Change of jurisdiction of the Federal Labour Court of Germany: Consequence of unauthorized instructions

Of central importance in German labour law is the right of the employer to issue instructions to employees with regard to the content, location and time of the work (sec 106 of the German Trade Regulation Act “Gewerbeordnung”). If admissible instructions are given, the employee is obliged to follow them. If he does not follow them,  this is a breach of duty which, in individual cases, may  lead to termination.

The situation is problematic, however, when the employer issues an (allegedly) inadmissible instruction. Inadmissibility may result from a number of factors: violation of laws, of collective agreements, work agreements, or the principles of fair discretion.

So far, the jurisprudence, (esp. the 5th Senate of the Federal Labour Court) which has been strongly criticized in the literature, called for the employee to comply with these instructions, unless the admissibility has been established. An impermissible instruction must also be followed. A refusal is therefore automatically a breach of duty, which could be punished with termination. This is now to be changed according to the 10th Senate of the Federal Labour Court (docket number 10 AZR 330/16): A breach of duty is only established if the instruction subsequently proves to be lawful. Unlawful instructions must not be followed.

This leads to new problems as long as the lawfulness of the instruction has not been clarified by the court. If the employee does not comply with the instruction and it later proves to be legal, he is still in breach of duty. The employee therefore continues to be at high risk if he does not follow the instruction. However, the situation also changes for the employer. The employer must now prove that an instruction was lawful – only then is there an obligation to observe it.  For the employer,  therefore, there is a higher requirement for examination than according to the current situation.

The consequences of this jurisprudence are still difficult to foresee since different senates of the Federal Labor Court now have different views. Should the 5th Senate uphold the present legal view, a so-called Grand Panel (“Großer Senat”) in the Federal Labor Court with representatives of all ten senates would decide on this. Pending a binding decision – which can take several years – there remains considerable uncertainty on the part of both employees and employers.