pension plan contained a clause according to which the survivor’s benefit is reduced by 5 % for each year that exceeds an age difference of 10 years. The plaintiff considered that clause to be inadmissible.
The Federal Labour Court ruled that the clause does not constitute inadmissible discrimination on grounds of age according to the General Law on equal treatment (Allgemeines Gleichbehandlungsgesetz) since the discrimination is justified. The employer who grants a survivor’s pension has a legitimate interest in limiting the associated financial risk. According to the Court, the age difference clause is also necessary and appropriate. It does not unduly prejudice the legitimate interests of the employees entitled to benefits who are affected by the clause. At an age difference of 11 years or more, the common standard of living of the spouses is designed in such a way that the survivor spends part of his life without the beneficiary (deceased former employee). In addition, with an age difference of 11 years or more only those spouses are excluded from benefits whose age difference from the beneficiary (deceased former employee) considerably exceeds the “usual” age difference between spouses. Moreover, the clause does not lead to a complete exclusion of benefits if the age difference is more than 10 years, but only to a moderate, gradual reduction that causes a complete exclusion only if the age difference is 30 years or more.
With this ruling the Federal Labour Court confirmed its earlier ruling of February 2018. In this previous decision, the Court also denied discrimination on grounds of age with respect to a clause providing that spouses receive a survivor’s benefit only if they are no more than 15 years younger than the deceased former employee. Until then, it had not been clarified by the highest court, whether age difference clauses with regard to survivor’s benefits are in in accordance with the General Law on equal treatment.
Notices of termination may not be signed before mass dismissal notification has been submitted
With its judgment dated 21 August 2018, the Higher Regional Labour Court of Baden-Wurttemberg (Landesarbeitsgericht Baden-Württemberg) decided that the dismissal of an employee as part of a mass redundancy is invalid if the notice of termination is signed prior to receipt of the mass dismissal notification to the authority. The time of the receipt of notice of termination by the employee is irrelevant (docket number: 12 Sa 17/18).
Under German law, the Employment Office must be notified prior to dismissals as part of a mass redundancy. This reflects obligations under the Directive 98/59/EC.
The termination at issue was issued as part of a shutdown of an operation. The employer had previously consulted with the works council on the planned shutdown and had entered into a balance of interests on 22 June 2017. Subsequently but on the same day, the employer drafted a mass dismissal notification which the Employment Office received on 26 June 2017. On 27 June, the employee received the termination letter, which was dated 26 June.
According to the Court, a mass dismissal notification must reach the employment agency before the employer reaches the final decision to terminate the employment relationship and before signing the termination letter. Even though the termination letter does not take effect before it has been received by the employee, the employer has already made the underlying termination decision at an earlier point in time, at the latest when signing the letter. The court held, however, that in the specific case it could not be established that the defendant had signed the dismissal notice of 26 June 2017 after the mass dismissal notification had been received by the Employment Agency on the same day. The dismissal was therefore held to be invalid.
Due to the fundamental impact of this judgment, the right to appeal to the Federal Labour Court has been expressly granted.
Appointment of a Conciliation Committee dealing with the subject of a No Smoking Policy
Under German law, works councils have so-called co-determination rights on certain subjects. This means that an employer must reach an agreement with the works council on these matters, such as rules and policies for employee conduct. Works council co-determination is, however, excluded if there are binding and final statutory provisions dealing with a certain matter. If no agreement can be reached through negotiations between the works council and the employer, a so-called conciliation committee will be established which can either reach an agreement or render a decision. The conciliation committee can be set up by mutual agreement, but it can also be established by a court order upon request by one party.
In a case decided by the Higher Regional Labour Court of Rhineland Palatinate on 20 September 2018, docket number 5 TaBV 13/18, an employer planned to implement a no smoking policy in its operation. It had previously agreed with its Joint Works Council on such a policy for its various operations. Under this existing policy, smoking was permitted indoors in designated areas as well as in specific locations outside. However, following a hazard assessment for one operation, in which it had been advised that smoking must be prohibited indoors, the employer planned to prohibit smoking indoors altogether. The works council objected and argued that the employer must first negotiate and honor the works council’s co-determination rights. As the employer refused negotiations, the works council requested the establishment by a conciliation committee through a court order.
The court granted the request, and in its order covered the following basic principles of works council co-determination rights:
- The primary responsibility for works council co-determination rights is with the local works council. Therefore, absent specific circumstances, the local works council was free to exercise its rights and the works agreement entered into with the Joint Works Council did not provide a final agreement.
