Monthly Dose Employment Law: 03/2025

On 26 November 2024, the German Federal Labour Court (Bundesarbeitsgericht, BAG) ruled (1 ABR 12/23) that the works council has no right of co-determination under Sec. 99 of the German Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) when the employer adjusts the remuneration of an exempted works council member in accordance with Sec. 37 (4) or Sec. 78 s. 2 BetrVG.

Facts of the case

• The parties were in dispute regarding the employer's obligation to initiate an approval procedure pursuant to Sec. 99 (1) BetrVG. The employer operates two car dealerships for which the applicant works council is responsible.
  
• The full-time chair of the works council was paid by the employer until the end of May 2020 in accordance with remuneration group VI of the applicable collective agreement on remuneration (CBA). After the works council member had successfully passed an assessment center to check his suitability for a workshop management position in March 2021, he received remuneration retroactively from 1 June 2020 according to the higher remuneration group VIII under the CBA.
  
• The works council requested to be involved in the classification and applied to oblige the employer to carry out a procedure in accordance with Sec. 99 BetrVG. The employer refused this on the grounds that there was no classification or reclassification requiring co-determination.
  
• The Labour Court (Arbeitsgericht, ArbG) Leipzig ordered the employer to initiate the approval procedure. The Higher Labour Court (Landesarbeitsgericht, LAG) Saxony rejected the application to the extent that it demanded the implementation of a procedure under Sec. 99 (4) BetrVG and otherwise confirmed the decision of the ArbG Leipzig. The BAG rejected the works council's application in its entirety.

Reasons for the decision

• No co-determination right under Sec. 99 BetrVG in the event of a remuneration adjustment under Sec. 37 (4) or Sec. 78 s. 2 BetrVG: The BAG clarified that an increase in the remuneration of a works council member who is released from their normal duties due to legal protection provisions is not to be regarded as a reclassification or re-grouping within the meaning of Sec. 99 BetrVG. A reclassification subject to co-determination requires the evaluation and assignment of an employee's specific job to a compensation group. However, when adjusting the remuneration of a released works council member, no such job evaluation takes place.
  
• Job evaluation or job grading that is not tied to a specific person when adjusting pay: In the case of works council members who are released from their normal duties and whose pay is increased in accordance with Sec. 37 (4) or Sec. 78 s. 2 BetrVG, the employer does not assign them directly to a pay scale. Rather, it is a matter of a remuneration adjustment based on a comparison with the hypothetical professional development of comparable employees (Sec. 37 (4) BetrVG) or to avoid discrimination due to works council activities (Sec. 78 s. 2 BetrVG). This adjustment is not based on an assignment to a CBA on the basis of the actual work performed. Since the remuneration adjustment is required by law and is not subject to the employer's discretion, the works council has no right of co-determination.Consequences for the practiceThe decision, which is helpful in practice, clarifies that remuneration adjustments for exempted works council members that are made solely to ensure continued compliance with the statutory requirements of Sections 37 (4) and 78 (2) BetrVG are not subject to the co-determination of the works council.

Consequences for the practice

The decision, which is helpful in practice, clarifies that remuneration adjustments for exempted works council members that are made solely to ensure continued compliance with the statutory requirements of Sections 37 (4) and 78 (2) BetrVG are not subject to the co-determination of the works council.

On 5 December 2024, the BAG ruled (8 AZR 370/20) that a CBA provision which makes the entitlement to overtime bonuses for part-time employees dependent on the regular working hours of a full-time employee is in violation of the prohibition of discrimination against part-time employees under Sec. 4 (1) of the German Part-Time Employment Act (Teilzeit- und Befristungsgesetz, TzBfG) if there are no objective reasons. In addition, such a regulation constitutes indirect discrimination on grounds of sex within the meaning of Sections 3 (2), 7 (1) of the German Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz, AGG) if a significantly higher proportion of women are affected by the regulation.

Facts of the case

• The plaintiff was employed as a part-time nurse (40% of a full-time position) by the employer, a dialysis provider. The employment was subject to a framework CBA concluded between the employer and the trade union ver.di (MTV).
  
