Monthly Dose Employment Law: 03/2026

Collective Bargaining Overtime Premiums Must Not Disadvantage Part-Time Employees

German Federal Labour Court (Bundesarbeitsgericht, BAG), Judgment of 26 November 2025, 5 AZR 118/23

In its judgment of 26 November 2025 (5 AZR 118/23), the BAG held that collectively agreed provisions on overtime premiums violate the prohibition of discrimination under Section 4(1) of the German Part-Time and Fixed-Term Employment Act (Teilzeitbefristungsgesetz, TzBfG) if part-time employees receive premiums only once they reach the same weekly working hours as full-time employees. The decision was rendered against the background of the fundamental case law of the German Federal Constitutional Court (Bundesverfassungsgericht, BVerfG, judgement of 11 December 2024, 1 BvR 1109/21, 1 BvR 1422/23) concerning constitutional equality review of collective bargaining agreements and further specifies the requirements for the non-discriminatory design of collectively agreed premium provisions for part-time employees. The judgment also builds on the recent case law of the European Court of Justice (ECJ) concerning the equal treatment of part-time and full-time employees.

Facts of the Case

• The claimant was employed as an order picker on a part-time basis with a regular weekly working time of 30.8 hours.
• The employment was subject to the generally binding Framework Collective Agreement for Employees in Companies Engaged in Wholesale and Foreign Trade in Bavaria dated 23 June 1997 (Manteltarifvertrag, MTV). Pursuant to Section 8 No. 1 Sentence 1 MTV, the regular collectively agreed weekly working time amounted to 38.5 hours. Under Section 9 No. 1 Para. 2 Sentence 3 MTV, overtime work up to and including the 40th weekly hour was remunerated, but an overtime premium of 25% was payable only for hours worked beyond the 40th weekly hour.
• The claimant repeatedly performed work exceeding his individual weekly working time but did not reach the collectively agreed threshold of 40 weekly hours.
• Pursuant to the MTV, working hours that do not exceed the regular weekly working time of 38.5 hours under Section 8 No. 1 Sentence 1 MTV by more than 1.5 hours do not attract an overtime premium.
• Nevertheless, the claimant sought overtime premiums and argued that the collectively agreed provision discriminated against part-time employees contrary to Section 4(1) TzBfG.
• The defendant maintained that the collective bargaining provision was valid and argued that the premiums were intended to compensate for the particular burden caused by excessive working time and to protect employees’ health.
  

Reasons for the Decision

The BAG upheld the claimant’s appeal and set aside the judgment of the Higher Labour Court (LAG) of Nuremberg.

• Violation of Section 4(1) TzBfG: The BAG found that the collective bargaining provision disadvantaged part-time employees in comparison with comparable full-time employees and violated the pro rata temporis principle set out in Section 4(1) Sentence 2 TzBfG. The uniform premium threshold of more than 40 weekly hours resulted in part-time employees having to perform substantially more additional hours than full-time employees before becoming entitled to a premium. In reaching this conclusion, the Court relied heavily on the relevant ECJ case law concerning the equal treatment of part-time and full-time employees.
• No Objective Justification: According to the BAG, the unequal treatment cannot be justified merely by reference to the existence of a collective bargaining provision. Although overtime premiums may generally serve the purposes of compensating additional burdens and protecting employees’ health, the provision at issue failed to take into account the particular burdens that may already arise for part-time employees once they exceed their individually agreed working time. Consequently, the threshold of 40 weekly hours did not pursue the stated objective in a coherent and appropriate manner.
• Partial Invalidity of the Collective Bargaining Provision Pursuant to Section 134 of the German Civil Code (Bürgerliches Gesetzbuch, BGB), the collective bargaining provision was invalid insofar as it required part-time employees also to work more than 40 weekly hours before becoming entitled to the premium. The discriminatory treatment could not be maintained to the detriment of part-time employees. Accordingly, part-time employees are entitled to the collectively agreed overtime premium as soon as they exceed the proportional premium threshold applicable to them.
• Proportional Premium Threshold: The BAG requires the premium threshold to be calculated by reference to the employee’s individual working time. The starting point is the difference under the collective agreement between the regular full-time working hours and the collectively agreed premium threshold. For part-time employees, this difference must be reduced proportionately according to their working-time ratio. In the present case, entitlement to the premium therefore arose once the claimant exceeded his individual weekly working time by more than 1.2 hours
• Upward Adjustment and Classification of the Federal Constitutional Court’s Case Law: The BAG eliminated the discrimination directly by means of an upward adjustment in favour of part-time employees. Affected employees may therefore rely directly on Section 612(2) BGB in conjunction with Section 4(1) TzBfG. Although the BVerfG emphasised that, in cases involving collective bargaining provisions that violate the principle of equality, the collective bargaining parties generally possess primary authority to correct such provisions, the BAG held that in this case the legal consequence follows directly from the statutory prohibition of discrimination under part-time employment law, making prior collective renegotiation unnecessary.
• Referral Back to the Higher Labour Court: The BAG was unable to determine the amount of the claimant’s entitlement conclusively. Findings regarding the extent and remuneration of the overtime actually worked were lacking. The case was therefore remitted to the Higher Labour Court of Nuremberg for further clarification and a new decision.
  

