Remuneration

Employee Leasing: Deviation from Equal Pay

According to a judgement of the Federal Labour Court employers (agency) who lease employees (agency workers) to a third party (client) can deviate from the principle of equal treatment (“Equal Pay”) by virtue of a reference clause in the contract of employment only if, for the period of the lease, the relevant collective bargaining agreement for employee leasing fully, and not just partially, applies (judgement dated 16 October 2019, docket number 4 AZR 66/18). The plaintiff was employed by the defendant and leased out to a client as a driver for the period from April 2014 to April 2015. The …

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Good news for parents? – Interpretation of social plan severance provisions

If, in a social compensation plan, the severance payment calculation is based solely on the gross monthly basic salary of a single reference month, the decisive salary of employees who work part-time in that month during their parental leave, is the gross monthly basic salary which they would have been entitled to under their employment contract if they had not been on parental leave (i.e. if they had not worked part time. This is what the German Federal Labour Court decided in its judgment of 15 May 2918 – docket number 1 AZR 20/17. The Court held that the system …

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No co-determination rights of the works council for stock options issued by a foreign parent company

In a judgment dated 3 August 2017, the Higher Regional Labour Court of Hessen has held that a works council’s co-determination rights do not extend to stock option plans by an employer’s foreign parent company (docket number 5 TaBV 23/17).   Under German law, works councils have a co-determination right regarding remuneration principles. In this case, the foreign parent company decided annually and independently from the local employing entity whether stock options were to be granted, which employees would receive these stock options and, if so, how many. Local employment documents of the German employees did not include any reference …

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Minimum wage increase

The statutory minimum wage increases: to 9.19 euros on 1 January 2019 and to 9.35 euros per hour on 1 January 2020. This has been decided by the minimum wage commission. The increase is higher than expected. The minimum wage is currently 8.84 euros gross per hour. Every two years, the Minimum Wage Commission (which consists of representatives of employers, unions and science) advises on adjusting the amount. . In doing so, it examines the level of the minimum wage that is suitable for contributing to an adequate minimum protection of employees, to enable fair and efficient conditions of competition, …

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Requirements of offering of job performance, relationship to reintegration relationship

On 6 December 2017 the Federal Labor Court (docket number 5 AZR 815/16) decided an employee has to offer his job performance in accordance with the contract of employment, in order to claim remuneration for default of acceptance. It is not sufficient to offer an activity within a reintegration relationship according to sec. 74 Social Security Statute Book V (Sozialgesetzbuch V, SGB V), since the reintegration relationship is a contractual relationship sui generis, which is not part of the employment relationship. In contrast to the employment relationship, the reintegration relationship is not characterized by an exchange of performance and consideration, …

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Employer obligation to provide individual target agreements to safety authority

Employers may be required to provide safety authorities with information on individual target agreements with their employees. In a judgment dated 28 February 2018, the Dusseldorf administrative court confirmed a corresponding order by the local safety authority (docket number 29 K 4191/16). In the case at hand, the employer offers consulting services. It is bound by a local collective bargaining agreement which provides for a regular weekly working time of 38 hours. Under the CBA, overtime of up to 3 hours per week can be agreed individually. Employees and their supervisors agree on annual individual targets (“Personal Business Commitments”). The …

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Does the employer have to pay for clothes change times?

Many professions require the wearing of special clothing, whether for hygiene or safety reasons (for example, in a hospital), or to show a particular corporate identity (for example, supermarket vendors). The worker does not wear the clothing because he wants to, but because the employer demands it. This leads to several problems: First, the question arises whether the period of time to change clothes belongs to the daily working hours (which is usually limited to a maximum of 8 hours); on the other hand, it must be clarified whether usual remuneration is to be granted for this time. This is …

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Reduction of a Special Payment Possible Despite Unrestricted Granting for Years

On 23 August 2017 the Federal Labour Court decided that despite the unrestricted granting of a special payment for multiple years, the employer may reduce the amount of a special payment in the future provided that the employment agreement contains a reservation in this respect (docket number 10 AZR 97/17). The employee and later plaintiff was employed by the defendant from 1999 and received through the years, in addition to her regular salary, a Christmas payment. Until 2013 this Christmas payment amounted to the equivalent of one monthly gross salary. The payment method was that employees regularly received with the …