• The CBA provided for a 30% overtime bonus for full-time employees if the monthly fixed working hours were exceeded and the overtime was not compensated by time off in lieu (Sec. 10 (7) s. 2 MTV).
  
• For part-time employees, there was no proportional reduction in the threshold for overtime bonuses. The bonus was only granted if the working hours of a full-time employee were exceeded.
  
• The plaintiff worked about 129 hours of overtime, for which she received neither a bonus nor a corresponding time credit.
  
• Of the part-time employees covered by the MTV, more than 90% were women.
  
• The plaintiff – like many other part-time employees of the defendant at the same time – filed a lawsuit for time credit for overtime bonuses and for immaterial damage compensation in the amount of EUR 4,485.06 pursuant to Section 15 (2) AGG.
  
• The BAG upheld the claim with regard to the time credit and with regard to the sought-after immaterial damage compensation in the amount of EUR 250.
  
  

Reasons for the decision

1. Entitlement under Section 4 (1) TzBfG in conjunction with Sections 134, 612 (2) BGB

• The plaintiff's claim to a time credit for overtime bonuses does not arise from the contract, but rather from Section 4 (1) TzBfG, in conjunction with Sections 134, 612 (2) of the German Civil Code (Bürgerliches Gesetzbuch, BGB).
  
• Section 10 (7) s. 2 of the MTV is invalid under Section 134 BGB insofar as it does not provide for a pro-rata reduction in working hours for part-time employees, above which overtime allowances are to be paid.
  
• Pursuant to Section 4 (1 s. 1 TzBfG, an employee who is employed part-time must not be treated less favourably than a comparable employee who is employed full-time, unless there are objective reasons for doing so. The BAG did not see any such reasons. Rather, there is an economic incentive for the employer to have overtime worked specifically by part-time employees, since these are less expensive. This constitutes an impermissible disadvantage.
  

2. Compensation under Section 15 (2) AGG

• The regulation in Section 10 (7) s. 2, MTV, leads to an indirect disadvantage on the grounds of gender within the meaning of § 3 (2) AGG.
  
• The provision discriminates against part-time employees in comparison to full-time employees, and since the percentage of female part-time employees is significantly higher, the discrimination primarily affects women.
  
• There is no apparent objective reason for this indirect discrimination.
  
• The liability privilege of Section 15 (3), AGG, does not apply. The plaintiff is therefore entitled to compensation in the amount of EUR 250. This amount is necessary, but – in view of the large number of the defendant's female employees affected – also sufficient to achieve the necessary deterrent effect and, in this respect, maintains proportionality.
  

Consequences for the practice

Employers should review their CBAs and company regulations on overtime pay and adjust them if necessary to avoid discriminating against part-time employees. In particular, overtime bonuses must not be granted only when the full-time threshold is exceeded, but must be granted in proportion to the individual's working hours. Otherwise, there is a risk of compensation claims for indirect discrimination – especially if it is predominantly women who are affected. In its judgment, the BAG clarified that in practice it is helpful to determine the amount of compensation under Section 15 (2) AGG on the basis of a comprehensive assessment, taking into account all the circumstances of the individual case.

On 27 August 2024, the Hamm Higher Labour Court ruled (6 Sla 63/24) that there is no entitlement to a wage increase if the employer grants a voluntary wage increase as an incentive only to those employees who agree to a revised, extensively amended employment contract. An employee who rejects the new contractual conditions – in particular because of individual clauses that are legally and/or economically disadvantageous compared to the previous version of the contract – cannot successfully invoke the general principle of equal treatment in this case.

Facts of the case

• The plaintiff has been employed by the defendant since January 2015. The defendant employs over 100 employees who have different employment contracts of different ages with different provisions.
  
• In February 2022, the defendant offered all employees new, standardised employment contracts (adapted to the current case law of the Federal Labor Court). These included a 4% increase in the monthly fixed salary and various changes in content that worsened the legal position of the employees compared to the previous version of the employment contract (including equal application of the notice periods for employers and employees in accordance with Section 622 (2) and (5) BGB, implementation of the case law of the BAG on the possibility of a graduated regulation of the statutory and additional contractual holiday entitlement, introduction of an effective three-month exclusion period).
  