Implications for Practice

The decision is of considerable practical relevance beyond the specific collective agreement at issue.

Employers should review collective bargaining, company-level and contractual premium schemes to determine whether they take appropriate account of part-time employees on a proportional basis. Uniform thresholds for overtime premiums may violate Section 4(1) TzBfG where they result in part-time employees receiving a premium only after having incurred a disproportionately greater additional workload relative to their agreed working time.

Particularly affected are sectors characterised by flexible working-time models, working-time accounts, shift systems and logistics operations. The decision is also likely to trigger a review of numerous existing premium systems and to further refine the requirements for the non-discriminatory design of overtime arrangements.

At the same time, the judgment demonstrates that, although the discretion of the collective bargaining parties emphasised by the Federal Constitutional Court must be respected, collective bargaining provisions remain subject to the mandatory requirements of part-time employment law and to the equal-treatment principles of European Union law. The decision therefore forms part of the current development in case law which, on the one hand, strengthens collective bargaining autonomy while, on the other hand, consistently remedies disadvantages suffered by part-time employees.

Invalid Transfer Where the Scope of Duties and Responsibilities Is Significantly Reduced

Lower Saxony Higher Labour Court (LAG Niedersachsen), Judgment of 12 January 2026, 4 SLa 454/25

In its judgment of 12 January 2026 (4 SLa 454/25), the Lower Saxony Higher Labour Court held that the assignment of a different position is no longer covered by the employer’s managerial prerogative (Direktionsrecht) pursuant to Section 106 Sentence 1 of the German Trade Regulation Act (GewO) if, despite retaining the same job title, the new role is in fact significantly less valuable.

Facts of the Case

• The claimant had been employed since 2002 as a department manager by the defendant, a company providing development services for the automotive and aerospace industries. Most recently (until the end of June 2024), he managed a department consisting of four teams, a total of 77 employees, and several testing facilities where equipment and systems of all kinds were inspected and tested.
• In its organisational guidelines, the defendant defined the role of a department manager as the sustainable management of sales and service delivery within the department as well as the supervision of the department’s employees and managers in the capacity of an executive employee.
• As part of a restructuring, the defendant instructed the claimant by letter dated 18 June 2024 to assume leadership of a different department with effect from 1 July 2024. The new department consisted of two teams, one of which was on short-time work and comprised two employees at the time of the instruction, and the team previously managed by the claimant with 19 employees. The main focus of the claimant’s new position was to promote the expansion of the Information Engineering business model and, for this purpose, to establish a new team. In his new role, the claimant would no longer be responsible for preparing investment business plans. The defendant had imposed a hiring freeze since February 2024.
• The claimant considered the transfer invalid because his new duties no longer corresponded to those of a department manager but rather to those of a team leader. By way of his action, he sought a declaration that the instruction was invalid and requested continued employment in his previous position.
  

