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Company pension scheme – no information, no damages

The Federal Labour Court (Bundesarbeitsgericht, BAG) ruled on January 21, 2014 (docket number: 3 AZR 807/11) that there is no legal obligation for employers to inform employees about their statutory right to divert parts of their remuneration into a company pension scheme.

According to section 1a para 1 of the Company Pension Act (Gesetz zur Verbesserung der betrieblichen Altersversorgung, BetrAVG) employees are entitled to request that the employer diverts parts of their individual gross remuneration into a company pension scheme. The maximum amount which can be diverted in 2014 is EUR 2,856.00. Those contributions are tax exempted and not subject to any social security contributions.

In the case decided by the Federal Labour Court an employee claimed damages from the employer since he had not been informed about his right to divert remuneration into a company pension scheme. The Federal Labour Court ruled that employers do not have a statutory obligation or any implied obligation to inform employees in this regard. As a consequence employees are not entitled to any damages if no such information is provided.

Upon request the employer must provide for a company pension scheme which may be a significant administrative and financial burden. However, the employer is not obliged to take any initiative to inform the employees about their right to divert remuneration into a company pension scheme.