Monthly Dose Employment Law Edition 9/2024

The ninth edition of our Monthly Dose Employment Law in 2024 on current case law explains the judgments of

(1) the German Federal Labour Court (Bundesarbeitsgericht, BAG) dated 13 March 2024 (10 AZR 555/20) on the unconstitutionality of collective bargaining agreement provisions that differentiate between bonuses for night work and night shift work,

(2) the Higher Regional Court (Oberlandesgericht, OLG) of Hamburg dated 08 February 2024 (7 W 11/24) on the obligation to delete anonymous reviews on employer review platforms,

(3) the Regional Labour Court (Landesarbeitsgericht, LAG) of Lower Saxony dated 28 February 2024 (13 TaBV 40/23) on the replacement of the works council chairman's consent to a dismissal of a released works council member for time fraud during works council duties,

(4) the LAG Cologne dated 2 May 2024 (6 Sa 274/23) on the possibility of rejecting a dismissal due to lack of original power of attorney on the grounds of forfeiture and

(5) the European Court of Justice (EJC) dated 16 May 2024 (C-706/22) on the inadmissibility of subsequent negotiations on employee participation in an SE (Societas Europaea).

1. Unlawful differentiation in collective agreements between allowances for night work and night shift work (BAG judgment of 13 March 2024, 10 AZR 555/20)

In its judgment of 13 March 2024 (10 AZR 555/20), the German Federal Labour Court (Bundesarbeitsgericht, BAG) had to decide the legal question of the permissibility of a distinction in the collective agreement (Tarifvertrag) between allowance for other night work and bonuses for night shift work.

The plaintiff demanded that the defendant employer pay higher night work allowances for the night shift work he had performed. The employment was governed by the collective agreement for employees in the fruit, vegetable and potato processing industry, the fruit juice industry and the mineral springs for Lower Saxony and Bremen dated 23 August 2005 (MTV), by virtue of the fact that both parties were bound by it. According to the collective agreement, the supplement for night shift work is 25% of the hourly wage (Section 5(2)(c) MTV), while a supplement of 50% is granted for other night work (Section 5(2)(b) MTV).

In the claimant's opinion, the different rules on the allowances violate the principle of equality under Article 3 (1) of the German Constitution (Grundgesetz, GG). In his view, the unequal treatment of employees who regularly work night shifts and those who work night shifts irregularly is not justified. The provisions of the MTV on night work bonuses serve to implement EU law within the meaning of Article 51 (1) sentence 1 of the Charter of Fundamental Rights of the European Union (CFR) and must therefore be measured against Article 20 and Article 31 (1) CFR.

The defendant argued that the groups of night workers and night shift workers are not comparable and that the MTV provisions fall within the discretion of the tariff parties. There is a relationship of rule and exception between night work and night shift work because plannable night shift work occurs more frequently than other night work. The higher supplement for night work not only serves to compensate for the difficulties of working at night, but also to compensate for the fact that the employees concerned lose the opportunity to plan their free time.

The decided in favour of the employee and ruled that the differentiation in the collective agreement between bonuses for other night work and night shift work violated the principle of equality under Article 3 (1) GG. The MTV provision led to an unjustified unequal treatment that could not be justified by objective reasons. The parties to the collective agreement have a margin of discretion in the content of the provisions of the collective agreement for the organisation of the working conditions. However, the general principle of equality (Article 3 (1) GG) forms an unwritten limit to the tariff autonomy of collective bargaining and obliges the tariff parties to prevent differentiations in the collective agreement provisions that are contrary to the principle of equality. Employees who work night shifts in accordance with Section 5 (2) (c) MTV and employees who perform other night work within the meaning of Section 5 (2) (b) MTV are comparable. The respective criteria for the payment of supplements are consistently linked to work performed during the night time as defined in the collective agreement, which – in particular due to the degree of strain – differs from work performed during other times. Thus, the different levels of supplements lead to unequal treatment. There is no objective reason for this, because the aspect of health protection does not justify a higher supplement for night work outside shift work. The same applies if such a supplement is intended to create an incentive to perform night work outside shift work on a permanent or regular basis, since such a purpose would contradict health protection. It is also not recognisable from the use of the term ‘night work’ alone that this should only be understood in the collective agreement sense to mean irregular, less plannable night work and that the higher supplement also has the purpose of offsetting the further resulting burdens.