• The plaintiff rejected the new contract because she felt it was disadvantageous to her, particularly due to the forfeiture clauses and the longer notice period. She continued to receive her previous monthly fixed salary of €2,451 gross under her employment contract.
  
• The defendant granted a further increase of 5% in the monthly fixed salary to all employees who had signed the new contract, with effect from January 2023.
• The plaintiff then filed a lawsuit, seeking a total increase of 9% in her monthly fixed salary for the period from January 2023 to March 2023, as well as a declaration that she is entitled to such an increased monthly fixed salary in the future.
• She considered the defendant's conduct to be a violation of the general principle of equal treatment and a disciplinary action within the meaning of Section 612a BGB.
  
• The defendant asserted that the different group treatment was justified by its legitimate interest in working with standardised employment contracts that are updated in accordance with legal changes and case law.
• The ArbG Dortmund dismissed the claim. The claimant lodged an appeal against the judgment of the court of first instance, although in the grounds of appeal she only dealt with the reasons for the decision of the labour court judgment regarding the requested increase in remuneration.
  
  

Reasons for the decision

• Application for declaratory judgment inadmissible: The application for declaratory judgment was inadmissible due to an insufficient statement of grounds of appeal, since it was an independent matter in dispute on which the plaintiff had not submitted any arguments on appeal.
• Application for payment unfounded: The plaintiff cannot derive a claim to a wage increase from the general principle of equal treatment. The two groups (employees with old or new contracts) are not in a comparable situation. The differences in the content of the contracts (e.g. preclusion periods, notice periods, other labour law changes) justify a differentiated treatment.
• No violation of the prohibition of discrimination under Section 612a BGB: The defendant did not discipline the plaintiff because she rejected the new employment contract, but rather decided to exclude her from the wage increase from January 2023 due to the different employment contract models. The non-granting of the wage increase is merely a consequence of the plaintiff's decision.
• No claim based on company practice: There is no recognisable consistent, repeated behaviour on the part of the defendant. The plaintiff was also unable to conclude from the wage increase granted exclusively to employees with new employment contracts that she should also be granted such a wage increase.
  

Consequences for the practice

This decision, which is helpful in practice, can give employers more leeway when revising/adapting employment contracts to current legal developments (and here in particular to further developments in the case law on general terms and conditions) by increasing the willingness of the employees affected by the contract changes to conclude them by promising a salary increase or comparable compensation incentives (e.g. as a one-time special payment). In doing so, employers should document the relevant criteria in a transparent and comprehensible manner in order to avoid accusations of discrimination. It should be noted that the plaintiff has appealed against the judgment to the BAG (5 AZR 239/24). It therefore remains to be seen how the legal dispute will continue.

On 24 September 2024, the LAG Niedersachsen ruled (10 TaBV 18/24) that the works council's consent to the classification of an employee as an employee not covered by a collective agreement must be replaced if the requirements of the Framework Remuneration Agreement (Vergütungsrahmentarifvertrag, VergRTV) are met.

Facts of the case

• The employer is a member of the employers' association Tarifgemeinschaft Technischer Überwachungs-Vereine (TÜV) e.V. and is subject to the VergRTV. Employees whose working conditions are regulated by individual contracts and whose monthly remuneration is at least 10% above the highest collectively agreed remuneration group are excluded from the personal scope of the collective agreement.
• In April 2023, the employer advertised a new position and requested the works council's consent to the applicant's classification as a non-tariff employee.
• The draft employment contract provided for a reference to the framework agreement between the TÜV e.V. collective bargaining association and ver.di. The remuneration and working hours were agreed in an individual contract.
• The weekly working hours were set at 38.5 hours. The agreed monthly fixed salary was approximately 20% higher than the monthly fixed salary at the highest pay scale level of the collective wage agreement applicable to pay scale employees. The employment contract also provided for compensation for up to 240 hours of overtime per year through the monthly fixed salary. Any additional overtime was to be remunerated or compensated by time off in lieu, at the employer's discretion.
• The works council approved the appointment but refused to consent to the non-tariff grouping, on the grounds that a tariff grouping was necessary because, taking into account the overtime, the tariff distance was not maintained.
• The employer then applied to the court for the consent to be replaced in accordance with Sec. 99 (4) BetrVG.
• The Labour Court of Hanover replaced the works council's consent by decision of 1 February 2024 (10 BV 6/23). It justified this by stating that there was no reason to refuse consent under Sec. 99 (2) BetrVG and that the personal scope of application of the VergRTV could be effectively excluded by contract.
• The works council filed an appeal against this decision. It asserted that the collective agreement requirement was not met because the overtime compensated with the basic salary should also be taken into account in the comparative calculation.
  
