employment law overview germany 2019-2020 · separate laws and case law generally make german...

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employment law overview germany 2019-2020Pusch Wahlig Workplace Law / Proud Member of L&E GLOBAL

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table of contents.

i. General overview 01II. PRE-EMPLOYMENT CONSIDERATIONS 03III. EMPLOYMENT CONTRACTS 05IV. wORkINg CONDITIONS 06V. ANTI-DISCRIMINATION LAwS 09VI. SOCIAL MEDIA AND DATA PRIVACY 11VII. AuThORISATIONS fOR fOREIgN EMPLOYEES 13 VIII. TERMINATION Of EMPLOYMENT CONTRACTS 14IX. RESTRICTIVE COVENANTS 17X. TRANSfER Of uNDERTAkINgS 19XI. TRADE uNIONS AND EMPLOYERS ASSOCIATIONS 20XII. EMPLOYEE BENEfITS 22


i. general overview

2. Key Points• Employees who are not from the EU/EEA require a residence title for the purpose of taking upemployment.

• A statutory minimum wage of 8.84 Euros per hour currently applies to all employees in all sectors of business. Aside from the statutory minimum wage,therearespecialregulationsandcollectivebargaining agreements within certain sectors.

•Overtimepay isnotexpressly regulatedby law,but is subject to the employment agreement, collective bargaining agreements and workscouncil agreements.

•Tradeunion representatives support employeesandworkscouncils,butdonothaveparticipationrights within a company.

•Due to the high level of protection againstdismissal, it is reasonably common for employment to be terminated by a separationagreement.

•Severance payments are paid if a number ofconditionsarefulfilled.

3. legal frameworKGerman labour and employment law is not consolidated into a single labour code. Separate laws for particular issues exist – e.g. the FederalVacation Act (Bundesurlaubsgesetz - BUrlG), theWorking Time Act (Arbeitszeitgesetz - ArbZG) ortheMaternityProtectionAct(Mutterschutzgesetz-

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MuSchG).ThemainsourcesofGermanemploymentlaw therefore are Federal legislation, collectivebargaining agreements, works council agreements andindividualemploymentcontracts.Manylabourandemploymentlawmattersareheavilyinfluencedby case law so that judicial precedent is an important part of the legal framework. Numerous separate laws and case law generally make German employment lawdifficult to navigate. There havebeen discussions about introducing a uniform LabourCode.Theprojectwashoweverabandonedand an introduction in the short- or mid-term isveryunlikely.

4. new DeveloPments

A. TEMPORARY PART-TIME wORk

Thereturnfrompart-timetofull-timeemploymenthasbeennewlyregulated.Afteratleastsixmonthsofserviceemployeesshallbeentitledtoatemporarypart-timearrangementforaperiodofbetweenoneandfiveyears,providedthattheemployerhasatleast 45 employees. According to the former legal situation,noentitlementforanemployeetoreturnto full-time employment once they have workedpart-time, existed. For companieswith 46 to 200employeesa limitofonepart-timeemployeeper15employeesshallapplytoreducetheoperationalburden of temporary arrangements.

1. introDuctionGermanemploymentlawisdividedintotwoareas:individualemploymentlawandcollectiveemploymentlaw.Individualemploymentlawconcernsrelationsbetweentheindividualemployeeandtheemployer,whilecollectiveemploymentlawregulatesthecollectiverepresentationandorganisationofemployeesaswellastherightsandobligationsofemployees’representatives.

Germanemploymentlawisnotconsolidatedintoasinglelabourcode:themainsourcesareFederallegislation,caselaw,collectivebargainingagreements,workscouncilagreementsandindividualemploymentcontracts.


employment law overview2019-2020 / germany

Theamendmentof thePart-TimeandFixed-TermContracts Act (Teilzeit- und Befristungsgesetz -TzBfG)cameintoforceinJanuary2019.

The new law does not change the current legal situationsignificantly.However,theemployeewillbeprovidedwithaclaim thatentitleshim/her toswitchtotemporarypart-timeworkwithoutrisks.Whethertheclaimactuallyexistsmustbeassessedindividuallyineachcase.

B. MATERNITY PROTECTION

With the reform of the Maternity ProtectionAct (Mutterschutzgesetz - MuSchG) its scope ofapplicability has been extended. Apprentices,interns as well as students doing a mandatory internshipandself-employedwomen,whocanbecomparedtoemployees,willenjoytheprotectionof the new MuSchG.

C. TEMPORARY AgENCY wORk

The Law on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz-AÜG)hasbeensubject to amendments. The revised version ofthe lawcame into forceon1April 2017. It limitsthepostingofaworkertoamaximumdurationof18months and grants theworker an entitlementto equal pay (compared to the employees of thelessee)atthelatestafter9months.

D. fORMAL REquIREMENTS

Pursuant toa reformof the regulationson termsandconditions(Sec.305ffCivilCode-BürgerlichesGesetzbuch – BGB), any provision in individualemployment documentation, which requestsa stricter form than text form (email and fax issufficient)fromanemployeeisnolongervalid.

Thisreformespeciallyappliestoso-calledforfeitureclauses inemployment contracts,whichhave thepurpose of contractually reducing the period for bringingclaimstousuallythreetosixmonthsafterthe due date. Forfeiture clauses, which providethat the employee must raise any claims within a specific period in writing (i.e. with an originalsignature of the employee) are no longer valid.The invalidity has the consequence that instead,statutorytime limitationperiodswillapply,whichmeansthatclaimscanbebroughtuntiltheendof

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the third year following the year in which the claim fell due. It is highly recommended to change any forfeiture clauses so that they only require the claimbeingraisedintextform.Foranyemploymentcontracts,whichhavebeenconcludedbeforeoron30 September 2016, the reform does not apply.This means that the clause of forfeiture in such employmentcontractsisstillvalid.However,incaseof any amendment to the employment contract, the forfeiture clause should be adapted as well.

Pleasenotethatthisregulationdoesnotapplytoterminationletters.ThesestillneedtobeinwritinginordertobevalidpursuanttoSec.623CivilCode(BürgerlichesGesetzbuch–BGB).Furthermore,theso-calledwrittenformclauseregardingchangesoftheemploymentcontractis–exceptforindividualagreements between the parties – still valid, asthesearenounilateraldeclarations.

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ii. PRE-EMPLOYMENT consiDerations 1. Does a foreign emPloyer neeD to establish or worK through a local entity to hire an emPloyee?No.Theemployerwill,however,beobligedunderthe statutory social security system to appoint a contact person in Germany, which can be an employee.

2. limitations on bacKgrounD checKsTherearenospecificstatutoryregulationsonthelegitimacy of background checks carried out bya private employer. However, there is complexcase law on the question of which informationanemployermay legitimately request froma jobapplicantduringthecourseofajobinterview,whichcanbeconsideredasabenchmarkforthelegitimacyof background checks, using other sources than the applicant. In essence, employers may only requestsuchinformationthathasadirectrelationtotheapplicant’s futuretasksandresponsibilitiesin the particular job in question. Therefore, theemployer’s right to carry out background checkswithouttheemployee’sconsentisverylimited:

•Aprivateemployerhasnorightofaccess toanapplicant’s criminal record. The employer may,if at all, only request the applicant to submit a copy of their criminal record. It is controversialtowhichextent sucha request is legitimate,asthe document may also contain informationonoffences that arenot relevant for the job inquestion.

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•Anemployer generally has a legitimate interestin verifying the statements an applicant makesin the application, e.g. on academic credentialsor employment history. The employer may therefore, e.g., require the applicant to present the original copies of their diploma (or otheracademic certificates) or the original copies oftheirreferenceletters.Theemployerishowevernot allowed to contact prior employers without theapplicant’sconsent.

