Monthly Dose Employment Law: 04/2025

The German Federal Labour Court (Bundesarbeitsgericht, BAG) already ruled on 23 February 2021 (5 AZR 314/20) that earnings from a new employment relationship during a period of paid, irrevocable leave must be credited against the remuneration of the previous employer if a so-called sprinter clause in the termination agreement allows for early termination and the employee does not make use of this option. We are including this judgement in the current edition of our Monthly Dose because many employers are still unaware of it in practice.

According to the BAG, the offsetting does not have to be based on Section 615 sentence 2 of the German Civil Code (Bürgerliches Gesetzbuch, BGB) because there is no obligation to work during the period of irrevocable leave, so there's no default of acceptance, but rather must be derived from supplementary interpretation of the contract – especially if the contract doesn't suggest double remuneration.

Facts

• On 12 September 2018, the plaintiff employee concluded a termination agreement with the defendant employer, terminating the employment relationship on 30 April 2019 and granting immediate and irrevocable release from duties.
• The termination agreement contained a sprinter clause according to which the plaintiff could terminate the employment relationship prematurely at short notice with three working days' notice and, in the event of premature departure, would receive a severance payment of EUR 90 per premature calendar day.
• At the time the termination agreement was concluded, there were eight working days of outstanding holiday entitlement.
• The employee took up a new job on 7 January 2019 without making use of the sprinter clause.
• The employer then suspended payment of remuneration for the period from 7 January 2019 to 30 April 2019. The employee demanded full payment.
• The courts of first and second instance upheld the claim. The BAG overturned the decision and referred the legal dispute back to the Hamm Regional Labour Court as second court instance.

Reasons

• No default of acceptance pursuant to Section 615  entence 1 BGB and therefore no offsetting  pursuant to Section 615  sentence 2 BGB: Due to the irrevocable reease stipulated in the termination agreement, there was no longer any obligation to work. Therefore, the employer could not be in default of acceptance – offsetting of earnings pursuant to Section 615 sentence 2 BGB is therefore ruled out as a matter of principle.
• Offsetting by supplementary interpretation of the contract: Despite the lack of an express provision on the offsetting of other earnings, it is clear from the overall understanding of the contract that double remuneration was not intended. The sprinter clause served the purpose of giving the employee an economic incentive to terminate the employment relationship early. Additional remuneration from the new employment relationship while continuing to receive remuneration from the old employer would undermine this purpose of the provision. The clause would be ineffective in this respect.
• Vacation creditation pursuant to Section 8 of the German Federal Leave Act (Bundesurlaubsgesetz, BUrlG): During a period of leave granted, the crediting of other earnings is excluded by law (Section 8 BUrlG). Although the contract did not specify the exact timing of the vacation, the BAG – taking into account the recreational function and the flexibility provided by the sprinter clause – set the vacation period at the beginning of the leave of absence. Only in this way could the recreational purpose be taken into account and realistic holiday entitlement be ensured.

Consequences for practice

The legal dispute (and especially its passage through the courts) clearly shows that in termination agreements which provide for the irrevocable release of the employee until the termination date specified in the termination agreement with a sprinter clause enabling the employee to terminate the employment relationship prematurely before the termination date by unilateral declaration in return for (partial) capitalisation of the salary costs then saved, transparent provisions on the offsetting of other earnings achieved during the irrevocable exemption and on the specific compensation for leave must be included.

In its judgement of 19 September 2024 (8 AZR 21/24), the BAG further developed its case law on abusive AGG compensation claims under Section 15 (2) of the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz, AGG) by so-called ‘AGG hoppers’ due to a violation of the prohibition of discrimi-nation on grounds of gender in individual application procedures. AGG hoppers due to a violation of the prohibition of discrimination on grounds of gender in individual application procedures. 