- Even if there was a statutory provision that prohibited smoking inside or stipulated such a prohibition, the works council was not barred from exercising co-determination rights. The court held that even in such a case, the employer might still have leeway to provide rules regarding when and where the employees were allowed to smoke outside.
Based on these two key issues, the court established the conciliation committee. The committee will, after its establishment, assess its responsibility for the subject at hand and will then need to find a solution to implement a policy.
Right of part-time employees to return to full-time
The German parliament has recently passed a law which amends the current Part-Time and Fixed-Term Act and will likely enter into force on 1 January 2019. Under the new law (so-called bridge-part-time-work), employees have the right to work part-time for a period of one to five years (“Part-Time-Period”) and return to full-time after the Part-Time-Period has expired. This right only applies if (i) at the time of the application the employee has been employed by his current employer for more than six months and (ii) the employer (e.g. the respective employing entity) employs more than 45 employees in Germany in total. Employers with more than 45 and not more than 200 employees may reject the employee’s claim if (i) one in 15 employees has already been granted bridge-part-time-work or (ii) operational reasons do not allow the (preliminary) reduction of the working time. Employers with more than 200 employees may only reject the claim to part-time work if operational reasons do not allow the (preliminary) reduction of working time. The employee must apply for the reduction in working time and the extent of the reduction at least three months prior to commencement of the Part-Time-Period. The right to return to full time is not contingent upon special personal circumstances, e.g. children below a certain age etc.
Co-determination right if the employer sets up and operates a Twitter account
In a judgment dated 13 September 2018 the Higher Labour Court of Hamburg (docket number 2 TaBV 5/18) ruled that if the employer operates a Twitter account, at least on the basis of the reply function, the (general) works council has a co-determination right according to section 87 para. 1 no. 6 Works Council Constitution Act (Betriebsverfassungsgesetz). The co-determination right does not require that the technical facility is designed to monitor the performance and behaviour of employees. It suffices that the possibility exists.
Twitter is an American online news and social networking service on which users post and interact with messages known as “tweets”. Users can join conversations by replying to others and by mentioning them in their own tweets. In addition, users can share a tweet publicly with their followers. The employer’s tweets are visible to everyone, including non-registered users, on the website belonging to the employer’s Twitter account. The replies from registered users to tweets by the employer are visible to the employer and, if it is not a protected answer, at least to all Twitter users. The employer cannot delete any reply himself. In addition, the Twitter’s reply function cannot be deactivated by the employer (in contrast to the comment function on a Facebook page).
Following the publication of the judgment of the Federal Labour Court (13 December 2016 – docket number 1 ABR 7/15) regarding co-determination if the employer operates a Facebook page with a comment function, the (general) works council took the decision to initiate the decision-making procedure regarding the deactivation of the employer’s Twitter account. The employer refused to deactivate the Twitter account.
The application of the (general) works council to prevent the operation of the Twitter account until his consent or a decision of the conciliation committee replacing his consent has been obtained, did not succeed in front of the local labour court. The appeal in front of the Higher Labour Court, however, was successful. The appeal to the Federal Labour Court was admitted and the procedure is pending (docket number 1 ABR 40/18).
The plaintiff’s injunctive relief follows the employer’s violation of co-determination by setting up and operating a Twitter account. The (general) works council has to be involved in the operation of a technical facility intended to monitor the behaviour and the performance of employees. The right to co-determination is aimed to protect employees from any impairment of their personal rights by using technical monitoring devices that are not justified and disproportionate in the light of the concerns of the employer. Because of the visibility of the replies to both the employer and the Twitter users, depending on the content of the reply, the employer may assign it by name and situation to a specific employee and use it for behavioural and performance control.
The fact that these are replies to employer tweets does not justify a different assessment. Monitoring performance already includes the collection of data that contains statements on the behaviour and performance of employees. Whether the employer intends to evaluate and further process the data is irrelevant. It is sufficient that an assessment remains possible.
Also, the fact that the replies to tweets of the employer remain on the accounts of the respondents and cannot be deleted by the employer does not justify any other assessment because the location is irrelevant to the purpose of employee protection. Rather, it is the question of who the news/answer is for. The fact that the answers cannot be deleted also increases the monitoring pressure for the employee.
