International Employment Law Review: August 2013 - Issue 4: Recent Employment Law Developments in Germany

by Dechert LLP


New Thresholds for Mini and Midi-Jobs are Established

Beginning January 1, 2013 the earning thresholds for mini-jobs and midi-jobs have been raised from € 400 to € 450 for mini-jobs and from € 800 to € 850 for midi-jobs. Mini-jobs and midi-jobs are a form of part-time employment which allows employees to have an average earning of up to € 450 (for mini-jobs) and € 850 (for midi-jobs) per month with only reduced social security payment obligations. Mini-jobs and midi-jobs are an important part of the German labor market. This form of part-time employment is extensively used in small businesses, the temporary work sector and in the service sector, particularly in wholesale and retail businesses, health and social services, restaurants and hotels.

Bankers' Bonuses are Capped

On March 20, 2013, the European Member States and the European Parliament agreed to cap bankers' bonuses at 100 percent of their annual pay, or 200 percent of their annual pay if approved by the qualified majority of the shareholders. The regulation will become effective on January 1, 2014 and will apply to all bankers working within the European Union, as well as employees of European bank subsidiaries abroad. Although the regulation may not have a huge impact on normal banking executives, it could have a radical effect on investment bankers, who work in a sector where it is not unusual for bonuses to reach as high as ten times their annual salary.

Case Law

Employees Can Waive Their Right to Receive Compensation for Their Statutory Minimum Vacation (German Federal Labor Court Decision Dated May 14, 2013 - 9AZR 844/11)

Employees in Germany are entitled by law to a minimum of 20 vacation days per calendar year. The statutory minimum vacation leave must be given to the employee during the employment, i.e. it cannot be waived or compensation paid as consideration for vacation not actually taken during the calendar year. However, if the minimum vacation leave cannot be taken by the employee before the end of his employment, the employee is entitled to a compensation payment. Due to the Federal Leave Act (Bundesurlaubsgesetz), it is not allowed to differ from the employee´s statutory entitlement to such compensation payment to the disadvantage of the employee. However, the Federal Labor Court has now ruled that the Federal Leave Act merely prevents employers and employees from negotiating on an individual basis upon an agreement that which excludes any such right to compensation. However, if the employee was able to make a claim for a compensation payment and waived such claim, the waiver shall be valid. In the case that the Federal Labor Court had to decide, the employee waived his compensation claim for untaken vacation leave in the course of a court proceeding for unfair dismissal as part of a settlement. The court pointed out that a waiver is possible if the employment is terminated and the compensation claim has already arisen and found that this waiver was valid.

Court Clarifies Exception to Notice Requirements (Decision Dated October 25, 2012 – 2 AZR 495/11)

The German Federal Labor Court decided a case where the employer had terminated the employment contract of an employee for good cause with immediate effect on grounds of misconduct (verhaltensbedingte Kündigung), and, by way of precaution, also by an ordinary dismissal based on misconduct by complying with the applicable notice periods. The employee, a chief physician, used his private mobile telephone during surgery even though that conduct was prohibited. However, the rules did not prohibit the use of the company phone for business calls even during surgery. The employee had received no prior warning about his conduct before he was terminated. The employee challenged his termination and the court found in his favor. The court reasoned that the requirement of a previous warning before a termination notice is issued had not been fulfilled in the case. Notwithstanding that the employee had violated his duties under the employment contract by making private phone calls during surgery; the misconduct did not justify an exemption from the general requirement of a previous warning before terminating an employee on grounds of misconduct. Such exemption from the warning requirement is possible only if it is either previously observable that the warning will not result in a change in attitude of the employee or if the misconduct constitutes such a serious matter that it would be reasonable to require an employer to tolerate it even once. The court found that neither exemption applied in this case.

Court Decides Case Involving Age Discrimination in Advertising Job Vacancy (German Federal Labor Court, Decision Dated January 24, 2013 – 8 AZR 429/11)

The German Federal Labor Court recently decided whether the advertisement of a vacancy for a “trainee-program” for university graduates/ young professionals and expressly addressed to entrants, constitutes age discrimination under the Federal General Equal Treatment Act (AGG). In this case, the claimant was a 36 year old lawyer with several years of experience. He applied for the vacancy, but was turned down. He argued that his application had only been denied because of his age in violation of the law. The company denied his allegations and argued that it had chosen the successful candidate by their final references. However, the Federal Labor Court ruled that the text of the advertisement for the vacancy was suggestive of age discrimination. As a result, the employer was obliged to put forth evidence that no such discrimination has actually occurred. If the company could prove that it had only included candidates with the best final references in its applicant selection without regard to age, it could prevail. As the claimant had denied such applicant selection of the company, the Federal Labor Court decided to remand the case to the Higher Labor Court Berlin-Brandenburg (Landesarbeitsgericht Berlin-Brandenburg).

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Dechert LLP

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