•Acheckonanapplicant’scredithistoryorstatuswill only be justified where the applicant’sfuturetasksinvolveaspecialpositionoftrustorfiduciaryduty,asonlyinsuchcasetheemployermay require the employee to give informationon their economical/financial situation in a jobinterview.

•Duetodataprotectionlaw,backgroundchecksinsocial networks are only allowed in professional networks that are intended to present professionalqualifications,suchasLinkedIn.Theemployerisnotallowedtouseinformationbasedonbackgroundchecksinprivatenetworks,suchasFacebook.

3. restrictions on aPPlication/interview QuestionsNearlyeveryemploymentrelationshiprequiresanapplicationprocess.Theemployerhasasignificantinterestinreceivingasmuchinformationaspossibleabout the future employee. Especially due to the protection of the privacy of the employee, thereare,however,alotofrestrictionsfortheemployerduring the hiring process in Germany.



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A. JOB INTERVIEwS

Job interviews are a typical step in the hiringprocess.However, as the applicant is usually in aweakerpositioncomparedtotheemployer,certainquestions regarding thesituationof theapplicantareprohibited.Theemployerisonlyentitledtoaskforinformation,whichisnecessaryforenteringintothe employment relationship, e.g. qualificationsthat are required for employment. Questionsconcerning pregnancy, age, race/ethnic origin, sexual identity, religion, trade union affiliation orseveredisabilityaregenerallynotallowedinajobinterview.

B. DISCRIMINATION ISSuES

The General Equal Treatment Act (AllgemeinesGleichbehandlungsgesetz - AGG) is of specialsignificance during the hiring process. The lawaimstoabolishunequalandunjustifiedtreatmentof employees based on certain criteria: race andethnic origin, gender, religion or belief, disability, ageorsexualorientation.Thisregulationisalreadyapplicable during the hiring process and especially restrictsjobadvertisementsandapplicantselection.Forinstance,theadvertisementfora“youngteammember”mightindicateadiscriminationbasedonage.

Toavoidpossiblediscriminationissuestheemployershould always base the rejection of an applicantonobjectivehiringcriteriasuchasjobprofileandrequired qualifications rather than on personalcharacteristicsoftheapplicant.Inrejectionletters,the employer should always be careful when giving individual reasons for rejection because oftheGermananti-discrimination law.Furthermore,during the period of claims for damages due to discrimination, the employer should be able toprove his selection process and therefore shouldkeep all documents.

C. DATA PRIVACY

The protection of data privacy of the applicantis of special interest during the hiring process. In accordance with Sec. 26 of the Federal DataProtection Act (Bundesdatenschutzgesetz –BDSG),Art.6para.1lit.bGeneralDataProtectionRegulation (Datenschutz-Grundverordnung –DSGVO)personaldatamayonlybeprocessed for

employment-relatedpurposeswherenecessaryforhiringdecisionsor,afterhiring,forcarryingoutorterminatingtheemploymentcontract.

Due to potential discrimination claims, theemployerisonlyentitledtostorepersonaldataoftherejectedapplicant for6monthsaftertheendoftherecruitmentprocess.Onlyincaseofexplicitpermission, may the employer store personal data of the applicant beyond that period.


iii. emPloyment contracts1. minimum reQuirementsThe employer has a statutory obligation toprovide themain contractual terms in writing tothe employee no later than onemonth after thecommencement of employment. The terms and conditions of employment are regulated mainlyby statutes, collective bargaining agreementsand works council agreements. As a rule, the employmentcontractmaynotdeviatefromtheseprovisions to the detriment of the employee.The written summary must contain at least thefollowing: 1) name and address of the employerand theemployee;2) informationon the startingdate; 3) the anticipated duration (only in caseof fixed term contracts); 4) the place of work;5) the nature of the activity involved; 6) thecompositionandamountof the remuneration;7)theworkinghours;8)thedurationofannualleave;9) the notice period and 10) a general referenceto thecollectivebargainingagreements,worksorserviceagreementsapplicabletotheemploymentrelationship, if any. To avoid future disputes, aversion of the employment contract should bedraftedinGerman.However,thisisnotrequiredbylaw.

2. FixEd-TERM/OPEN-enDeD contractsAs a general rule, the employment contract is enteredintoforanunlimitedperiod.Afixed-termcontract is possible, provided the term is agreeduponinwritingbeforetheemploymentcommences.A fixed-term contract ends automaticallywithoutwritten notice at the end of its term. A fixed-term employment relationship must be justifiedby objective grounds, some of which are setforth in statutory law (e.g. temporary increase in

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workvolume, substitutionofanemployeeduringparental leave). If no objective grounds exist,fixed-term employment is limited to a maximumduration of two years, provided that no previousemployment contract with the same employer existed. If the parties continue the employmentafter the expiration of the fixed-term contract,the agreement is deemed to be concluded for an indefiniteperiod.

3. trial PerioDThe employer and employee may agree upon a trialperiod,whichislimitedbylawtoamaximumdurationofsixmonths.Thenoticeperiodwithinthetrialperiodistwoweeks.TheDismissalProtectionAct does not apply during thefirst sixmonths ofemployment, regardless of whether the partiesagreed upon a trial period.

4. notice PerioDThe lengthof thenoticeperiod for theemployerdepends on the employee’s length of service,ranging from 4 weeks for employees with less than 2years’seniority,to7monthsforemployeeswithmore than 20 years’ seniority. Unless otherwisestated in theemploymentcontract, theextendedstatutory notice periods are only applicableto terminations by the employer, whereas theemployee may terminate the employment with a noticeperiod of fourweeks to the 15th or theend of a calendar month. Most employment contracts align the notice periods for employeeswiththeextendedperiodsapplicabletoemployers.Collectiveagreementsmayspecifylongerorshorternotice periods, whereas individual contractsof employment may only specify longer noticeperiods.



iv. worKing conDitions 1. minimum worKing conDitionsThe terms and conditions of employment (suchas maximum working hours, minimum paidholiday and sick leave) are regulated by statutes,collectivebargainingagreementsandworkscouncilagreements.Theindividualemploymentagreementcannot deviate from these provisions to thedetriment of the employee. The rights of employees who are only temporarily sent to work in Germany are generally determined by foreign employment law. However, to ensure fair competition and toprotect the interests of employees, the Posted Workers Act (Arbeitnehmerentsendegesetz –AEntG) stipulates that in certain business sectors– including, but not limited to the construction,commercial cleaning and mail service sectors– certain minimum working conditions mustbe observed. They include: 1) maximum workperiods and minimum rest periods; 2) minimumpaid vacation entitlements; 3) minimum wage,including overtime (pursuant to the relevantcollectivebargainingagreement);4)regulationsonhealth,safety,andhygieneatwork;5)maternity/parental leave and youthprotection; and 6) non-discriminationprovisionsincludingprohibitionsongenderdiscrimination.

2. salary

a. minimum waGe

A statutory minimum wage of 9.19 Euros perhour applies to all employees in all sectors of business. Employees under 18, trainees and interns are exempted from the regulation. Aside fromthe statutory minimum wage, there are special regulations and collective bargaining agreementswithincertainsectors,e.g.theconstructionsector.

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Mostoftheseregulationscontainaminimumwageabove9.19Eurosperhour.