Facts

• The male plaintiff, who was doing a full-time distance study (business law) during the period in question, systematically applied for job ads for ‘secretaries’ that were clearly aimed at female applicants.
• He generally used identical cover letters via online portals such as ‘eBay Kleinanzeigen’ and ‘Indeed’, in which he referred to his gender, among other things. The advertised positions were located throughout Germany, often far from his place of residence.
• In numerous cases, the plaintiff received rejections referring to the female-formulated job advertisement and subsequently brought claims for compensation before the respective labour courts for alleged discrimination under Section 15 (2) AGG. He won some of the legal disputes, but lost others in which the respective labour court rejected the claim for compensation on the grounds of abuse of rights. After each lost legal dispute, the plaintiff modified his specific approach, in particular by removing from the respective further application procedures the evidence that the respective court had cited as grounds for the abusive assertion of rights (so-called ‘second-generation’ compensation claims).
• In the case underlying the BAG's decision, the plaintiff applied for a position as a female secretary at an engineering company in Dortmund; the company did not respond to the plaintiff's application and filled the position with a female competitor. The plaintiff then demanded at least EUR 6,000 in compensation for discrimination on the basis of his gender.
• The action was unsuccessful in all three instances.

Reasons

• The BAG considered the action to be unfounded because the claim for compensation asserted was precluded by the objection of abuse of rights under Section 242 BGB.
• When applying for the position of ‘female secretary’ that was the subject of the dispute, the plaintiff was not seriously interested in the position, but solely in obtaining compensation payments.
• In general, restrictive requirements must be imposed on the abuse of rights in the assertion of a claim for compensation under Section 15 AGG in view of the EU legal basis of the AGG and the legislative objective of eliminating discrimination relevant to the AGG as specified in Section 1 AGG, and a comprehensive overall assessment of all relevant facts of the individual case must be carried out for the purpose of assessment; However, in the present case, this leads to the conclusion that an abuse of rights is present, primarily on the basis of the following objective indications:

1. Considerable distance between the place of work and the plaintiff's place of residence and no willingness to relocate for the position, which was not presented in the legal dispute.
2. Parallel distance learning as a full-time course of study with no discernible intention to interrupt it in favour of full-time employment.
3. A large number of similar legal disputes against other employers with identical arguments.

• Subjectively, the plaintiff was accused of having obtained the status of applicant only formally in order to generate claims through abuse of rights. The plaintiff had adapted his applications over time to the findings of the compensation proceedings already conducted. Accordingly, the application did not serve to gain access to the labour market, but was part of a systematic approach that was described as a kind of ‘second-generation business model’.
• The court expressly emphasised that the claim for compensation did not fail because the job advertisement was possibly gender discriminatory. Rather, it was assumed that discrimination within the meaning of Section 7(1) in conjunction with Section 1 AGG may have existed. However, the decisive factor was that the plaintiff could not invoke a possible violation of the AGG due to his abusive conduct under Section 242 BGB.

Consequences for practice

The judgement confirms the restrictive line taken by the BAG in dealing with AGG claims based on abuse of rights and strengthens employers' protection against “AGG hopping”. It makes it clear that formal applications without a serious interest in the job do not give rise to a claim for compensation.

Nevertheless, the obligation to advertise jobs in a gender-neutral manner remains – the AGG protects persons who are actually affected by such discrimination (‘genuine victims of discrimination’), not strategic claims.

In its decision of 23 October 2024 (7 ABR 34/23), the BAG ruled that persons eligible to vote in works council elections whose anticipated absence is known to the election committee in advance – for example, due to short-time working or working from home – are entitled to receive postal voting documents in accordance with Section 24 (2) sentence 1 no. 1 of the Election Regulations under the Works Constitution Act (Wahlordnung zum Betriebsverfassungsgesetz, WO BetrVG). However, it is not permissible to send the documents without regard to the attendance situation known to the election committee.