In this context, the employee is entitled to the higher night work supplement of 50% of the hourly wage, since the unequal treatment that is contrary to the principle of equality can only be eliminated by an ‘upward’ adjustment. In addition to the supplement paid under Section 5 (2) (c) MTV, this results in an entitlement to payment of a further supplement amounting to 25% of the hourly wage for the hours worked by him during the collectively agreed night time.

Consequences for the practice

The judgment emphasises the remuneration-related significance of the principle of equality (Art. 3 (1) GG) for the concrete implementation within the tariff autonomy. Therefore, employers should regularly carefully examine the content of the relevant collective agreement with regard to the relevant remuneration components before/within the scope of its application to the employment and, in the case of remuneration rules that are found to be contrary to the principle of equal treatment, take appropriate measures to mitigate the legal risks (which, in addition to interaction with the parties to the collective agreement, may include, in particular, employment contract measures such as the restriction of the reference to an independent employment contract that is in conformity with the law and regulates the relevant remuneration components).

2. Obligation to delete anonymous reviews on employer review portals (Hamburg Higher Regional Court, decision of 8 February 2024, 7 W 11/24)

In its decision of 8 February 2024 (7 W 11/24), the Higher Regional Court (Oberlandesgericht, OLG) of Hamburg had to decide whether operators of employer review portals are obliged not to disseminate reviews on their review portal if the employer being reviewed denies having had any business contact with the reviewer and the portal operator cannot sufficiently prove that such contact did take place.

In the case underlying the decision, the applicant company (which employs 22 people) had objected to negative reviews on the employer review portal Kununu (with a total of over 5,300,000 reviews of over 1,040,000 companies) because it denied contact with the employees who had left reviews and the portal operator could not sufficiently prove the contact. On Kununu, current and former employees, applicants and apprentices can rate their employer in various categories (including working conditions and working atmosphere, communication, work-life balance, colleague cohesion) on the basis of a star scoring (from 1 star (= insufficient) to 5 stars (= very good)) and justify the respective rating in prose. The rating in dispute had an overall rating of 1.3 stars.

The employer initially asked the portal operator to delete the entries in dispute. The portal operator refused and only provided the plaintiff with anonymised evidence of the alleged employment of the reviewers. The plaintiff then applied for a temporary injunction to force the deletion of the ratings.

OLG Hamburg granted the plaintiff's application. It stated that the portal operator – as an indirect interferer for the liability of the operator of an internet rating portal – was obliged to inform the rated party in such a way that the latter could verify the alleged business contact. The operator had to ensure that the rated party was able to verify the authenticity of the ratings, otherwise the ratings had to be deleted. This is essential to prevent reviews from being published without any actual reference. It is not sufficient for the portal operator to check the authenticity of the review itself and merely assure the person being reviewed that contact has been made. Even the fact that it is an employer review portal does not justify a different assessment, according to the Higher Regional Court of Hamburg.

Anonymising the identity of the reviewer would deprive the reviewed company of the opportunity to verify the accuracy of the review. Even anonymising the evidence by the portal operator – even on data protection grounds or for fear of possible reprisals by the employer – is not sufficient enough to ward off the reviewed company's claim for deletion.

In addition, the court stated that according to Section 823 (1) of the German Civil Code (Bürgerliches Gesetzbuch, BGB) in conjunction with Section 1004 (1) BGB, companies have a right to an injunction to prevent untrue or unverifiable factual claims (such as, among other things, the assessments objected to here) in their business activities, and emphasised the corporate personality right under Article 2 (1) GG in conjunction with Article 19 (3) GG (which includes protection against untrue or defamatory allegations).

Consequences for practice

The decision, which is helpful in practice, provides employers with a legal tool for taking action against unjustified negative portal ratings. If portal operators do not provide them with the contact details of the employees who have given ratings, employers can demand that the publication of the relevant ratings be stopped.

At the same time, operators must provide the employers who have been rated with the information necessary to verify the authenticity of the relevant ratings. This can not only improve transparency and fairness on the platforms, but also increase the overall credibility of the ratings.

3. Replacement of the works council's consent to the dismissal of a released works council member for working hours fraud in works council duties (LAG Niedersachsen decision of 28 February 2024, 13 TaBV 40/23)

In its decision of 28 February 2024 (case reference: 13 Ta 40/23), the Higher Labour Court (Landesarbeitsgericht, LAG) Niedersachsen had the opportunity to update the case law on the replacement of the works council's consent to the extraordinary dismissal of an exempted works council member for working time fraud.