Asageneral rule, remuneration isdeterminedbymutual agreement. The salary is set forth in the individualemploymentcontract,eitherconcretelyorbyreferencetoacollectivebargainingagreement.Furthermore, the contractual freedom of thepartiestodeterminetheremunerationbymutualagreement, is limited by public policy. A salary of less thantwothirdsof therelevantusualwage iscontrary to public policy and such an agreement is generallyconsideredtobevoid.

The minimum wage of currently 9.19 Euros perhour will be subject to further increase within the nextyear. Itwill increase to9.35Eurosperhourfrom1January2020.

B. REMuNERATION TRANSPARENCY ACT

Tosupportgenderequalityregardingremuneration,the core of the Remuneration Transparency Act(Entgelttransparenzgesetz – EntgTranspG) is anindividual right to information on remuneration.This right is granted to all employees working in establishmentswithmorethan200employees.

There is, however, no right to be informedon a specific remuneration - only the averageremuneration of a comparison group must bedisclosed. This group comprises employees of the opposite sex who perform the same, or similartasks,astheemployeerequestingtheinformation.However, as no specific remuneration shall bedisclosed, the claim can and must be denied if providing the information can lead to the salaryof specified employees becoming known. This isassumediftherelevantcomparisongroupconsistsoflessthansixpersons.



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Anemployeehastherighttoinformationon:

•the criteria of how his/her remuneration isdetermined and/or

•thecriteriaofhowthecomparableremunerationis determined and/or

•thecomparableaverageremunerationcalculatedbythestatisticalmedianofthemonthlyaverageremunerations, granted to employees in thesameoracomparableposition.

If the employer is bound by collective bargainingagreements, the reference to such agreements is sufficientforfulfillingtheinformationclaim.

The information can be provided by the workscouncil,theemployer,orthepartiesofacollectivebargaining agreement. If the employer does not comply with the employee’s claim, no directconsequences are provided in the law. If theemployee then, however, claims discrimination,the failureto informwill leadtoa reversalof theburdenofproof.Theemployer thenhas toprovethatnodiscriminationtookplace.

Employersremainfreetopayemployeesdifferently,aslongasthisisbasedonobjectivereasons,suchasqualifications,marketvalue,orresponsibilities.

3. maximum worKing weeKThestatutorymaximumworkingtimeis8hoursperday from Monday to Saturday. Working on Sundays and public holidays is generally forbidden, unless explicitlypermittedbystatutorylaw.Thestatutorymaximum weekly working time is 48 hours. Theregular daily working time may be extended upto10hours,providedthatonaverage8hoursperworkingdayarenot exceededwithin a referenceperiodof6monthsor24weeks.Anuninterruptedrest period of 11 hours after dailyworkmust beguaranteed. There are no opting-out provisionsunder German law.

4. overtimeOvertime pay and overtime surcharges are notexpressively regulated by law but are subject totheemploymentagreement, collectivebargainingagreements or works council agreements. For

regular employees, it is not possible to deem any overtimecompensatedbytheregularremuneration.However, it ispossibletocontractuallyagreethatovertimeof10–20%oftheregularworkingtimeshall be deemed as compensated by the regular remuneration.

For boardmembers andmanaging directors, anyovertimeworked,isgenerallydeemedtobealreadyremunerated by their normal salary.

5. health anD safety in the worKPlace

A. EMPLOYER’S OBLIgATION TO PROVIDE A hEALThY AND SAfE wORkPLACE

As the employer has the organisational controlof its premises and the employees are exposedto dangers of the workplace, the employer is obliged to provide a healthy and safeworkplace.The employer therefore is obliged to set up and maintain all rooms, devices and equipment andto organise the work in a way that the employees areprotectedagainstanypossibleharm.However,the regulations on a healthy and safe workplacedepend on the type of industry sector and on the degreeofdanger faced in thespecificworkplace.Thefulfillmentoftheapplicablehealthandsafetyregulations are monitored by the administrativeauthorities.

B. COMPLAINT PROCEDuRES

Employeesareentitledtomakesuggestionstotheemployerregardingallmattersofsafetyandhealthprotection. In the event that an employer doesnotmeetitsobligations,employeesareentitledtolodge a complaint. If the employer does not respond to the complaint appropriately, the employees can lodgeacomplaintoutsidetheestablishment(e.g.totheauthority forworksafety).However, this issupposed to be the last resort.

If the employer does not fulfill the rules ofoccupational safety, the employees are entitledto refuse to work at the workplace without losing their claim to remuneration. Furthermore, theemployee is also entitled to demand that health




andsafetyregulationsareobservedandmayclaimcompensation for any damages. Also, the workscouncilandtheGermanadministrativeauthoritiesmay insist on the fulfillment of applicable healthandsafetyregulations.

C. PROTECTION fROM RETALIATION

Theemployeemustnotsufferanydisadvantageasaresult of lodging a complaint. This applies as long as therewasreasonableindicationthatabreachoftheemployer’sobligationtoprovideahealthandsafeworkplacehasoccurred.However,iftheemployeelodgesacomplainttotheauthoritieswithoutgivingthe employer a reasonable opportunity to correct thelackofsafety,adismissalcanbejustified.


V. ANTi-diSCRiMiNATiON laws1. brief DescriPtion of ANTi-diSCRiMiNATiON lawsThe General Equal Treatment Act (AllgemeinesGleichbehandlungsgesetz - AGG) providescomprehensiveprotectionagainstdiscriminationonthe basis of race and ethnic origin, gender, religion orbelief,disability,ageorsexualorientation..

2. extent of Protection No discriminationmay occur with respect to theconditions for access to employment, to self-employmentandtooccupation,includingselectioncriteriaand recruitment conditions,whatever thebranch of activity is and at all hierarchical levels,includingpromotion.Furthermoreallemploymentandworkingconditions,includingpay,mustbefreefromdiscrimination.

The law provides protection against differentbehaviors.Thegeneraldefinitionofdiscriminationthereforeincludes:

•directdiscrimination•indirectdiscrimination• harassment•sexualharassmentand•instructionstodiscriminate

Direct discrimination occurswhere one person istreatedlessfavorablythananotherinacomparablesituationduetothecriteriasetforthintheAGG.

Indirectdiscriminationoccurswhereanapparentlyneutral provision, criterion or practice puts anypersons in adisadvantageous situation comparedwith other persons, on grounds of racial or ethnic origin,sex,religionorbelief,disability,age,sexual

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orientation unless that provision, criterion orpracticeisobjectivelyjustifiedbyalegitimateaimandthemeansofachievingthataimareappropriateand necessary.

3. Protections against harassmentFurthermore, the law especially protects theemployee against harassment and sexualharassment. Such categories are regarded as discriminatory categories in Germany.

Harassment occurs, when an unwanted conducttakesplacewiththepurposeoreffectofviolatingthe dignity of a person and of creating anintimidating, hostile, degrading, humiliating oroffensive environment, which is related to anygroundsprotectedunderthelaw.Anindicationforharassmentistheviolationofdignityandcreationofahostileenvironment.

Aspecificformofharassmentissexualharassment,where the harassment takes place by unwanted conductrelatedtothesexofaperson.Thisincludesin particular unwanted sexual acts or requests tocarryout sexualacts,physical contactofa sexualnature, comments of a sexual nature, as well asthe unwanted showing or public exhibition ofpornographic images.

4. emPloyer’s obligation to ProviDe reasonable accommoDationsIn accordance with the law, the employer has several organisational obligations to protect his



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employees from discrimination at theworkplace.The employer is obligated to take the necessary safeguarding measures, point out inadmissible discrimination and protect employees againstdiscriminationfromanotheremployeeoranythirdperson.Discriminatorybehaviorofanemployeeisconsidered a breach of the employment contract. Inordertoprotectthevictimfromdiscrimination,the employer is obliged to take the appropriate and necessarymeasures,suchasawrittenwarningoftheoffender,relocatingthemorterminatingtheircontract.

