Germany: New Decisions Of The Federal Labour Court On The Inclusion Of Temporary Workers In Legal Threshold Values

Last Updated: 30 April 2013
Article by Kathrin Vossen

Whether or not temporary workers deployed at enterprises should be included in statutory threshold values was the subject matter of two decisions reached by the Federal Labour Court [Bundesarbeitsgerichts, BAG] in January and March 2013. Both decisions point in the same direction.

By judgement dated 24 January 2013 (docket no.: 2 AZR 140/12 – as yet only available as a press release), the Federal Labour Court answered the question of whether the temporary workers employed at a company also should be taken into consideration for the application of the German Unfair Dismissals Act [Kündigungsschutzgesetz, KSchG] to such company. An employee of a small business had opposed the termination of his employment relationship by his employer and claimed protection for his employment relationship under the KSchG, despite the fact that the employer did not employ more than ten own employees (cf. Sec. 23 para. 1 sentence 3 KSchG). Temporary workers were repeatedly employed at the business, however, which meant that the number of actually employed persons lay above the threshold value of ten employees.

The Federal Labour Court affirmed the inclusion of temporary workers in the determination of the relevant number of employees, but limited this to cases where temporary workers are employed on grounds of a regular workload and are not only hired to cover special peak workloads. It was not decisive for the application of the KSchG whether or not the employed persons were in an employment relationship with the hiring enterprise. The proprietors of small businesses should – amongst other things – be protected against the encumbrances of the increased administrative workload ensuing from unfair dismissal proceedings. However, if more than ten – own or leased – employees are actually regularly employed, then the Federal Labour Court assumes that the employer has organisational structures which can reasonably be expected to handle the increased efforts ensuing from an application of the KSchG.

Employers who organise their business with a multitude of temporary workers but only a few own employees must, according to the decision of the Federal Labour Court, rethink this approach. However, of far more practical relevance will be the evident tendency of the Federal Labour Court to progressively abolish the distinction between temporary workers and permanent work force, for even in shop constitution law the Federal Labour Court sometimes handles the two groups equally, as is illustrated by the decision dated 13 March 2013 (docket no. 7 ABR 69/11): There, the 7th Senate of the Federal Labour Court changed its opinion on the inclusion of temporary workers in the threshold values of shop constitutional law, abandoning its previous jurisprudence.

The cause of the dispute was the contestation of a works council election by the works council, which wanted to have the temporary workers employed at the business taken into consideration in the determination of the size of the works council. According to Sec. 9 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG], the number of works council members depends on the number of employees regularly employed at the business and with voting rights. If the temporary workers had been included, 15 works council members would have had to have been elected - instead of the 13-strong council that was actually formed. Back in 2004 the BAG had decided that temporary workers should not be taken into consideration in the determination of the size of the works council within the meaning of Sec. 9 BetrVG. The Federal Labour Court has expressly abandoned this position with its decision of 13 March 2013 and now postulates the opposite: Regularly employed temporary workers must be counted in the determination of the size of the business and thus the number of works council members; this is required by an interpretation of Sec. 9 BetrVG geared towards the meaning and purpose of the statutory threshold values.

With this, the 7th Senate of the Federal Labour Court now agrees with the 1st Senate: The latter decided on 18 October 2011 (docket no. 1 AZR 335/10) regarding Sec. 111 BetrVG that temporary workers should be counted where business changes which require a compromise of interests and social plan are concerned. Section 111 BetrVG provides that, in case of business changes at an enterprise with more than 20 employees, the works council can demand the negotiation of a compromise of interests and a social plan. The 1st Senate justified its decision with the fact that, through the threshold value of Sec. 111 BetrVG, the economic performance of the enterprise was taken into consideration and excessive financial strain avoided. For the determination of economic performance, however, it is of no relevance whether jobs are occupied by own employees or temporary workers.

In terms of operational practice, the recent decisions of the Federal Labour Court mean that the advantages of temporary workers for employers are increasingly diminishing to the more flexible deployment possibilities and availabilities. The requirement of "equal pay" and their consideration in statutory threshold values remove the conventional differences between temporary workers and permanent staff which employers could previously exploit for their enterprises.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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