Federal Labor Court rulings to watch in 2017 (edition Jan – March)

Already in the first quarter of the New Year Germany’s Federal Labor Court will deliver a number of judgments important for advisors and practitioners alike:

Time Credits for works council members?

(- docket no 7 AZR 224/15 – expected for 18 January 2017- )

Although members of a works council act in an honorary role they are entitled to time off for works council duties which are necessary during working hours. But does this extend to time credits in a flexible working time scheme? The Federal Labor Court has to decide in particular whether the mandatory rest of 11-hours between two work days applies before works council meetings and how works council work shall be converted into working time credits.

The appealed judgement of the Higher Labor Court Hamm negated the application of the rest period and ordered a time credit for participation in a works council meeting outside official shift hours. The Federal Labor Court will have to review the whole system of working time and release rules for works council members to answer the questions posed by this difficult case.

Compensation for discrimination of severely handicapped

(- docket no 8 AZR 736/15 – expected for 26 January 2017- )

German anti-discrimination rules will be clarified in a ruling on compensation for discrimination by denying a handicapped part timer increased regular working hours. All other employees who had applied for more working hours were considered. The handicapped employee argued that the raise of working hours was not granted because of his disability which would violate the General Equal Treatment Act. The Higher Labor Court Hesse had ruled in favor of the plaintiff, even though the employer claimed business reasons for his decision.

Corporate bonus payments

 (- docket no 10 AZR 144/16 – expected for 22 February 2017- )

The highest German labor court will as well decide soon whether a term in an employment agreement, which grants a corporate bonus only after four years continued employment, violates German unfair contract term laws (sec. 307 para. 1 Civil Code). The plaintiff argued that the Agreement constitutes an unreasonable disadvantage and is therefore void. The defendant however states that the corporate bonus was intended for corporate success and not for the personal performance. He further argues that the waiting period reflects the basic idea of tying bonus compensation to the sustainability of corporate success, as provided mandatorily for executives in sec. 87 para. 1 Stock Corporation Act. The Federal Court’s decision will give important guidance for future drafting of bonus schemes.

Does employment protection apply in a family household?

 (- docket no 2 AZR 500/16 – expected for 2 March 2017- )

In March 2017 the Federal Labor Court will have to debate about employment protection rights of a housekeeper working in a “private” family house which however employs in total 15 people in various assistant roles. The housekeeper appeals against his dismissal on the grounds that a family house with more than 10 full time employees is an operation within the meaning of sec. 23 para. 1 Employment Protection Act. Moreover, the exclusion of employees from a family house from the scope of the Employment Protection Act is said to infringe the principle of equal treatment, art. 3 German Constitution. The defendant obviously disagrees, and with him the local and regional labor courts which so far have dismissed the claim.

Non-competition clause

 (- docket no 10 AZR 448/15 – expected for 22 March 2017- )

In a case originating from 2014 the appellant claims compensation for a post-contractual non-competition clause which had been agreed upon in the employment agreement. It did however not provide for compensation, which according to sec. 74 Commercial Code is a mandatory requirement of valid non-compete terms. The agreement ended with a standard clause which read that invalid provisions should be replaced with the closest possible valid provision. According to the plaintiff the lack of compensation could be supplemented in consideration of this severability clause. The defendants however consider that the non-competition clause is void due to the lack of compensation, and that it would be contrary to the requirement of written form if a compensation term was added under the severability clause.

Removing of interfering workers

 (- docket no 2 AZR 551/16 – expected for 28 March 2017- )

If an employee troubles operating peace at a site, the works council may request from the employer to dismiss or at least to transfer such employee elsewhere, sec. 104 Works Council Act.

In the case scheduled for 28 March 2017 the plaintiff was subject to this seldom applied procedure. The works council had asked the employer to dismiss the plaintiff or to transfer her to another site. The employer initially denied to do so, but the works council enforced its application and therefore the employer extraordinarily terminated the employment agreement, with the approval of the works council, with immediate effect. The plaintiff challenged this dismissal, stating that there was neither a reason for the extraordinary nor for a precautionary normal dismissal, which was issued as well. She claimed that the procedure under Section 104 Works Council Act would not create any new grounds for termination and also that the earlier court decision obtained by the works council had no prejudicial effect. The Regional Labor Court Dusseldorf ruled that the instant dismissal was invalid, but upheld the ordinary notice given.

This overview and selection of upcoming caselaw from the Federal Labor Court proves that German employment law is very case driven. Close attention to the rulings of the court is mandatory for every employment law practitioner, whether directly in business or in an advisory role.