Furthermore, the employer needs to establish acomplaints body for victims of discrimination forpursuing their complaints. The employer must also train its employees in an appropriate manner in order not to discriminate any other employees.

5. remeDiesThe employee, who was discriminated, has the possibility to complain with the company`s complaints body, if the discrimination relates tothe employment relationship. Furthermore, theemployeeisalsoentitledtodirectlyclaimremedyorcompensation,iftheywerediscriminated.

If the employer is responsible for the discrimination, it is obliged to pay damages or areasonablecompensation.Compensationamountsare, however, relatively low compared to othercountries. The employee needs to raise their claiminwrittenformwithinaperiodofforfeitureof two months after they became aware of thediscrimination.Incaseofdiscriminationduringthehiring process, only monetary damages are granted by law, there is no right to be given the relevantjob, however. An applicant may be entitled to acompensation of three-monthly salaries even ifthey had not been hired in a discrimination-freeapplicationprocess.

6. other reQuirements In order to increase the number of women in management positions, a gender quota of 30percent has been in force since 2016, for newsupervisory board positions in companies whichare listed or are subject to co-determination onboardlevel.



vi. social meDia anD Data Privacy 1. restrictions in the worKPlaceTheemployerisentitledtodecidewhetherornotand towhich extent the employeesmay use thecompanyInternet,telephoneore-mailsystemforprivatematters,within or outside of theworkinghours. Without permission, the employee is generallynotentitledtousetheInternetforprivatematters.TheFederalLabourCourtruledthatevenwithout an explicit prohibition, employees maynotassumethattheemployerwilltolerateprivateuse. If the employee violates the prohibition ofprivate use of work equipment, the employer isentitledtoissueawarningandeventoterminatethe employment contract, depending on the circumstances.

InpracticemanyemployerspermittheprivateuseofInternettoareasonableextent.However,evenin case of permission, the use of the Internet for privatemattersshouldberestrictedregardingthecontentandthetimeofuse.

We strongly recommend prohibiting the privateuseoftheemployee´scompanye-mailaddress,asotherwise monitoring or accessing the employee´s company e-mail account may be very difficult,or may be a criminal offence, even where theemployerhas a legitimate interest in such access(e.g.whentheemployeeisoffsick,onholidays,hasleftthecompanyetc.).

A. CAN ThE EMPLOYER MONITOR, ACCESS, REVIEw ThE EMPLOYEE’S ELECTRONIC COMMuNICATIONS?

Theemployer’srightsinthisrespectdependgreatlyon whether private use is allowed or not. If theemployerhasprohibitedtheprivateuse,thecontent

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of an employee’s electronic communications canbesubjecttomonitoringactivitiesbytheemployer,unlesssuchcommunicationsareobviouslyprivate.

If the private use is allowed or tolerated, theemployer may be qualified as a provider oftelecommunication systems, such being subjectto stricter laws, including criminal prosecutionfor accessing or ordering third parties to accessemployees’ communications beyond what isnecessary for security reasons. As long as this question has not been answered by a Germancourt, we recommend not to monitor the use of employee’selectroniccommunications.

Tobeabletocontroltheusage,theprivateuseofInternetande-mailshouldbemadesubjecttotheconsent of the employee.

In case the private use has been prohibited, theemployermayspotcheckwhetherthisprohibitionis being observed. The employees will have tobe made aware of these controls, and certain proceduresandstepshavetobecompliedwith.

B. DATA PRIVACY

The new Federal Data Protection Act(Bundesdatenschutzgesetz -BDSG)has come intoforce together with the General Data ProtectionRegulation(GDPR)on25May2018,incorporatingthe prerequisites of the GDPR. The key principle already applying under previous data protectionregulations remains unchanged under the newGDPR/BDSG: processing of personal data isprohibited unless expressly permitted by law,a works agreement or a collective bargainingagreement. Furthermore, it is still possible for anemployee to give his/her consent to the specificdata processing.




Aconsentgivenunder the formerBDSGwillonlyremain valid insofar as such consent alreadymeets the requirements of the GDPR and the new BDSG. In particular, the consent has to beseparate from other terms, and the employer has to inform the employee about the purpose of the dataprocessing,aswellastherighttorevoketheconsent with future effect, andmust be done intext(written)form.

In general, employers have tomake sure that no24/7 monitoring will occur. Monitoring of theemployees requiresanoverallbalanceof interestbetween the privacy rights of the employee andthe business needs of the employer.

2. emPloyee’s use of social meDia to DisParage the emPloyer or Divulge confiDential informationThe employee is obligated not to violate thejustified interests of the employer, even duringtheir free time. Thismeans that the employee isnot entitled to disparage the employer towardsanythirdpersonor insocialmedia.Furthermore,theemployeeisobligedtosettleanydisputes,withthe employer internally, before leaking out internal information,especiallytomedia.

In addition, under the law the employee alsois obliged to keep business and trade secrets confidential. Such confidentiality obligation haseffect during the employment relation and alsoafteritstermination.Iftheemployeeviolatessuchobligation,theemployerisentitledtoclaimdamagesand, if appropriate, to terminate employment. Under certain circumstances violationsmay evenbeacriminaloffence.


vii. authorisations for foreign emPloyees reQuirement for foreign emPloyees to worK Inprinciple,everyemployeewhowouldliketoworkinGermany requiresa residencetitleandaworkpermit before entering Germany. This does not applytopersonswhoare:1)ofGermannationality;2) a European Union national; 3) a national ofa European Economic Area (EEA) member state(Iceland,Liechtenstein,Norway);or4)anationalofSwitzerland.

Residence title and work permit are grantedtogether as a “residence title for the purpose ofemployment” (Aufenthaltstitel zum Zwecke derBeschäftigung).Suchtitleisgenerallyonlygrantedif the employment agency agrees or such consent is not required due to statutory regulations. Theconsent of the employment agency will be obtained in an internal procedure from the German embassy abroadinthecountryoforigin(visacentre)ortheresponsiblelocalimmigrationauthorityinGermany.TheemploymentagencyexamineswhetherthejoboffermaynotbefilledbytheGermanemploymentmarket includingEUandEEAnationalsor foreignnationals with an unrestricted residence permit(“jobmarket test”) and that a concrete job offerwith usual working conditions exists. The permitfor taking up employment is awarded together with theresidencetitle.

Several types of employees are exempt from theconsent requirement of the employment agency, including:1)highlyqualifiedpersons(e.g.scientistswithspecificprofessionalknowledge);2)executives(e.g.boardmembers,managingdirectors);and3)employeesonashort-termdeploymentofupto90dayswithinaperiodof180days. Insuchcases,aresidencetitleforthepurposeofemploymentcan

be obtained more quickly than in cases where the employmentagencymustbeinvolved.

Highly educated employeesmay also apply for aBlue Card EU allowing them to stay and work in Germanyforuptofouryears(withthepossibilityofaprolongation).TheBlueCardEUisaresidencetitleonly granted to employees who graduated from university(orhaveacomparabledegree)andhaveaconcretejobofferwithanannualgrosssalaryofatleast52,000Euros.Thisamountappliesfor2018and usually rises slightly each year (in 2017, theminimumannualgrosssalarywas50,800Euros).Alower salary threshold of 40,560 Euro applies forjobswhere there is a shortage such as scientists,mathematiciansandengineers,aswellasdoctorsand IT specialists.