Reasons for the Decision

The Lower Saxony Higher Labour Court ruled in favour of the claimant and held that the assignment of the new area of responsibility was not covered by the employer’s managerial prerogative. Rather, the assignment constituted an amendment of the employment contract.

• Scope of the Employer’s Managerial Prerogative: The permissibility of exercising the mangerial prerogative is governed by Section 106 GewO. Under this provision, the employer may determine the content, place and time of the employee’s work at its reasonable discretion (Section 315(3) BGB), within the limits of the employment contract. As a rule, a different role may only be assigned under the managerial prerogative if it is of equivalent value. The managerial prerogative under Section 106 Sentence 1 GewO permits only the specification of the employment contract, but not its substantive amendment.
• Lack of Equivalence of the New Role: The claimant formally remained employed as a department manager. However, the court found that the new role was no longer equivalent to his previous position. Even under the requirements established by the defendant itself for the role of department manager, it was doubtful whether the new position still possessed the characteristics of a department manager position. Furthermore, the claimant’s scope of duties and responsibilities had been significantly reduced. In particular, substantial technical and commercial responsibilities had been removed. The court also considered the substantial reduction in the number of subordinate employees—from previously 77 employees to initially only 28 and later 21 employees. In light of these circumstances, the court concluded that the new position could no longer be regarded as equivalent. Since the instruction already exceeded the contractual limits of the employment relationship, there was no need to examine whether it complied with the standard of reasonable discretion.
• Continued Employment in the Previous Position: The claimant was entitled to be employed in his former position. Such entitlement already followed from the fact that the assignment of the other role was not covered by the defendant’s managerial prerogative. Consequently, the claimant was required to perform his work as specified by the last valid instruction. The employer nevertheless remains free to issue a new and valid instruction at any time.
  

Implications for Practice

Although the court’s reasoning is not entirely convincing throughout, the decision highlights the importance for employers of carefully assessing the permissible scope of the managerial prerogative when intending to change an employee’s duties or function by way of managerial instruction.

The employee’s actual duties are decisive, rather than the formal title of the position. Particular importance must be attached to the extent of managerial, personnel, operational and budgetary responsibility, as well as the employee’s actual position within the corporate hierarchy.

Where a labour court determines that the assignment of different duties was invalid, the last valid specification of the employee’s duty to work remains controlling until replaced by a new valid instruction.

If the employee’s sphere of responsibility is permanently and materially reduced, the reassignment may fall outside the scope of the managerial prerogative. In such circumstances, a consensual amendment to the employment contract or, where appropriate, a dismissal with an offer of altered terms of employment (Änderungskündigung) may be required in order to establish the desired new status quo.

Probationary Period in Fixed-Term Employment Relationships – No Fixed Standard Values

BAG Judgment of 30 October 2025, 2 AZR 160/24

In its judgment of 30 October 2025 (2 AZR 160/24), the BAG held that there are no fixed standard values for the duration of a probationary period in fixed-term employment relationships within the meaning of Section 15(3) TzBfG, and that the proportionality of such probationary periods must always be assessed on a case-by-case basis.

Facts of the Case

• The claimant was employed by the defendant employer on the basis of a fixed-term employment contract with a duration of one year. The contract provided for a four-month probationary period with a notice period of two weeks.
• For the position in question, a 16-week onboarding programme was established, consisting of three weeks of theoretical training, four weeks of practical nesting training and a nine-week non-tenure phase in which employees already worked largely independently but continued to receive support.
  
• The defendant terminated the employment relationship by ordinary dismissal during the probationary period.
• The claimant argued that the probationary period was disproportionately long and should not have exceeded three months, as Section 15(3) TzBfG requires an appropriate relationship between the probationary period and the duration of the fixed term. Furthermore, the claimant argued that the dismissal should have been reviewed for social justification under the provisions of the German Dismissal Protection Act (Kündigungsschutzgesetz – KSchG), as Section 1(1) KSchG should, by way of teleological reduction, be interpreted as requiring consistency between the permissible probationary period—which, in her view, was three months in the present case—and the statutory waiting period.
• The defendant maintained that the four-month probationary period was appropriate in light of the required 16-week onboarding period.
  