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Obligation to provide the works council with salary data does not allow for anonymized lists

Under the Works Constitution Act, the works council has a right to access information regarding the gross salary of employees. Such information is provided to the works council in form of a chart including relevant compensation details. In a case decided by the Higher Regional Labour Court of North Rhine Westphalia – Hamm – (judgment dated 19 September 2017, docket number 7 TaBV 43/17), the employer had, after initial disagreement, provided the works council with a list containing compensation data, however in anonymized form. The works council requested a de-anonymized list, matching the relevant compensation data with the employee name. …

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Minimum wage also applies to public holidays and night work premiums

Remuneration on public holidays, as well as night work premiums, which are based on the actual hourly earnings must be calculated at least on the basis of the minimum wage. This is the result of a new judgment by the Federal Labour Court dated 20 September 2017 (docket number 10 AZR 171/16). In the case at hand, the collective bargaining agreement provided for a night work premium amounting to 25% of the actual hourly earnings, and remuneration for holidays amounting to 1.5 times the average earnings of the employees. On 1 January 2015, when the Minimum Wage Act (Mindestlohngesetz, MiLoG) came into force, the defendant …

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Allowances for work on Sundays, bank holidays or at night are protected against attachment

On 23 August 2017 the Federal Labour Court ruled (judgment, 10 AZR 859/16) that allowances for work on Sundays, on bank holidays and at night are protected against attachment so far as the amount of such payments is common practice. Whether the extent and amount of such allowances are “common”, which means they are protected against attachments (according to sec 850a no. 3 ZPO), can be linked to sec. 3b EStG. In the current case, a personal insolvency proceeding was annulled, where the plaintiff was in a phase of good conduct (Wohlverhaltensphase) and assigned the attachable remuneration to a trustee. …

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Demonstrating readiness to work every three minutes is unreasonable

On 10 August 2017 the Labour Court of Berlin stated that it is unreasonable to require a taxi driver to press a button at short intervals of time in order to control the employee’s readiness to work (judgement of the Berlin Labour Court dated 10 August 2017, docket number 41 Ca 12115/16). The employee works as a taxi driver for a taxi company. During those periods of time when he was not driving the taxi but waiting for the next fare, he was instructed by his employer to press a button every three minutes after the occurrence of a certain …

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New Act on Remuneration Transparency

Following up our blog post from December 19, 2016 where we reported about a legislative proposal to promote equal pay between women and men, the Remuneration Transparency Act has now entered into force. Arguing that women still earn 7 % less than men even if statistics account for women frequently working part-time, less often climbing up the career ladder and rather working in social professions with lower salaries, the German Government felt that at least larger employers (beyond 200 employed persons) should be held responsible for their actions in this context. To close the gender pay gap the two legislative …

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40 Euro lump sum compensation in the event of late or incomplete wages

On 22 November 2016, the Labour Court Cologne decided that an employer who pays late or incomplete wages is obliged to pay lump sum compensation in the amount of 40 Euros to the affected employee (Judgement of 22.11.2016 – 12 SA 524/16). In 2011 the European Parliament and the Council of the European Union passed the Directive 2011/7/EU on combating late payment in commercial transactions. “The aim of this Directive is to combat late payment in commercial transactions, in order to ensure the proper functioning of the internal market, thereby fostering the competitiveness of undertakings and in particular of SMEs. …

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Ins and Outs of Bonus and Commission Payments – Part I

Employers may grant their employees bonuses in addition to fixed basic salary for a variety of reasons, for example, to reward performance, loyalty to the company or just as a Christmas gratuity. In this context different questions arise. This two-part post addresses the most common questions regarding bonus and commission payments.    What are the different types of bonuses payments? The term “bonus” is not limited to a special kind of a bonus payment. In fact, there are numerous different kinds of bonus payments. These can be categorized in line with the reasons they are paid, as follows: Performance based …

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