With the implementation of the European ICTDirective through German legislation, intra-grouptransfershavebeenfacilitated.Asof1August2017,non-EUcitizenscan,undercertaincircumstances,beentitledtoanewresidencetitle“ICT-Card”,whichallows them to work for a German group entityforuptothreeyears.This ispossible iftheyhavebeenpostedbyanothergroupentityfromoutsidetheEU.Moreover, third-countrynationalsalreadyresiding and working in another EU member state, basedontheICTDirective,canapplyfora“MobileICT-Card”iftheyneedtobepostedtoGermanyfora period longer than 90 days. In case of a short-termassignment(i.e.nomorethan90dayswithina180-dayperiod)noresidencetitlewillbenecessaryat all; the competent authority (i.e. the FederalOffice for Migration and Refugees – Bundesamtfür Migration und Flüchtlinge) just needs to benotified.Hence,third-countrynationalscanworkindifferentEUmemberstatesunderasinglepermit.

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2019-2020 / germany

viii. termination of emPloyment contracts 1. grounDs for termination Under German law, the employment relationshipcan be terminated by mutual consent, by expiryofafixed-termcontractorbynoticegivenbyoneofthetwoparties.Protectionagainstdismissal isdividedintogeneralandspecialprotection.Specialprotectionisprovidedtoemployeeswhogenerallyface a greater risk of dismissal such as handicapped or pregnant employees and members of the works council. In such cases, thepermissionof relevantgovernmentauthoritiesisrequiredpriortoissuingatermination.

As to the general protection, the freedomof theemployer to dismiss an employee is substantiallyrestricted by the Dismissal Protection Act(Kündigungsschutzgesetz–KSchG).Theactappliesif: 1) a business establishment has generallymore than ten employees; and 2) the employeehas worked in the same company or business establishmentforsixmonthswithoutinterruption.If theKSchGapplies, a termination is only legallyeffectiveifitis“sociallyjustified”.Aterminationisjustifiedonlyifitisbasedonreasonsrelatedto:1)theperson;2)theconductoftheemployee;or3)urgent operational requirements which precludethecontinuedemploymentoftheemployeeintheestablishment.

In case of severe breaches of obligations, theemployment can also be terminated for cause with immediate effect by either party withoutobservinganoticeperiod.Amongthevalidreasonsfor immediate terminationare crimesagainst theemployer.Theemployermustprovidenoticewithin2 weeks after becoming aware of the relevantcircumstances.

2. collective DismissalsDismissals by reason of redundancy are considered ordinary dismissals under the KSchG. In addition,specific rules apply if the dismissals form part ofa so-called mass redundancy of a certain scale;e.g.priornoticemustbegiven to the competentemployment agency and a violation of thisformalitywillresultindismissalsbeingvoid.Incaseofaso-calledoperationalchangeofbusinesssuchas the closure of business, collective dismissalsadditionally require the negotiation of a socialplan (Sozialplan) and the attempt to negotiate areconciliation of interests (Interessenausgleich)with the works council if the undertaking employs morethan20employees.Certainalleviationsexistduringthefirstfouryearsofacompany’sexistence.

3. inDiviDual DismissalsIftheKSchGapplies,anoticeisonlylegallyeffectiveifitis“sociallyjustified”.PursuanttoSec.1KSchG,aterminationisjustifiedonlyifitisbasedonreasonsrelated to: 1) the person; 2) the conduct of theemployee; or 3) urgent operational requirementswhichprecludethecontinuedemploymentoftheemployee in the undertaking.

Person-related reasons include, in particularphysical or mental impairments, extensiveabsenteeism due to illness and reduced working capacity.Conduct-relatedreasonsincludeawillfulorseverelynegligentbreachofcontract.Adismissalbasedontheemployee’sconductusuallyrequiresthat an advance warning (Abmahnung) be giventotheemployee.Intermsofoperationalreasons,the employer must prove that the employee’sdismissal was necessary for compelling business reasons, such as reorganisation. These measuresmust result in the loss of the position and theremay not be any alternative position available



that the employee could occupy. Furthermore,dismissals due to operational reasons are onlysocially justified if a social selection has beencarriedout.Amongemployeeshavingcomparablepersonal and technical qualificationsandworkingin similar jobs, the employer must select the employee with the weakest social standing based onspecificcriteriawhichare;age,lengthofservice,support obligations for dependents and severedisability. Employees whose further employment is crucial for the functioning of the undertaking(Funktionsträger) may be excluded from thisselectionprocess.Suchexclusionhoweverisarareexception and will usually not be possible. Poorperformance isnota selectioncriteria,nor isnothavingavalidreasonfora terminationundertheKSchG.

Noticemustbegiveninwriting(wetinksignature)andsignedbyadulyauthorisedrepresentativeoftheemployerinordertobelegallyeffective.Allotherformsofnotice(i.e.,thosegivenorallyorbye-mailorfax)arevoid.Terminationswithoutinformation/hearing of the works council (if in place) or therepresentativebodyforseverelydisabledpersons(ifinplaceandincaseofaterminationofaseverelydisabledperson)arealsovoid.

The employee has the option to challenge theirdismissal.Insuchcase,theyhavetofileacomplaintwith the competent labour courtwithin 3weeksfrom receipt of the termination notice. If thedismissalisineffective,theemployeeisentitledtoreinstatementandcontinuedremunerationbytheemployer.Inpractice,mostcasesaresettledinoroutofcourtagainstpaymentofseverance.

A. DISABILITY PROTECTIONS

An employee, who is severely disabled, enjoysseveralbenefitsinordertobetreatedwithrespectto such disability. Employees who are severelydisabled are protected against termination.Authorisation by a public authority is necessarypriortoatermination.

They may also claim part-time employment, ifthis is necessary with respect to the disability. A severely disabled person may refuse to workovertime.The conditionsofemploymentneed tobe organised taking into account the restrictionsof the disabled person. The employer may only

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deny such organisational measures, which areunreasonableordisproportionate.

Iftheemployeremploysmorethan20employees,butdoesnotemploydisabledpersonsinaspecifiednumber, he is obligated to pay compensation.The number of disabled persons, who need to be employed, depends on the number of employees. Generally, at least 5 percent of the employees should be disabled persons.

B. IS A SEVERANCE PAY REquIRED?

Severance payments are paid at the end ofemployment in the following cases: 1) theemploymentagreementprovidesforacontractualseverancepayment(whichisveryunusual);2)thepartiesagreeuponaseverancepayment(inoroutof court) to settle a termination dispute; 3) thecourt dissolves the employment against paymentofseveranceifitfindsthatdespitetheinvalidityofthetermination,continuedemploymentwouldbeintolerable either for the employer or the employee; or4)asocialplanconcludedwiththeworkscouncilinconnectionwithacollectiveredundancyprovidesfor severance payments. Before labour courts aswellasinseparationagreementsandsocialplans,the following (non-binding) formula is oftenusedtocalculateaseverance:

Monthly gross salary multiplied by years ofemploymentmultipliedbyfactorx.

Xisgenerallyafactorbetween0.5and1.5andmaybe lower or higher, depending on the circumstances, business sector and region of Germany.

4. seParation agreements

A. IS A SEPARATION AgREEMENT REquIRED OR CONSIDERED BEST PRACTICE?

Due to the high standards of protection againstdismissal, it is not uncommon for the employment to be terminated by contract between the employer and employee, i.e. a separation agreement. Thismayoccuratanytimewithorwithoutseverancepayment. The provisions on protection against




unfair dismissal do not apply in such cases. Evenemployees enjoying special dismissal protectionmay conclude a separation agreement withoutrequiring permission of the authorities. Theemployerwillgenerallyofferaseverancepaymenttoinducetheemployeetoaccepttheterminationby agreement.