Reasons for the Decision

The BAG held that the duration of the probationary period was appropriate in the circumstances of the case and that the dismissal had validly terminated the employment relationship.

• No Fixed Limits for the Length of a Probationary Period: The BAG clarified that no fixed limit (for example, 25% of the duration of the fixed term) exists for the length of a probationary period. Neither Section 8(2) of the Working Conditions Directive nor Section 15(3) TzBfG contains any such requirement. A proposal discussed during the European legislative process to limit probationary periods to a maximum of 25% of the contractual term was ultimately not incorporated into the Directive. The courts are likewise not permitted to develop fixed percentages, since both the European and the German legislators deliberately refrained from defining proportionality through specific thresholds.
• Case-by-Case Assessment of Proportionality: Instead, Section 15(3) TzBfG requires an individual assessment of proportionality taking into account: (1) the duration of the fixed-term employment relationship; and (2) the nature of the work, while considering all circumstances of the individual case. The maximum probationary period of six months established by the German legislature in Section 622(3) BGB had not been exceeded. Nor did the relative duration of the probationary period—four months within a twelve-month fixed term—by itself indicate disproportionality. The BAG emphasised that, at least where two-thirds of the fixed-term period remain outside the probationary period, this circumstance alone will generally not constitute an unreasonable disadvantage to the employee.
• Justification of the Four-Month Probationary Period: The BAG considered the probationary period proportionate in the specific case primarily because an objectively comprehensible onboarding programme with a total duration of 16 weeks had been provided for the role. A probationary period may also include a period during which employees are expected to apply independently what they have learned after completing a structured training programme. Following completion of the 16-week onboarding programme, only approximately one and a half weeks remained before expiry of the four-month probationary period.
• No Requirement for Social Justification under the KSchG: The BAG further held that the dismissal did not require social justification under the KSchG. The concept of a “probationary period” under EU law (cf. Article 8(2), first sentence, of the Working Conditions Directive) and under Section 15(3) TzBfG is not synonymous with the concept of the “waiting period” under Section 1(1) KSchG:
  

- The probationary period is a period during which the employee’s suitability for the position is assessed and is based on an agreement between the parties.

- The waiting period, by contrast, regulates the six-month period during which the KSchG does not yet apply. It constitutes a legal prerequisite for the commencement of statutory dismissal protection.

Implications for Practice

Employers may determine the duration of probationary periods individually, but must always take into account the specific position and the actual onboarding requirements of the role. There are no fixed percentages by which the permissibility of a probationary period can be assessed.

The decision also makes clear that the courts may not develop fixed benchmark values but must instead conduct a comprehensive assessment of the individual circumstances of each case.

Careful documentation of onboarding requirements, training programmes and induction phases will facilitate demonstrating the appropriateness of the duration of a probationary period in subsequent disputes concerning dismissals during probation.

The Statutory Minimum Wage Is Not Satisfied by the Provision of a Company Car

BSG Judgment of 13 November 2025, B 12 BA 8/24 R

The BSG was called upon to determine whether the statutory minimum wage claim may, for social security purposes, be satisfied through the provision of a company vehicle or whether the minimum wage must necessarily be paid as a monetary benefit and therefore remain relevant for the calculation of social security contributions irrespective of any benefits in kind granted.