Facts

• During the works council elections held by the employer concerned between 14 and 18 March 2022, some of the employees eligible to vote were on short-time work due to the pandemic and were repeatedly working from home.
• Due to repeated short-time work caused by the pandemic, the election committee had decided to send postal voting documents to all employees affected by short-time work without prior request. Postal voting documents were also sent unsolicited to employees with rolling home office arrangements, including employees whose temporary presence at the company was necessary for business-essential activities.
• During the election process, the candidates had the opportunity to campaign on the employer's premises, which cover an area of more than 6 km2. Posters and flyers of individual candidates were repeatedly covered up, destroyed or removed. The employer then increased the number of patrols carried out by security staff.
• After the election, several candidates initiated an appeal procedure under Section 19 (1) of the German Works Constitution Act (Betriebsverfassungsgesetz, BetrVG), arguing, among other things, that the general order for postal voting by the election committee and the removal/destruction/covering of election campaign material violated essential provisions of electoral law and the election procedure.
• In the appeal proceedings, the Braunschweig Labour Court upheld the challenge and the Lower Saxony Regional Labour Court dismissed it. The BAG  overturned the second-instance decision and referred the case back to the Lower Saxony Regional Labour Court for a final clarification of the facts as to whether employees with ‘business-essential activities’ were actually excluded from postal voting during the election period.

Reasons

• The BAG recognised at the outset that the WO BetrVG conclusively regulates the cases in which postal voting is permissible.
• If the election committee is already aware of the anticipated absence within the meaning of Section 24 (2) sentence 1 no. 1 WO BetrVG – for example, due to working from home or short-time working – the postal voting documents must also be sent to these persons without application. The aim of this provision is to ensure voter turnout and to prevent the exclusion of voters.
• There is no obligation to investigate or verify beyond this. However, if the election committee learns through its own investigations that certain employees will be present at the time of the election contrary to the general assumption, postal voting documents may not be handed out to these persons without their express request.
• A violation of these requirements may constitute a significant electoral error, which may be challenged under Section 19 (1) BetrVG. However, based on the facts established so far, the BAG was unable to conclusively assess whether the election committee had also sent postal voting documents to employees with business-essential activities during the election period whom it knew to be working at the company during the election period. This fact and its possible causality in relation to the election result must be determined by the Lower Saxony Regional Labour Court.
• The BAG did not recognise the partial removal/covering/destruction of individual election advertising as grounds for contestation in the present case. These measures do constitute obstruction of elections within the meaning of Section 20 (1) sentence 1 BetrVG. In the event of such obstruction or other measures by third parties that have a negative impact on the election, the election committee is only required to take reasonable (and, if necessary, preventive) measures. If it has taken these measures (as in the present case, where the employer reinforced its security measures), any violations are not attributable to the election committee or the employer and do not generally constitute grounds for contesting the election.

Consequences for practice

The BAG's decision raises awareness among employers and election committees, particularly with regard to sending postal voting documents to absent employees in the context of mobile work: Pursuant to Section 24 (1) WO BetrVG, the election committee may only send postal voting documents without a request if it is specifically aware of the absence of the employees at the time of the election. A blanket mailing – for example, to all employees working from home – is not permitted and may render the election contestable. Employers must therefore provide the election committee with complete information about planned absences in good time for the continuation of case law on the requirements for the election committee/employer with regard to reasonable actions and reactions to disruptive measures by third parties affecting the election is helpful in practice.

On 12 November 2024 (9 AZR 13/24), the BAG ruled that a group company that assigns an employee to another group company for several years to perform work cannot invoke the so-called group privilege under Section 1 (3) no. 2 of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, AÜG) if the actual employment of the employee serves the purpose of the assignment.

Facts 

• The plaintiff was employed by S GmbH from 14 July 2008 to 31 August 2020. He performed his work continuously on the defendant's premises.
• The defendant is a company in the automotive industry. Throughout the entire period of employment, S GmbH and the defendant were affiliated companies.
• The plaintiff sought a declaration of an indefinite employment relationship with the defendant. He justified this on the grounds that he was organisationally integrated into the defendant's business and was subject to its instructions. Consequently, he claimed that this was a case of disguised temporary employment.
• The defendant requested that the action be dismissed. It referred to a contract for work and services with S GmbH, which had been operating in a separate area with its own staff. In addition, the fictitious effect of Section 10 (1) of the AÜG in conjunction with Section 9 (1) AÜG did not apply due to the group privilege pursuant to Section 1 (3) No. 2 AÜG.
• The lower courts dismissed the action. The BAG overturned the appeal ruling and referred the case back for a retrial.