B. whAT ARE ThE STANDARD PROVISIONS Of A SEPARATION AgREEMENT?

Inaseparationagreement, typically thefollowingconditionsareregulated:

•terminationdate•severancepayment• outstanding bonus payments and treatment of otherbenefitsupontermination

•release from duty to work by offsetting anyholiday claim

•confidentiality•letterofreference• return of company documents and work items •settlementclause

C. DOES ThE AgE Of ThE EMPLOYEE MAkE A DIffERENCE?

Underage persons are generally only able to conclude a separation agreement (just likethe employment or trainee contract) with theapproval of their legal representatives, regularlytheirparents.With respect toagediscrimination,especiallyregulationsinsocialplanscompensatingdisadvantages for older employees need to bedraftedwithduecare.Theageofanemployeemayalso have an impact on negotiations, as typicallyolderemployeesmayfind itmoredifficult tofindnew employment and therefore typically ask for higherseveranceamounts.

D. ARE ThERE ADDITIONAL PROVISIONS TO CONSIDER?

Besides the standard provisions of a separationagreement, the parties should consider agreeinguponadditionalprovisions,suchas:

•outplacementservice•post-contractualnon-compete•communicationregulation

5. remeDies for emPloyee seeKing to challenge wrongful terminationAs there is generally no statutory entitlement toseverance payments in Germany, the employeecan only claim reinstatement. The burden of proof regardingthevalidityoftheterminationisontheemployer, and in practice it is often difficult toestablish the social justification for the dismissal.Iftheterminationisdeemedinvalid,theemployeereturnstotheirposition.Inpractice,mostdismissalprotectionproceedingsaresettledinexchangeforaseverancepayment.

6. whistleblower laws There is no general legislation coveringwhistleblowing in Germany. In general, employees are obliged to report any kind of misconduct within the company as part of their ancillary employment duties(socalleddutiesofgoodfaith-Treue-undRücksichtnahmepflichten). In certain businesssectors, special legal provisions exist, such ase.g. in the financial services sector. Currently,the law implementing the European Directiveon the Protection of Trade Secrets provides forlegal protection forwhistleblowers if they aim atprotecting the general public interest. The law isexpectedtocomeintoforceearlyin2019.

Whistleblowers do not enjoy special protectionagainst dismissals but are subject to the general rules, which are rather strict, and are decided on the basisofthequestionofwhetherthewhistleblowingwas“proportionate”,i.e.thattheemployeeshouldfirst report a misconduct internally before goingpublicortoauthorities.


ix. restrictive covenants 1. Definition of restrictive covenantsDuringanemploymentrelationship,theemployeeisnotallowedtoworkforanycompetitorpursuantto statutory law.However, after the expirationofthenoticeperiod,theemployeeisnolongerboundby the statutory non-compete. Therefore, it maybecomenecessarytoagreeuponapost-contractualrestrictivecovenantwiththeemployee.

Under German law, the possibility of agreement torestrictivecovenantsislimitedbystatutorylaw.Accordingtosuchlaw,apost-contractualrestrictivecovenantisonlybinding,if:

•the agreement is in writing and the employeereceivedanoriginallysignedcopy,

•theemployerhasajustifiedcommercialinterestinthecontentoftherestrictivecovenant,

•the justified interests of the employee are notunlawfully restricted,

•the covenant does not exceed a period of twoyears, and

•the employer pays a compensation for theduration of the post-contractual restrictivecovenant in theamountofat least50%of theprioroverallearningsoftheemployee.

If the justified scope of the post-contractualrestrictivecovenantisexceeded,theemployeemaychoosewhethertoadheretothelegitimatepartofthe restrictive covenant and to be compensatedor whether to ignore the restrictive covenantoverallwithoutbeingcompensated.Therefore,thecontent of restrictive covenants must be draftedverycarefully.

The employer may waive the post-contractualrestrictive covenant. However, the obligation topaythenecessarycompensationcontinuousfora

periodof twelvemonths, although theemployeeisnolongerboundbytherestrictions.Onlyincaseofa termination forcausewith immediateeffect,theemployerwillbeentitledtowithdrawfromtherestrictive covenant. Therefore, if the employerno longer has an interest in the post-contractualrestrictivecovenant,heshouldwaivethoserightsandobligationsassoonaspossible.

Especially with respect to the obligation ofcompensation payment in the amount of 50% ofthelastoverallremuneration,thepost-contractualnon-compete is expensive in Germany andshould therefore only be used with respect to key employees.

2. tyPes of restrictive covenants

A. NON-COMPETE CLAuSES

Non-competeclausescanbedivided intoclauses,which regulateanyactivityofa formeremployeefor competing companies (company-related), andclauses,which regulate the kindof activities of aformeremployee(activity-related).

B. NON-SOLICITATION Of CuSTOMERS

Such clauses regulate that a former employee is hindered to actively pitch to and contact formercustomers of the employer in order to transfer the business from the former employer to him/her oracompanytheemployeeworks for.Customer-related non-solicit clauses will be considered anon-competeunderGermanlaw,andarethereforesubject to thecompensation requirement setoutabove.



C. NON-SOLICITATION Of EMPLOYEES

Such clauses regulate that a former employee is hinderedtoactivelysolicitotheremployeesoftheformer employer to terminate their employment and to start working with him/her or a company the employee works for.

3. enforcement of restrictive COVENANTS—PROCESS anD remeDiesIftherestrictivecovenantisagreeduponlawfully,itcan be enforced in front of a labour court. There is apossibilityofobtaininginjunctiverelief,wherebytheemployeecanbeforcedtostopanycompetingactivities.

Furthermore,theemployerisnotobligatedtopayany compensationduring thetimeof violationoftherestrictivecovenant.

The employee has to compensate the employer foranydamages,whichresultfromtheviolationoftherestrictivecovenant.However,inmostcases,itwill be hard for the employer to demonstrate and provetheamountofanydamages.

Thepartiesalsohavetheopportunitytoagreeuponacontractualpenaltyforeachcaseofviolationofthe restrictive covenant. This has the advantagethat the damages incurred by the employer do not need to be demonstrated, but the amount of the contractualpenaltyisrealiseduponanyviolation.

4. use anD limitations of garDen leave The employee has a right to work for the employer and therefore cannot be released unilaterally by the employerwithout a justified reason (criminalacts of the employee, concerns of the employer regardingtheprotectionof itsbusinessandtradesecrets or any competing acts of the employee).In practice, employees are nevertheless oftenreleasedfromtheirdutytoworkafteratermination

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noticeuntiltheendoftheapplicablenoticeperiod.Duringsuchrelease,thecontractualremunerationof the employee needs to be paid. The employer is, however, entitled to offset any outstandingholiday against the release. Generally, during the time of release the employee may not performany competing activities as the employmentrelationship is still ongoing, and the statutorynon-compete still applies.However, in caseof anirrevocablerelease,theemployershouldexplicitlystatethatthenon-competeshallcontinuetoexist.



x. transfer of unDertaKings 1. emPloyees’ rights in case of a transfer of unDertaKingThe transfer of an undertaking, business or part of a business to a new owner by way of agreementissubjecttoSec.613aoftheCivilCode(Bürgerliches Gesetzbuch – BGB). By referencein the Transformation Act (Umwandlungsgesetz–UmwG),Sec.613aBGBalsoapplies in thecaseof mergers, splits and asset transfers. Sec. 613aBGBadoptstheamendedEU“acquiredrights”or“transfer of undertakings” directive (EU Directive2001/23/EC).Anundertaking,abusinessorapartof a business is defined for this purpose by theEuropeanCourtofJusticeandtheGermanFederalLabourCourtasaneconomicentity,whichretainsitsidentityirrespectiveofthetransfer.PursuanttoSec. 613a BGB, all of the transferor’s employeesautomatically transfer to the transferee with thetermsandconditionsoftheiremploymentcontractsand their seniority remaining intact. Prior to the transfer,eachaffectedemployeemustbeinformedin writing about the transfer, its reasons, thebackground, the social and legal consequences and any further measures planned by the transferee.