The current decision shows that co-determination depends on the individual circumstances of the internet presence of the employer. Thus an employer presence without the possibility of interaction usually does not trigger any co-determination rights. Insofar as an interaction is permissible and it is possible to influence the behaviour and performance of individual employees as a result the co-determination rights of the works council will intervene.
No Automatic Expiration of Holiday Entitlement Due to Missing Holiday Request
Judgments
With judgments dated 6 November 2018 (docket number: C-619/16; C-684/16), the European Court of Justice (Europäischer Gerichtshof, EuGH) decided that an employee’s entitlement to paid holiday must not automatically expire due to a missing holiday request. Rather, the holiday entitlement should only expire if the employer is capable of approving that the employee voluntarily waived the holiday after being put in the actual position to take holiday in due time. Therefore the employer has the obligation to provide information to employees.
Facts
In the first legal proceedings, the plaintiff (C-619/16), who completed his legal preparatory service as an article clerk at the District Court of Berlin, did not take paid annual holiday during the last months of his service. Therefore he requested compensation for the holidays not taken, which the Court rejected. The plaintiff of the second legal proceedings (C-684/16) was employed by Max Planck Society for the Advancement of Science (Max-Planck-Gesellschaft zur Förderung der Wissenschaften, MPG), which asked the plaintiff two months prior to the end of the employment relationship to take his remaining holiday. However, the Society did not require the plaintiff to take holiday at a preset time. Since the plaintiff took only two days holiday, he requested for remuneration of the remaining holiday. The Society rejected his remuneration request.
Argument/Statement
At the competent courts’ request for interpretation of Union law, the European Court declared that it was violating Union law if an employee’s entitlement to paid holiday expired automatically in cases where an employee’s holiday request is missing. Being the weaker party and therefore worth protecting, employees might be frightened to explicitly assert their rights towards their employers in general, since their demand might result in measures unfavourable for their employment relationships.
Practice Note
In the opinion of the European Court, however, the expiration of the holiday and compensation entitlement cannot be challenged if the employer is able to approve that the employee was put in an actual position of taking holiday in due time, but nevertheless waived the holiday. Furthermore it was the only possible interpretation to be combined with the basic idea of paid holiday, namely the creation of an actual period of leave to guarantee an effective protection of the employee’s safety and health. Additionally the stated principles are applicable to public as well as private employers.
Occupational pensions: No claim for employee to terminate an employee-funded direct life insurance policy
By judgment of 26 April 2018 (docket number: 3 AZR 586/16) the Federal Labour Court has ruled that an employee has no claim against his employer to terminate an employee-funded direct life insurance policy (deferred compensation /salary conversion) in order to receive the surrender value.
The employee (plaintiff) concluded a deferred compensation agreement with the employer in 2001. According to that agreement, the employer – as policyholder – was obliged to pay an annual amount of approximately 1,000.00 euros to an insurance company for the purpose of funding the insurance policy. The insurance policy was concluded in favour of the employee. In 2009 the insurance policy was amended so that contributions no longer had to be paid. In 2013 the employee informed his employer that he had terminated the insurance policy in order to receive the surrender value due to financial distress. The employer refused both to approve this termination and to terminate the insurance policy by himself.
The Federal Labour Court dismissed the case. The Court holds that the employee does not have a right to terminate the insurance policy or have a legitimate interest to demand the termination. Since the employee was not a concluding party of the insurance policy, the employer’s approval would have been necessary to terminate the policy. The purpose of the option to convert salary (deferred compensation) as stated in the German Occupational Pension Act (Betriebsrentengesetz) is – at least partly – to secure the employee’s standard of living in old age. It is the legislator`s intention to prevent vested entitlements being paid out before retirement. The saved capital shall not be used for consumption or to settle debts.
The ruling creates legal certainty. According to the Federal Labour Court there is normally no right to terminate the insurance policy if it is funded via salary conversion (deferred compensation). However, the court points out that in specific cases – such as substantial financial distress, which must be concretely presented to the court and not, as it was in this case, only abstractly – the legal situation could be judged differently.