Reasons

• Exclusion of the group privilege: The BAG clarified that the group privilege under Section 1(3) no. 2 AÜG does not apply if an employee is either hired or employed for the purpose of temporary assignment. The existence of one of the two characteristics is therefore sufficient to exclude the scope of application of the group privilege. The BAG interpreted the provision in accordance with established methods:
• Wording: The conjunction ‘and’ in Section 1 (3) no. 2 AÜG is not necessarily to be understood cumulatively, but can be interpreted as an alternative list.
• Meaning and purpose: According to the draft bill for the AÜG, the only thing that matters is that the employee transferred within the group was hired from the outset for the purpose of temporary employment. During the legislative process, the legislature added the words ‘and employed’ to the provision. This deliberate addition demonstrates the legislature's intention to exclude the group privilege even in the case of employment for the purpose of temporary assignment.
• Systematic: The AÜG primarily links its legal consequences to the actual implementation of the temporary employment. This is intended to prevent formal contractual arrangements from circumventing statutory employee protection.

Consequences for practice

Group companies must pay particular attention to the actual deployment of the employee and the duration of the assignment in the case of intra-group assignments. Long-term de facto assignment can also result in the exclusion of the group privilege pursuant to Section 1 (3) no. 2 AÜG, even if there was no original intention to hire the employee for the purpose of assignment. To avoid legal uncertainty, companies should clearly differentiate between contracts for work and services and temporary employment. The employee's dependence on instructions from the company to which they are assigned must be strictly avoided.

In its decision of 26 November 2024 (1 ABR 37/20) – following the European Court of Justice (ECJ) decision on its request for a preliminary ruling of 16 May 2024 (C-706/22) – the BAG recognised that an SE holding company established without co-determination can be established in a group with employees without having to conduct negotiations with the special negotiating body on co-determination.

Facts

• In 2013, an SE with no employees was established by two founding companies with no employees under British law without conducting negotiations on employee co-determination.
• One day after registration, the SE became the sole shareholder of a German holding company with its own employees and several (EU-wide) subsidiaries with a total of approximately 2,200 employees, which itself was subject to the German One-Third Participation Act (Drittelbeteiligungsgesetz, DrittelbG). The holding company was subsequently converted into a limited partnership (KG), as a result of which employee participation under the DrittelbG ceased to apply. As part of the conversion, the SE became the sole limited partner and sole shareholder of the general partner in the form of another SE. Both SEs remained without employees.
• The SE's registered office was transferred from England to Germany in 2017. Shortly afterwards, the KG's group works council applied to the Hamburg Labour Court in the present proceedings for an order that the SE must conduct the participation procedure retroactively. The Hamburg Labour Court and the Hamburg Regional Labour Court dismissed the application of the group works council. The BAG, which was subsequently seized by the group works council, referred the question at issue in these proceedings to the ECJ for a preliminary ruling, among other things, on whether, in such a case of subsequent activation of the SE as the controlling company of subsidiaries employing employees, the procedure for employee participation in the SE must be repeated.
• The ECJ denied this on the basis of the grounds for its decision, which were also adopted by the BAG in the present decision.