Theemployee isentitledtoobjecttothetransferof employmentwithin onemonth from receivingacorrectandcompleteinformationletter,withoutgiving reasons for their objection, and, in suchcases,Ifthetransferorisnolongerinthepositionto offer a job to the employee, a dismissal foroperationalreasonsmaybesociallyjustified.

Theemployee isentitledtoobjecttothetransferof employmentwithin onemonth from receivingacorrectandcompleteinformationletter,withoutgivingreasonsfortheirobjection.Iftheinformationletterisnotinlinewithlegalrequirementstheright

toobjectmayonlyforfeityearsafterthetransfer.Incaseofanobjection,theemploymentwillcontinuewith the transferor. If the transferor is no longer in the position to offer a job to the employee, adismissal for operational reasonsmay be sociallyjustified.

2. reQuirements for PreDecessor anD successor PartiesThetransfereeisboundbyallrightsandobligationsresulting from the employment contracts inexistenceatthetimeofthetransferandisalsoliablefor pension commitments made by the transferor totheemployeesaffected.However,thetransfereeis not obliged to treat the employees transferred and its other employees equally. A dismissal is invalidifthedismissalisbasedonthetransfer.



xi. traDe unions anD emPloyers associations 1. brief DescriPtion of emPloyees’ anD emPloyers’ associations Ingeneral,themainfunctionoftradeunionsistoconclude collective bargaining agreements. Tradeunion representatives also support employees ortheworks council (e.g. by giving legal advice andrepresentingemployeesbeforethecourt),butdonot have participation rights within a company.Employers’ associations are mostly organisedby industrial sectors as well as by region, with national and stateboards. Theyaregenerally thecounterpartoftradeunionswhennegotiatingandconcludingcollectivebargainingagreements.

2. rights anD imPortance of traDe unionsTheformation,functionandtheinternaldemocraticstructures of trade unions are protected by constitutional law. Trade unions can concludecollective bargaining agreements with either asingle employer or an employers’ association.Collective bargaining agreements are contractsthat have immediate and binding effect on theindividual employment relationship in the samemanner as statutory law if one of the following requirementsismet:

•theemployeeisamemberoftherelevanttradeunion and the employer is a member of the relevant employers’ association/concluded thecollectivebargainingagreementitself;

•theFederalMinistryofLabourandSocialAffairshasdeclaredthecollectivebargainingagreementto be generally binding; or

•the employment contract provides for thecontractual applicationof aparticular collectivebargaining agreement.

Although the unionisation rate in Germany islow with about 20 percent of the employeesorganised, the collective bargaining coverageusually is around 80 percent. In the event thatseveral collective bargaining agreements apply inone establishment, the agreement concluded with the union that has the highest number of members among the employees in the establishment shall prevail. Smaller unions also represented in theestablishment are only entitled to assume thissame agreement for their members, so that only one collective bargaining agreement will be inplaceinanestablishment.TheFederalConstitutionCourt ruled that these legal principles are only “largely” in linewith theGermanconstitution, sothatchangeswillhavetobemadeuntiltheendof2018,especiallytoprotectthesmallerunions.

3. tyPes of rePresentationThemainrepresentationofemployeesinGermanyisguaranteedbytheworkscouncil(Betriebsrat).Aworks council, however, is only established upontheinitiativeoftheemployeesoraunion,whichisrepresented in the company.

If a company hasmore than 100 employees anda works council exists, an economic committeefor the works council must be formed. If there are generallymore than 10 executives in a company,a representative body for executive staff can beestablished.

A. NuMBER Of REPRESENTATIVES

The size of the works council depends on theregular number of employees in the business



site and ranges fromone up to 35works councilmembers for companies with over 7,000 regularemployees andmaybe even larger in companieswithover9,000regularemployees.

B. APPOINTMENT Of REPRESENTATIVES

In any company, generally employing at least 5 employees entitled to vote for a works council(i.e.,allemployeesover18yearsofage,includingtemporary workers if they have been with thecompany formore than3months)andat least3employeeseligible forelectiontoaworkscouncil(i.e.employeeswiththeentitlementtovoteandaseniorityofatleast6months),aworkscouncilcan–byelection–beestablishedbytheemployees.

Theworkscouncilelectionis initiatedandcarriedout by an electoral board. Where no works council exists,aunionrepresentedwithinthecompanyorthreeemployeeseligibletovotehavetherighttocall an employees’meeting atwhich an electoralboard is elected.

4. tasKs anD obligations of rePresentativesThe works council represents all employees of a business site, except executive employees, andhas initiative, participation and co-determinationrights in personnel matters (recruitment,transfers,dismissal),socialmatters(workingtime,remuneration schemes, use of IT systems) andeconomicmatters(operationalchanges).

Furthermore, the works council can concludeworks council agreements with the employer on matters, such as e.g. working conditions andremunerationschemes.Workscouncilagreementshaveimmediateandbindingeffectontheindividualemployment in the same manner as statutory law.

5. emPloyees’ rePresentation in management

In stock corporations, partnerships limited byshares and limited liability companies with more than500employees,onethirdofthemembersofthe supervisory board must consist of employeerepresentatives who are directly elected by theemployees. If such companies employ more than 2,000 employees, the Co-determination Act(Mitbestimmungsgesetz–MitbestG)applies.Withveryfewexceptions,thesecompaniesmustinstallasupervisoryboardconsistingofanequalnumberofrepresentativesofemployeesandshareholdersandthedeputychairpersonmustbearepresentativeofthe employees.

6. other tyPes of emPloyee rePresentative boDies Ifabusinesssitehasatleastfiveemployees,whoare below the age of 18 or are trainees with an age below 25, a representation body for youngemployees and trainees can be established.

Furthermore, in companies with more than100 employees, an economic committee will beestablished,ifaworkscouncilexists.Sucheconomiccommittee will discuss economic issues with theemployer and inform the works council.

In companies with more than ten executives, anexecutive committee can be established. Such anexecutive committee is comparable to a workscouncil,butwithlimitedrightsandpossibilities.

Inanycompanywithmorethanfivedisabledpersonsor disabled persons with equivalent status on along-termbasis,arepresentationbodyfordisabledemployees can be established. The function ofthisbodyistosupporttheintegrationofseverelydisabled persons, to represent their interests as wellastoadviseandhelpthem.Furthermore,therepresentationbody fordisabledpersonshas theright to information and consultation in matterswith impact on disabled persons. This especially applies to a termination of a severely disabledperson. Without appropriate participation of therepresentativebodyforseverelydisabledpersons,ifoneexistsatthecompany,theterminationisnullandvoid.



xii. emPloyee benefits 1. social securityInGermany,employeesbelongtothenationalsocialsecurity system by law. The statutory social security system is regulated in the Social Security Codes (Sozialgesetzbuch – SGB). It covers the followingprincipal areas: health insurance, unemploymentinsurance, nursing care insurance, pension and accident insurance.

