Germany: Labour Law

Last Updated: 19 September 2014
Article by Jörg Looman

I. Compensation subject to the contract of employment - Reimbursement of detective costs in the event of a termination upon suspicion

In its judgement of September 26, 2013 (8 AZR 1026/12) the Federal Labour Court (BAG) has deemed the costs for a detective of an employer refundable – only – in case of a legally valid termination upon suspicion.

Suspicion subsequent to the first observation made by the detective

Reinforcement of suspicion subsequent to a new (second) observation – termination upon suspicion and compensation

Due to the frequent absences from work of the employee the employer commissioned a detective agency. The first observation produced a considerable number of indicators for the fact that the employee was actually not unfit for work. As a result of that the employee was requested to be examined by the medical service of the health insurance, which the employee refused several times. In the month following the employer commissioned the detective agency again to observe the employee. This resulted in the reinforcement of the existing suspicion. In consequence the employer declared a termination upon suspicion and requested to be reimbursed by the employee for both observations. The Arbeitsgericht as well as the Landesarbeitsgericht had admitted the claim only with reference to the second observation. Following the appeal of the employee the Federal Labour Court (BAG) has annulled the ruling and referred the legal dispute back to the Landesarbeitsgericht.

Prerequisite of a termination upon suspicion

The Federal Labour Court (BAG) reconfirmed in its reasons for the decision the validity of so-called terminations upon suspicion: The suspicion that the employee could have committed an offence or a serious violation of duty might constitute an important reason for an extraordinary termination. This suspicion had to be justified objectively by facts being of such a nature that that they prompted a reasonably and judiciously assessing employer to declare termination. The suspicion concerning a breach of contractually agreed principal and secondary obligations was decisive for this as well as the loss of trust thus connected to it.

Reimbursement of detective costs not only in the event of the suspicion being confirmed, but in case of a valid termination upon suspicion

Until today court rulings have only decided that detective costs have to be reimbursed upon a confirmation of suspicion. In the present case it was not possible to finally clarify whether the employee was actually unfit for work; however, quite substantial indicators supported that assumption. For that reason the Federal Labour Court (BAG) extended its ruling concerning the reimbursement of detective costs to those cases in which a termination upon suspicion had been declared with due effect. The duty of reimbursing the detective costs can now also be taken into consideration if the facts established result in such a serious suspicion of a breach of contractual obligations that due to that a termination upon suspicion based on those facts has to be deemed justified. A further prerequisite for the duty of reimbursement is that a reasonably and economically thinking employer, given the circumstances of the individual case, deemed the costs for the elimination of this irritation not only appropriate but, moreover, also necessary.

The Federal Labour Court (BAG) has, therefore, taken the costs for the second observation as based on sufficiently substantiated elements of suspicion because the first observation established those substantiated assumptions.

In order to further establish the facts of the case the Federal Labour Court (BAG) has referred the decision of the Landesarbeitsgericht again.

Practical Considerations

The Federal Labour Court (BAG) has confirmed and extended its established court rulings with that decision. It is a prerequisite for a duty to reimburse detective costs that an already existing suspicion is confirmed by means of the observation. However, it is insufficient for the reimbursement of costs that moments of suspicion only come into being by way of the observation.

Jörg Looman

II. German Federal Holiday Act (BUrlG) – Entitlement to holiday in case of unpaid special leave

In its ruling of May 6, 2014 (9 AZR 678/12) the Federal Labour Court (BAG) has added a further chapter to the ever popular topic under labour law "entitlement to holiday".

The plaintiff was employed at the defendant as a nurse. In the period between January 1, 2011 and the termination of her employment contract on September 30, 2011 the plaintiff had some unpaid special leave and did not work for the defendant during that time. After the termination of employment the plaintiff requested a compension of 15 days of holiday resulting from the calendar year 2011. Whilst the Arbeitsgericht had dismissed the action, the Landesarbeitsgericht as well as the Federal Labour Court (BAG) have admitted the claim.

Entitlement to holiday for an existing employment even without actual work performed

The Federal Labour Court (BAG) stated in its ruling that according to §4 German Federal Holiday Act (BUrlG) only the existence of an employment contract was relevant to the entitlement to holiday to arise. Whether the employee actually rendered any work was insignificant according to statutory regulations. The statutory entitlement to holiday did not constitute a consideration of the employer for a performance of work rendered or still to be rendered, but a statutory obligation of the employer resulting from the employment contract to exempt the employee for the duration of his/her holidays from the duty to work. The agreement regulating some unpaid special leave left the legal validity of the employment contract unaffected and did, therefore, not counter the claim arising from § 1 German Federal Holiday Act (BUrlG).

No analogous application of special-law regulations to the German Federal Holiday Act (BUrlG)

In fact, some special-law regulations partly provided the possibility of shortening the holidays as, for example, for parental leave or military service. However, an analogous application to other facts and circumstances could not be taken into consideration due to the exceptional nature of the special-law regulations.

For that reason the employer had the duty to satisfy the entitlement to holiday of the employee with pecuniary means.

Practical considerations

This ruling will not exactly encourage the willingness of employers to grant unpaid special leave. Since the Federal Labour Court (BAG) has made it clear that the entitlement to holiday is pursuant to § 13 German Federal Holiday Act (BUrlG) indispensable, a contractual waiver of the employee to holidays being granted may be considered ineffective. The employer should, therefore, pay attention when granting unpaid special leave that the employment contract will not be terminated directly subsequent to that special leave.

Jörg Looman

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