Facts of the Case

• The claimant, a limited liability company (GmbH), employed two employees on a part-time basis between 2015 and 2017.
• The employees had initially worked full-time and had each been provided with a company car that could also be used for private purposes. The employees subsequently reduced their working hours and switched to part-time employment. They received remuneration of EUR 150 gross (for a 12-hour working week) and EUR 480 gross (for a 32-hour working week), respectively, together with the continued use of their company cars. Pursuant to the contractual arrangements, the agreed gross remuneration was deemed to be provided through the granting of the company cars, and the respective monetary value of the benefit in kind was made subject to social security contributions. Depending on the value of the benefit in kind, balancing payments were made between the employer and the employees in order to reconcile the agreed remuneration entitlement.
• Following a company audit, the German Pension Insurance Association (Deutsche Rentenversicherung Bund) demanded payment of social security contributions and levies amounting to EUR 4,337.21. In its view, the employees were entitled, for the hours worked, to the statutory minimum gross wage of EUR 8.50 (in 2015 and 2016) and EUR 8.84 (from 2017 onwards), which could not be satisfied by the benefit in kind “company car”.
• While the Social Court dismissed the action, the Higher Social Court set aside the additional contribution assessment. Upon the appeal on points of law filed by the German Pension Insurance Association, the BSG ruled in favour of the defendant.
  

Reasons for the Decision

• Relevance of the Social Security Accrual Principle: For the purpose of calculating social security contributions, the decisive factor under the social security accrual principle (Entstehungsprinzip) is the remuneration owed under employment law. It is therefore irrelevant whether, or in what manner, the remuneration claim has actually been satisfied.
• Independent Statutory Minimum Wage Claim: The statutory minimum wage claim pursuant to Section 1(1) and (2) of the German Minimum Wage Act (MiLoG) constitutes an independent statutory entitlement that exists alongside the contractual remuneration claim and arises with every hour worked.
• Minimum Wage Must Be Paid in Money: According to the BSG, the statutory minimum wage can, as a matter of principle, only be satisfied through a monetary payment. This conclusion follows in particular from the wording of the MiLoG, which repeatedly refers to the “payment” of the minimum wage, as well as from the determination of a specific euro amount per working hour. The purpose of the minimum wage likewise supports fulfilment through payment in money. The minimum wage is intended to secure a subsistence-level minimum income for employees, prevent wage-dumping competition and avoid reliance on public welfare benefits. These objectives cannot be achieved through the provision of a company vehicle.
• Significance of Section 107(2) GewO: The BSG further based its reasoning on Section 107(2) GewO. Under this provision, benefits in kind may only be agreed as part of the employee’s remuneration and may not completely replace remuneration that is, in principle, payable in money.
• Systematic Confirmation by Social Security Law: This result is additionally confirmed by Section 28g Sentence 2 of Book IV of the German Social Code (SGB IV). Pursuant to this provision, the employee’s share of social security contributions may generally only be asserted by deduction from remuneration, which presupposes remuneration owed in monetary form.
• Consequences for the Present Case: Consequently, the contractually agreed provision of company cars did not satisfy the employees’ statutory minimum wage claims. The minimum wage claim continued to exist independently of the benefits in kind granted. Since the claimant had paid social security contributions and levies only on the monetary value of the vehicle benefit, the social security contributions and levies attributable to the statutory minimum wage had not yet been paid in full.
  

Implications for Practice

By this judgment, the BSG confirms the established case law of the Federal Labour Court concerning the requirement that the statutory minimum wage be satisfied by a monetary payment.

Employers must ensure that at least the applicable statutory minimum wage is paid in cash. Benefits in kind—such as the private use of a company vehicle—cannot, as a general rule, satisfy the statutory minimum wage claim.

For payroll administration, the decision means that where the minimum wage paid in money falls below the statutory minimum, social security contributions must subsequently be assessed on the statutory minimum wage amount. Employers should in particular review remuneration models under which employees are compensated wholly or predominantly through benefits in kind.

Failure to do so may result in substantial social security contribution claims in the course of company audits.

Dismissed Candidate for Election to the Works Council Has a Right to Time-Limited Access to the Workplace for Election Campaigning, but No Right to Use the Employer’s IT Systems

Labour Court of Nuremberg (ArbG Nürnberg), Decision of 15 January 2026, 9 BVGa 3/26

By decision of 15 January 2026 (9 BVGa 3/26), the Labour Court of Nuremberg further specified the protections afforded under works constitution law to dismissed employees in the period leading up to works council elections. The court affirmed that a dismissed candidate for election to the works council has a right, derived from the passive right to stand for election and the prohibition of election interference (Section 20 of the Works Constitution Act – BetrVG), to time-limited access to the workplace for the purpose of election campaigning. At the same time, the court clarified that this right does not extend to the use of the employer’s electronic communication systems.