REquIRED CONTRIBuTIONS

All salary payments are subject to tax and socialsecurity contributions (pension, unemployment,health and nursing care insurance). These mustbe withheld from an employee’s salary by theemployer and paid to the respective institutions.In general, the employer and the employee each pay half of the social security contributions, andemployersmustpaytheirshareinadditiontothesalary based on the employee’s gross salarywithcertainmaximumamountsapplying.Contributionsto the employee accident insurance are made solely by employers.

2. healthcare anD insurancesThe employee can choose between differentstatutory health insurances. Only employees with an income exceeding the annual remunerationthresholds(53,100Eurosin2018)areexempt.Theycanbecomemembersofprivatehealthinsurances.Inbothcases,thecontributionsaresharedequallyby the employer and the employee.

3. reQuireD leave

A. hOLIDAYS AND ANNuAL LEAVE

Thenumberofpublicholidaysdiffersbetweenthefederal states in Germany, the minimum is nine

(e.g.Berlin,LowerSaxony)andmayrisetotwelvepublicholidays(Bavaria,Saarland).

Anyemployeeisentitledtoannualleaveof20days,based on a 5-day-week pursuant to the FederalVacationAct (Bundesurlaubsgesetz – BUrlG). Thismeansthatanemployeecanclaimanannualleaveof four weeks in a calendar year. However,mostemployersgrantalongerannualleave,dependingon the industrial sector between 25 days and 30days.

B. MATERNITY / PATERNITY LEAVE

Under the Maternity Protection Act(Mutterschutzgesetz - MuSchG), pregnantemployees enjoy special protection againstdismissal during pregnancy and for four months afterbirth.Womensufferingamiscarriageafterthe12thweekofpregnancyarealsoprotectedagainstterminationforthenextfourmonths.Terminatinganemployeeduringthetimeofspecialprotectionagainstdismissalwillonlybepossibleinexceptionalcases. Prior permission has to be obtained from the competent state authority.

Female employees are entitled to paidmaternityleave,whichisthetimeperiod6weeksbeforeand8weeksaftergivingbirth.Thematernityleaveafterthebirthhasbeenextended to12weeks in caseofmultiple births, premature births and disabledchildren. Payments to the employee during this period are made partly by the statutory health insuranceproviderandpartlybytheemployer.

The employer is obligated to carry out a risk assessment for each work conducted within the company, not only for work done by pregnant employees. Necessary measures to protect pregnant employees must be implemented immediatelyafter theemployerwasmadeawareofapregnancy,andtheemployeemustbeoffereda conversation on (further) adjustments of herworkingconditions.



After birth of a child, both - male and female -employees are entitled to a maximum of threeyears’parentalleaveperchild.Duringthisperiod,the employer is not obliged to make any payments to the employee. Employees, however, have astatutory right to work part-time (between 15and 30 hours per week) during parental leaveunlessurgentbusinessreasonspreventsuchpart-timework.Afterexpiryof theparental leave, theemployeereturnstotheirpreviousposition.

C. SICkNESS LEAVE

Afterfourweeksofemployment,theemployeeisentitled to continued payment by the employerin case of sickness for a duration of six weekspursuant to the Act on Continued Remuneration(Entgeltfortzahlungsgesetz – EFZG). The regularpayment,whichtheemployeewouldhaveearnedwithout sick leave, needs to be paid by theemployer.

Ifanemployeeissickseveraltimesduringacalendaryear, theymaybeentitled to continuedpaymentseveral times evenbeyond anoverall durationofsixweeks.Onlyiftheemployeeissickforthesamereasonforlongerthansixweeks,thisentitlementis limited. This, however, does not apply if theemployee was not off sick for the same reasonformorethansixmonthsor ifaperiodoftwelvemonthsafterthefirstsickness forthisreasonhasexpired.

In small companieswith less than30 employees,theemployermayparticipateinanapportionmentprocedure, which allows for a repayment of sick pay.

Afterexpiryofcontinuedpaymentbytheemployer,the employee is entitled to sickness allowancespaid by the statutory health insurance. Generally, the statutory sickness allowances are paid in the amountof70%oftheregularremunerationforaperiodof78weeks.

D. DISABILITY LEAVE

After six months of employment, a severelydisabledemployeemayclaimadditionalholidayintheamountoffiveworkingdays,basedona5-day-week.

E. ANY OThER REquIRED OR TYPICALLY PROVIDED LEAVE(S)

Any leave, other than the above-mentionedstatutory leaves (e.g.compassionate leaves, leavewhenmoving)issubjecttoindividualnegotiationsor is typically part of collective bargainingagreements/works council agreements.

4. Pensions: manDatory anD tyPically ProviDeD Thepublicretirementinsurancesystem(gesetzlicheRentenversicherung–GRV),companypensionplans(betriebliche Altersvorsorge – bAV) and privateindividual retirement investments are the threepillars of the German pension system. The public retirementinsurancehasalwaysbeen“pay-as-you-go“,withthecurrentpensionsof theretiredpaidfromthecurrentpremiumsofthenotyetretired.Inviewofdemographicchanges,pensionpaymentlevelsarebecomingdifficulttomaintain.Companypensionplanshavetraditionallybeendesignedtosupplementstatutoryretirementinsurance.Thoughcompany pension plans are not compulsory, they coveraboutthree-fifthsoftheworkingpopulation.Thethirdpillar,individualretirementinvestments,is becoming more important and is subsidised by thegovernment.Retirementusedtobeginatage65,butisnowgraduallybeingincreasedtoage67.

5. any other reQuireD or tyPically ProviDeD benefitsDifferent types of bonus payments and otherbenefits exist, all ofwhichhave to benegotiatedindividually or are typically part of collectivebargaining agreements/works council agreements, such as company car, car allowances, gym memberships, group accident insurances, “jobticket”,childcarearrangementsorallowances,oradditionalallowanceforsickpay.

Tobias Pusch, PartnerPusch Wahlig Workplace Law [email protected]+49302062953–0



mailto:pusch%40pwwl.de%20?subject=

Pusch Wahlig Workplace Law is a leading German employment and labor law firm,withmore than30 highly qualified labor and employment lawspecialistsworking inoffices inBerlin,Düsseldorf,Frankfurt am Main and Munich. The firm offersclear,concise,goal-orientedsolutionsinthehighlyregulated realm of German labor and employment law.Throughclosecontactandaregularexchangeof ideas with clients, Pusch Wahlig Workplace Law develops proactive strategies to help employerscreateoptimalworkingrelationships.Thefirmhasparticularexperienceindealingwithcomplexworkscouncilissues,restructurings,ex-patarrangementsand the implementation of global policies.Pusch Wahlig Workplace Law was nominated as EmploymentLawFirmof theYear inGermanybyJUVEin2008and2011andin2009forthenewlycreated“Gründerzeit-Award”.Theawardisdirectedatlawfirmsthatmanagedamarketbreakthroughin a short time and developed in a particularlydynamic way. In 2017, Pusch Wahlig WorkplaceLawwontheJUVEawardasEmploymentLawFirmoftheYearinGermany.ThefirmalsowontheAzurAward in the category “Diversity” in 2017 and isnominated in the category “Innovation” in 2019.In2018,thefirmwascommendedinthecategory“EuropeanSpecialistLawFirmoftheYear”atTheLawyer European Awards; it is nominated again in the same category as well as in the category “European Managing Partner of the Year” in2019.Partnersofthefirmareregularlyrecognisedas leading employment lawyers in Germany by Chambers, Best Lawyers, Who’s Who Legal, TheLegal500andJUVE.

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