  

Reasons for the decision

• The LAG Niedersachsen dismissed the appeal and upheld the decision of the Labour Court of Hanover.
  
• The employee's classification as a non-tariff employee is effective because the conditions for excluding him from the personal scope of the VergRTV are fulfilled: his working conditions are governed by an individual contract and his monthly basic salary exceeds the highest collectively agreed salary group by more than 10%.
  
• The objection of the works council that the overtime compensated at a flat rate should be taken into account in the comparative calculation is irrelevant. The only thing that is relevant is the contractually agreed basic salary – not a mathematical allocation of the hours worked.
• The LAG Niedersachsen confirmed that the collective agreement does not place any further requirements on the non-tariff grouping and that there is therefore no violation.
  

Implications for practitioners

The decision makes it clear that the non-tariff grouping is permissible on the basis of the amount of remuneration if the conditions for (monthly fixed) remuneration provided for in the collective agreement are met and the requirement for a gap in the collective agreement is thus fulfilled. Employers should ensure that the contractually agreed working conditions are clearly not subject to the collective bargaining system applicable to employees covered by collective agreements in order to avoid disputes.

The European Court of Justice (ECJ) ruled on 19 December 2024 in case C-531/23 that private households are also obliged to objectively record the working hours of domestic workers.

The facts of the case

• A domestic worker was employed full-time in Spain and was dismissed. She took legal action against the dismissal and claimed outstanding wages, but was unable to prove her actual hours worked due to the lack of systematic recording of working hours.
• Under Spanish law, employers of domestic workers were not obliged to set up a system for recording daily working hours.
• The competent Spanish court doubted the compatibility of this national regulation with EU law and submitted a corresponding question to the ECJ. It wanted to know whether Articles 3, 5 and 6 of Directive 2003/88/EC (Working Time Directive), in conjunction with Directives 2000/78/EC (Framework for Equal Treatment) and 2010/41/EU (Self-Employed Workers) and with Articles 20, 21 and 31 (2) of the Charter of Fundamental Rights of the European Union preclude national legislation that exempts domestic workers from the obligation to record working time?
  

Reasons for the decision

• Working time recording as a key protective measure: The ECJ emphasised that an objective, reliable and accessible system for recording working time is necessary to ensure effective compliance with rest periods and maximum daily and weekly working hours.
• Obligation of the Member States: Both the Working Time Directive 2003/88/EC and Article 31 (2) of the Charter of Fundamental Rights oblige the Member States to take appropriate measures to ensure compliance with the working time provisions.
• Protective purpose of the regulation: The recording of working hours not only serves to monitor, but also, in particular, to protect the health of employees by limiting working hours and ensuring recovery times.
• No general exemption for domestic workers: Although Article 17 of Directive 2003/88/EC allows for exceptions, these must be interpreted narrowly. A general exemption for domestic workers would contradict the purpose of the directive and would unduly erode the protection of workers.
• Possible indirect discrimination: The ECJ pointed out that such an exemption could particularly disadvantage women, since domestic workers are predominantly female. This could constitute indirect discrimination on grounds of sex within the meaning of Article 21 of the Charter of Fundamental Rights.
  

Consequences for practitioners

The ECJ ruling confirms that employers in private households are also obliged to objectively record the working hours of domestic workers. The ruling increases the pressure on the – German – legislature to implement the clarifications to the German Working Hours Act (Arbeitszeitgesetz) that have been demanded by practitioners since the Federal Labour Court's ruling of 13 September 2019 (following the ECJ ruling of 14 May 2019 (Case 55/18)), at the latest; from a practical point of view, this would be best achieved in the coalition agreement that is currently still being negotiated.