Reasons

• In general, no retroactive participation procedure is required for an SE that was validly established without co-determination rights: In this case, a participation procedure does not (also) have to be carried out retroactively if the SE becomes the controlling company of subsidiaries in different EU countries. The relevant provisions of European law in the SE Regulation (Regulation (EC) No 2157/2001; in particular Article 12) and the SE Directive (Directive 2001/86, in particular Articles 4 et seq.) stipulate that the negotiation procedure between the parties must take place before the SE is established and that the provisions do not apply to an SE that has already been established. In the interests of predictability for shareholders and employees and the stability of existing SEs, the EU legislature has deliberately decided that the participation procedure should be carried out before – and not after – the SE is established. Although it considered the possible need to resume negotiations in the event of structural changes to the SE, it deliberately chose not to include this in the statutory provisions. In this respect, there is no regulatory gap, but rather a genuine decision by the EU legislature resulting from the compromise on the before-and-after principle.
• Nor is there any need to repeat the participation procedure under Section 43 SEBG on the grounds of abuse of rights: Section 43 sentence 1 SEBG does not, according to its wording, require the participation procedure to be carried out (retrospectively) in the event of abuse; rather, it merely prohibits certain conduct. Furthermore, from a legal methodology perspective, Section 43 sentence 1 SEBG does not contain such a provision based on historical and systematic interpretation, because in Section 36 MgFSG, which was enacted in 2023 and is comparable in content to Section 43 SEBG, the national legislature stipulated that the participation procedure must be carried out in the event of abuse of a cross-border change of legal form. If the legislature had also wanted to determine this legal consequence of an abusive arrangement for SEs, it could have amended Section 43 SEBG when enacting the MgFSG – but it (deliberately) refrained from doing so.

Consequences for practice

The BAG's decision creates legal certainty. We discuss this in detail (and the further questions arising from it regarding comparable structuring options) in our Client Alert.

On 10 December 2024 (2 Ta 5/24), the Baden-Württemberg Regional Labour Court ruled that lecturers working at a private school for alternative medicine are not employees if there is no personal dependence and no organisational integration into the specific school operations.

Facts

• The plaintiff had been working as a freelance lecturer for a private school for alternative medicine with several locations since 2013.
• The plaintiff's teaching activities comprised between 6 and 33 teaching units of 45 minutes each per week. She selected her teaching assignments via an online portal on which the defendant naturopathic school posted course offerings with specified content, locations and times. The assignments were accepted on a voluntary basis; there was no obligation to teach a minimum number of lessons. The plaintiff was responsible for the methodological and didactic design of the teaching units, which she conducted at various locations of the defendant.
• The plaintiff earned an average monthly remuneration of EUR 3,000 from her teaching activities. At the same time, she worked as a self-employed alternative practitioner.
• The defendant terminated the contractual relationship underlying the lecturing activity without notice on 24 May 2024. The plaintiff brought an action against the termination before the labour court and sought a declaration that the employment relationship included in the lecturing activity had not been terminated by the termination.
• The labour court affirmed its jurisdiction over this legal dispute. The Baden-Württemberg Regional Labour Court upheld the defendant's appeal and denied the labour court's jurisdiction, as the lecturer relationship in question did not constitute an employment relationship.

Reasons

• No personal dependence: If a lecturer at a private school for alternative medicine can freely refuse teaching assignments without fear of negative consequences, the personal dependence required for employee status is lacking. This is particularly the case if there are no requirements regarding a minimum number of hours.
• No organisational integration: A lecturer who teaches at different locations, does not attend internal training courses or participate in team meetings is not organisationally integrated into a foreign company. The Baden-Württemberg Regional Labour Court clarifies that, in the case of lecturing activities, such a lack of organisational integration can also be assumed in individual cases under the circumstances, even after the so-called ‘lecturing activities ruling’ of the German Federal Social Court (Bundessozialgericht, BSG) of 28 June 2022 (B 12 R 3/20 R).
• Economic value of the individual teaching assignments: Long-term and continuous cooperation does not establish personal dependence, but initially only economic dependence. Furthermore, if there is no incentive system that causes a certain behaviour to become so necessary that regular employment becomes imperative, and if the assignments taken on are not insignificant small jobs that only become economically relevant when taken together, an employment relationship cannot be assumed.

Consequences for practice

The decision emphasises that in freelance work, particularly in the education sector, the criteria of personal dependence and organisational integration are decisive for assessing employee status. Even in the case of long-term cooperation and detailed framework conditions, an employment relationship can be denied if the work is characterised by a high degree of self-determination and a lack of integration into the work organisation. It remains to be seen whether the BAG will share this (correct) finding, also taking into account the lecturer ruling of the BSG.