In the specific case, the employer had requested the works council's consent to the immediate dismissal of the released works council chairman. The works council chairman had been sent to an external three-day works council meeting together with three other works council members. While the other members were present on the second day of the event, the works council chairman left the meeting location and spent the time with his ex-wife. On the third day, he returned to the conference venue, but did not take part in the event, instead meeting with the other works council members to travel home. During his time away from the venue, he kept in touch with one of the works council members by phone and stated that he was feeling unwell, was looking around the city where the conference was taking place and would come to the event later. On the return journey, he told his colleagues that he had booked a hotel with his ex-wife. In the proceedings to replace consent, he changed his statement to the effect that he had ‘relationships in the city of the conference venue’, met with his ex-wife to network regarding her role as former deputy chair of a works council, and also carried out research on his mobile phone, including on on-call duty.

The employer asked him to create a time sheet for the business trip. He stated that he had performed works council work from 1:00 to 4:00 p.m. and from 7:00 to 10:00 p.m. on the second day of the event, and from 7:00 to 11:00 p.m. on the day after he returned. In response to the accusation of working time fraud, he stated that, due to his full exemption from work for works council activities, he was legally not able to commit working time fraud.

After the works council refused to consent to the termination without notice, the Labour Court of Lüneburg replaced this consent. The complaints of the works council and the exempted works council member were rejected by LAG Niedersachsen. According to Section 103 s. 1 of the German Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) in conjunction with Section 15 of the German Dismissal Protection Act (Kündigungsschutzgesetz, KSchG), the refusal to give consent must be replaced if the extraordinary termination is justified in consideration of all circumstances. This requires the existence of good cause within the meaning of Section 626 (1) BGB, according to which the employer, taking into account all interests, must be unable to reasonably be expected to continue the employment relationship until the end of the notional notice period.

The court made it clear that even works council members who are released from their normal duties are obliged either to perform works council activities or to be available to do so. Although the works council member generally has a wide discretion regarding which activities are required as part of the works council's work, this discretion is limited when a specific assignment for training is involved, since the decision to participate in the event clearly defines the works council activity for this period. Only urgent matters could, in exceptional cases, take precedence over attending training. Neither the meeting with his ex-wife nor the ‘research into legal issues’ he mentioned constituted such urgent exceptional cases. LAG Niedersachsen ruled that the works council chairman's later statements constituted a deception regarding the actual time spent on works council activities that was subject to remuneration. The breach of duty was not merely a breach of official duty, which could be penalised by an exclusion procedure under Section 23 BetrVG, but a breach of the contractual duty to perform work, which justified extraordinary termination. The proceedings are currently pending at the BAG under the case number 3 ABN 30/24.

Consequences for the practice

The judgment clarifies that works council members who are released from their normal duties must use their working hours exclusively for works council activities and that works council members who are sent on training courses are obliged to actually attend them. This is because the decision to participate determines their working hours, so that private absence is considered a breach of duty. The decision thus limits the discretion of works council members who are exempt from the obligation to work, encourages them (also) to maintain clear documentation and binding records of working hours, and offers employers more precise legal options for action in the event of such breaches of duty.

4. No rejection of the termination due to lack of original power of attorney due to forfeiture (LAG Cologne judgment of 02.05.2024, 6 Sa 274/23)

In its decision of 2 May 2024, the LAG Cologne had to deal with the effectiveness of two dismissals with missing original authorisation and the subsequent legal question of whether and to what extent the provisions in Sections 4 and 7 KSchG also apply to cases of rejection of the notice of dismissal in accordance with Section 174 BGB.

The plaintiff had been employed by the defendant employer since 1 February 2022. The defendant terminated the employment on 19 February 2022 with effect from 7 March 2022 (‘first termination’) and had the letter of termination personally delivered to the plaintiff by an employee. Enclosed with the letter of termination was a copy of a letter from the management dated 18 May 2021 to the workforce informing them that the employee is authorised to make redundancies independently. The employee had also signed the plaintiff's dismissal. The plaintiff rejected the dismissal by letter dated 23 February 2022, explicitly referring to Section 174 BGB, due to the lack of an original power of attorney. The defendant then terminated the employment relationship again by letter dated 8 March 2022, effective 23 March 2022 (‘second termination’).