Facts of the Case

• The applicant had been employed by the employer since 1 December 2010 as an order processing clerk with a regular weekly working time of 35 hours and most recently received a gross monthly salary of EUR 4,381.53.
• On 12 November 2025, the employer terminated the employment relationship with immediate effect for cause.
• On 21 November 2025, the employee filed an action for protection against dismissal. At the time of the court’s decision, no final and binding judgment had yet been rendered in those proceedings.
• Works council elections were scheduled to take place at the employer’s business operation between 2 March 2026 and 5 March 2026.
• The applicant stood for election as the lead candidate of the election list “Gemeinsam AKTIV!” (“Active TOGETHER!”).
• The employer refused the dismissed employee access to its business premises at its A-Stadt and F-Stadt locations.
• Access to the company email server and internal communication platforms was likewise blocked.
• The applicant argued that approximately 70% of the employer’s workforce regularly worked from home, were travelling on business or were deployed on construction sites.
• Without access to the employer’s communication systems, effective election campaigning would be significantly impeded.
• By way of interim relief, she sought access to the business premises and to the employer’s communication systems until completion of the works council election.
• In support of her application, she relied on her continuing passive right to stand for election and the prohibition of election interference under Section 20(1) BetrVG.
  

Reasons for the Decision

• Admissibility of the Proceedings The Labour Court held that the matter was properly brought by way of works constitution proceedings (Beschlussverfahren). The dispute concerned the protection of rights arising under works constitution law, namely the passive right to stand for election and the protection against election interference under Section 20 BetrVG. Participation of the works council was not required because the requested decision concerned only the employer in its capacity as holder of the domiciliary rights (Hausrecht).
• Continued Eligibility Despite Dismissal: The applicant remained eligible for election despite the dismissal. Pursuant to Section 8 (1) BetrVG, an employee does not lose eligibility to stand for election where an action for protection against dismissal has been filed in due time and no final and binding decision has been rendered before the election takes place.
• Right of Access to the Workplace: The court held that the continuing eligibility to stand for election necessarily implies that the applicant must also be able to exercise her passive electoral rights in practice. A complete refusal of access to the workplace substantially impedes contact with eligible voters and the conduct of election campaigning and therefore constitutes election interference within the meaning of Section 20 (1) BetrVG. The court further held that it was not necessary to examine whether the dismissal was obviously invalid. That standard applies to requests by dismissed works council members seeking access in order to perform ongoing works council duties, but not to election campaigning by a candidate standing for election.
• Urgency and Scope of the Right of Access: The requisite urgency arose from the imminence of the works council election. In order to strike an appropriate balance of interests, the court ordered the employer to grant the applicant access to its business locations on working days from 11:00 a.m. to 2:00 p.m. until the conclusion of the election.
• No Right to Use the Employer’s IT Systems: The court rejected the claim for access to the employer’s email server and internal communication platforms. The prohibition of election interference under Section 20 BetrVG does not confer a right to the provision or continued availability of the employer’s communication systems for election campaigning. Moreover, the employer had not permitted other election candidates to use those systems either, such that there was no violation of the principle of equal treatment of candidates.
  

Implications for Practice

The decision highlights important considerations for employers regarding the treatment of dismissed election candidates in connection with works council elections. Employers cannot simply rely on their domiciliary rights where doing so would prevent or materially hinder the effective exercise of a candidate’s passive electoral rights.

Where an employer dismisses an employee who is standing for election, that individual generally remains eligible for election as long as a dismissal protection claim has been brought in due time and no final and binding decision has yet been rendered. In such circumstances, a right to time-limited access to the workplace for election campaigning may exist.

At the same time, the decision illustrates the limits of this protection. The prohibition of election interference does not give rise to a general right to use the employer’s IT systems or internal communication platforms. Employers retain control over their digital communication channels, provided that they administer those channels neutrally and in a non-discriminatory manner vis-à-vis all election candidates