Unemployment benefits despite existing employment relationship

Even without being formally unemployed, an employee might be entitled to unemployment benefits (Arbeitslosengeld I) in the event of factual unemployment, the Social Court Dortmund (Sozialgericht, SG) decided in a recent ruling on 10 October 2016 (docket number: S 31 AL 84/16).

The plaintiff, a judicial clerk who was employed at a local court (Amtsgericht, AG) by the state of North Rhine-Westphalia, was being bullied at work. After a long period of absence and a phase of reintegration at other local courts, the plaintiff was expected to resume working at her previous job. Because she did not see herself able work again at the local court where she was bullied before, she refused to work there. The state thereupon released her from work without any further payments of salary.

The plaintiff therefore registered as seeking employment with the competent Employment Agency Dortmund and demanded the granting of unemployment benefits. Instead of terminating her employment contract with the state, she sued the state for relocation.

The Employment Agency Dortmund refused to pay any unemployment benefits due to the existing valid employment contract between the plaintiff and the state and the fact that the state had not waived its right to Employers Directives (Direktionsrecht). The Agency held that the plaintiff could not be considered as unemployed and thus was not entitled to any unemployment benefits.

The Social Court Dortmund ruled that the Employment Agency was obliged to grant the plaintiff unemployment benefits. The court held that the required status of unemployment of an applicant for unemployment benefits is fulfilled by factual unemployment even though there might still be an existing valid employment contract, such as in the case at hand.

According to the court, the plaintiff had de facto terminated her employment with the state by registering with the Employment Agency and not admitting to the Employer’s Directives when she refused to work at the local court which she had previously worked at. The fact that the plaintiff made the formal termination of her employment contract with the state subject to whether she would find another suitable job, was legitimate, as well as that she tried to get re-employed with the state by suing it for relocation. In the court’s opinion this could be seen as the plaintiff’s personal effort to try to end her unemployment.