On 15 March 2022, the plaintiff filed a lawsuit against the two dismissals. After the Labour Court Aachen indicated at the conciliation hearing that the lawsuit against the first dismissal had been filed too late according to the standard of Section 4 KSchG, the plaintiff withdrew this lawsuit. He finally requested a declaratory judgment that the employment relationship had not been terminated by the second termination on 8 March 2022 and continues unchanged.

The ArbG Aachen dismissed the action and ruled that the employment had ended due to the first termination, in that the first termination had the effect of a legally effective termination pursuant to Section 7 KSchG due to the failure to comply with the three-week period for filing an action for unfair dismissal. The plaintiff appealed against the judgment dismissing the action and argued, among other things, that the presumption of validity of Section 7 KSchG does not apply to the first termination, since the first termination was already effectively valid with the rejection in accordance with Section 174 BGB.

The LAG Cologne dismissed the appeal. It found that at the time of the second termination, there was no longer an employment that could have been terminated, as the employment had already ended with the first termination on 7 March 2022. The reliance on the invalidity of the first dismissal due to rejection in accordance with Section 174 BGB was forfeited because the plaintiff, by withdrawing the application for protection against dismissal against the first dismissal, had realised the factual element necessary for forfeiture and, by failing to comply with the three-week period for filing an action in accordance with Section 4 KSchG, had realised the temporal element necessary for forfeiture. The LAG Cologne explicitly left open whether Section 4 KSchG also applies to cases in which the termination has previously been rejected pursuant to Section 174 BGB due to the failure to present an original power of attorney.

Consequences for practice

On the one hand, the decision once again highlights the importance, from an employer's perspective, of carefully documenting the power of attorney of the employer's employee declaring the termination in order to avoid the termination being rejected by the employee with reference to Section 174 BGB. The LAG Cologne would not necessarily have had to take the route of forfeiture, since the BAG had already ruled in its judgment of 20 May 2021 (2 AZR 596/20) that the constructive effect of Section 7 KSchG also covers dismissals that the employee has rejected under Section 174 BGB due to the failure to present a proper power of attorney.

5. Subsequent negotiations on employee participation in an SE are inadmissible (ECJ judgment of 16 May 2024, C-706/22)

In its judgment of 16 May 2024 (C-706/22), the ECJ had to decide, on a reference from the Federal Labour Court, whether a European Company (SE, Societas Europaea) must subsequently initiate a procedure for the involvement of employees if it was initially established without employees and then becomes a parent company of subsidiaries with employees.

In the case underlying the decision, the SE was established as a holding company without employees and without the employee participation procedure and was entered in the register for England and Wales on 28 March 2013. In the course of the establishment, no negotiations (pursuant to Articles 3–7 of Directive 2001/86/EC (Participation Directive)) were held with the employees regarding their participation rights. One day after the entry in the commercial register, the SE became the sole shareholder of a limited liability company (GmbH) based in Hamburg (whose supervisory board was composed of one-third employee representatives) and decided to convert the subsidiary from a GmbH to a KG. From the date of the KG's entry in the commercial register, employee participation in the supervisory board ceased. At that time, the KG employed approx. 816 employees and also had several subsidiaries with more than 2,000 employees in various EU member states.

After the holding SE relocated its registered office to Hamburg with effect from 4 October 2017, the group works council of the KG requested that the holding SE be obliged to initiate the participation procedure in accordance with Sections 4 et seq. of the German SE Participation Act (SEBG). The group works council of the KG took the view that the management of the Holding SE should initiate proceedings to form a special negotiating body, since the Holding SE had to make up for the failure to negotiate employee participation when it was established. This was on the grounds that the Holding SE – unlike when it was established – now had subsidiaries that employed staff.

The ECJ ruled that the participation procedure does not have to be repeated in the case of an SE that is (permissibly) established without codetermination if the SE becomes the controlling company of subsidiaries with employees in different EU states. A repeat procedure may only be necessary in the event of abuse, with the respective national legislator being responsible for a corresponding regulation. In a kind of obiter dictum, however, the ECJ provided the BAG with indications of the circumstances under which an abuse could be assumed in individual cases.

Consequences for practice

The ECJ's decision creates legal certainty and it is to be expected that the Federal Labour Court will follow it in the initial proceedings and dismiss the group works council's appeal, since in the present case there is (also) no abuse.