Remuneration of travel time for international assignments
I. Judgment
With its judgment dated 17 October 2018, the Federal Labour Court (Bundesarbeitsgericht, BAG) decided that in cases of an employee’s temporary international assignment the employer must remunerate the time required for outward and return travel as work (docket number: 5 AZR 553/17)
II. Facts
The plaintiff, who is employed by the defendant as a technical assistant, has a contractual obligation to work on domestic and foreign construction sites. Therefore the plaintiff was sent to a construction site in China from 10 August to 30 October 2015. At the plaintiff’s request, the defendant booked an outward and return flight in Business Class with a stopover in Dubai instead of a direct flight in Economy Class. However, for the four days of travel, the defendant paid the plaintiff the remuneration agreed in the employment agreement for eight hours each. By his action, the plaintiff claims remuneration for a further 37 hours, maintaining that the entire travelling time from his home to the external place of work and back should be remunerated as work.
III. Argumentation/Statement
According to the Court, journeys to and from the external workplace in cases where the employer temporarily sends an employee abroad (international assignment) are exclusively made in the employer’s interest and therefore must be generally remunerated as work. In principle, the travel time required for a flight in Economy Class is decisive. Due to the absence of required sufficient findings by the State Labour Court on the extent of the plaintiff’s travel time, the responsible senate of the Federal State Court was unable to reach a final decision on the matter, so the case was remanded.
IV. Practice Note
The exact basis for the judges’ decision that remuneration is payable for overtime hours caused by business travel hours will become apparent in the judgment’s written grounds. Due to remission, however, it is obvious that the significance of the decision will be limited to the special collective agreement regulation in para. 7 no. 4.3 of the Federal Framework Collective Agreement for the Construction Industry (Bundesrahmentarifvertrag für das Baugewerbe, BRTV) and will not initiate a reverse from the Court’s previous case-law. Outside a special employment or collective agreement regulation, overtime in the context of business trips must therefore probably continue to be subject to general regulation of sec. 612 para. 1 German Civil Code (Bürgerliches Gesetzbuch, BGB) which stipulates that remuneration shall be deemed tacitly agreed if the circumstances of a service indicate that the service can only be expected in return for remuneration. The Federal State Court has repeatedly rejected the existence of a legal rule determining that travel time should always or at least regularly be remunerated. An expectation of remuneration should always be assessed on the basis of an objective standard, taking common usage as well as the individual case into account. Accordingly, remuneration of a part of the travel time can also be considered.
Judgement of the Federal Labor Court Regarding Dismissal due to Frequent Short Illnesses
With its judgment dated 25 April 2018, the Federal Labor Court (Bundesarbeitsgericht, BAG) has maintained its constant jurisdiction, deciding that a disruption relevant for dismissal exists if, according to the employee’s health prognosis, costs for continued remuneration exceeding six weeks within one year are expected in future (docket number: 2 AZR 6/18).
The court had to decide under which conditions the extraordinary dismissal of an employee, whose contract cannot be ordinarily terminated under a collective agreement, due to frequent short illnesses can be justified. The plaintiff, who was born in 1966, has been employed by the defendant as a nursing assistant since 1992. Since 2011, he has been repeatedly incapacitated for work – predominantly due to illnesses of the “psychiatric form circle” -, mostly for shorter periods of up to ten working days. He is recognised as a disabled person with a degree of disability of 40%, but is not equated with severely disabled persons.
On the basis of contractual reference, the Collective Agreement for Public Service of the States (Tarifvertrag für den öffentlichen Dienst der Länder, TV-L) is applicable to the employment relationship, whereby the plaintiff is not ordinarily terminable in accordance with sec. 34 para. 2. Consequently the defendant extraordinarily terminated the employment relationship on 22 August 2016 with a social expiry date of 31 March 2017 due to frequent short illnesses. However, in order to avoid an objection to the valuation it is urgent that the employee observe a phase-out period corresponding to the fictitious ordinary qualifying period. Additionally, the standard of review must take into account the high requirements to be met for extraordinary dismissal pursuant to sec. 626 para. 1 German Civil Code (BGB).
The Federal Labour Court and the State Labour Court in Cologne have upheld the dismissal protection suit. The claim will now be referred back to court for a new hearing and decision.
In the judgment’s official directive it is said that, according to sec. 34 para. 2 of the Collective Agreement for Public Service of the States (Tarifvertrag für den öffentlichen Dienst der Länder, TV-L), an important reason for extraordinary dismissal with a necessary expiration period of an employment relationship that cannot be terminated in accordance with sec. 34 para. 2 sentence 1 of the relevant Collective Agreement may exist, if it is to be expected that the employer will have to continue paying remuneration in the event of illness for more than one third of the annual working days, whereby a comprehensive weighing of interests in individual cases is required.
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