Germany: International Employment Update: New Legislation (Germany) - February 2010

Last Updated: 12 March 2010
Article by Ralph Panzer

Originally published February 2010

Extension of the short-time working benefit, Regulation of 8 December 2009

Pursuant to German Social Security Laws, employees can obtain short-time working benefits provided by the employment authorities. These benefits granted by the state compensate to a large extent the losses the employee suffers from a reduction of working time due to short-time working. The statutory maximum term for such benefits is six months. The term can, however, be extended up to 24 months by the German Federal Ministry of Labour and Social Affairs.

Due to the worldwide economic crisis, by regulations of 29 May 2009, the German Federal Ministry of Labour and Social Affairs had extended the benefit period to 24 months for such employees who started working short-time before 1 January 2010. The state benefits prevented major job losses due to the economic crisis in Germany that would have occurred by now. Also by its recent regulation of 8 December 2009, the German Federal Ministry of Labour and Social Affairs set the benefit period to 18 months for employees who start working short-time from 1 January 2010 to 31 December 2010. The Federal Employment Authorities have thus reacted to the still severe impact of the worldwide economic crisis on the German labour market.

Reported case law

European Court of Justice, Decision of 19 January 2010

The term of the notice periods of employees are set out in the German Civil Code (section 622) and relate to the employee's job tenure with the current employer. Depending on the term of service, the notice periods for the employer may vary from four weeks to seven months to the end of the calendar month (if the employment relationship has lasted 20 years with the same employer). To calculate the relevant job tenure for the notice period under section 622, a period prior to the 25th birthday of the employee may not be taken into account. This means, for instance, that an employee at the age of 28 who started working for the company at the age of 20 has a job tenure as regards the calculation of the notice period under the above conditions of only three years and thus a shorter notice period would apply to his employment.

In its decision of 19 January 2010, the European Court of Justice held that the part of section 622 which excluded the job tenure completed before the employee's 25th birthday from the calculation regarding the length of the notice period, is age discriminatory and thus void. In the course of its ruling the ECJ confirmed that, in addition to its prior case law, national courts are entitled but not required to make a reference to the ECJ for a preliminary ruling on the interpretation of the principle of non-discrimination on grounds of age. So, national courts are entitled in such cases to also decide – without making a reference to the ECJ - not to apply provisions of national law considered to be contrary to European Union law. This is now supposed to be possible even for cases where there is no space for interpretation of the law according to the directive. With this decision, the ECJ has broadened the competency of the national courts.

Federal Labour Court, Judgment of 17 December 2009 – 8 AZR 1019/08

In February 2009 the ECJ ruled in its "Klarenberg" judgment that a transfer of business under the Acquired Rights Directive (ARD) could also take place even if the transferred business loses its organisational independence with the transferee as far as a "functional link" between the "production factors" is retained. This not so easy to interpret statement of the ECJ put the long established case law of the German Federal Labour Court (FLC) into question, according to which a transfer of business required a transfer of an economic entity or parts of it which retain its identity after the transfer, where the FLC was relatively strict as regards the question whether the business unit has retained its identity.

In its recent ruling after the "Klarenberg" judgment of the ECJ, the FLC stated that it is not a transfer of business, even though an extensive transfer of equipment has taken place, if the transferee requires and uses the transferred equipment just partially due to a substantially modified operational concept. This is supposed to apply, at the very least, if the transferee has made substantial modifications regarding the organisation and the staff structure.

In the case at hand, the transferor had managed three canteens of a car company. The claimant was one of the kitchen assistants. In contrast to the former organisation of the canteens, the transferee no longer prepared freshly made meals but only heated meals which were delivered by external suppliers, so cooks were not necessary at all. The FLC held that the former business purpose of preparing fresh meals had been changed and the kitchen equipment was thus used in a substantially different manner. The case shows that the FLC continues its former case law as long as it is not obviously contradictory to the latest case law of the ECJ.

Federal Labour Court, Judgment of 17 December 2009 – 8 AZR 670/08

According to the German Anti-Discrimination Act (ADA), the discrimination of an employee is also prohibited in cases where the discriminating person does not exactly know if the possibly discriminated employee belongs to the group of employees protected by the ADA. Thus, questions in a job interview which aim at certain health impairments may imply the question whether there are any disabilities which would indicate discrimination.

In the case at hand, the claimant applied unsuccessfully for a job to assist in academic studies and clinical research with a company in the field of medical research and development. In the job interview the plaintiff was asked if he received psychiatric or psychotherapeutic treatments. He even had to sign that this was not the case. The Federal Labour Court has referred the case to the Regional Labour Court to clarify if these questions indicate discrimination.

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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