Monthly Dose of Germany: June 2024

The impending transposition of CRD 6

Before the summer break, we can expect the draft bill of a federal law that will implement CRD 6 and support CRR 3. What is particularly interesting is that CRD 6 standardises EEA market access via so-called "third-country branches" (TCBs) of banks and generally prohibits the cross-border conduct of banking business from a third country into the EEA. Branches from third countries must be clearly distinguished from branches from other EU member states, as the latter fall under the provisions governing the European Passport and are almost exclusively regulated by the home country supervisory authority of the main branch. To date, EU law has been extremely neglectful in how it has treated TCB by only imposing a "ban on preferential treatment" and has not taken into account the cross-border mode, i.e. without a physical presence in the EEA. The result has been the "European patchwork" that the EBA "uncovered" almost exactly three years ago in a report - at least with regard to TCB. According to the EBA report, Germany is the EU member state with the most third-country branches. The legal situation: the investment services and investment management sector was regulated much earlier with regard to third-country access in MiFID and AiFMD. One reason for the EBA's deliberations was certainly Brexit, which raised the question of how the UK, now a banking-related third country with which we were closely linked in the EEA, should be treated in future. Another impetus may have come from the ECB, which previously had no opportunity to influence TCBs directly even if they were categorised as significant institutions due to their total assets. TCBs already play a role, albeit a subordinate one, in one area of supervisory law: the question of whether financial institutions from third-country groups that are not consolidated in the EEA is required to set up an "intermediate parent undertaking (IPU)", subject to consolidation, also depends on the balance sheet volume of the European TCB from the respective third-country group.

Pay Transparency, Pay Equity and Pay Gap Reporting - are you ready?

One of the key HR trends for 2024 and beyond is increased pay transparency, being driven by regulatory changes across the US, Canada, the EU, Australia and a number of other jurisdictions.

New measures in the EU will require employers with employees in an EU member state to undertake gender pay gap reporting across the EU for the first time and to adopt other pay transparency measures. Although EU member states have until June 2026 to implement the EU Pay Transparency Directive, employers should be starting preparations now, given the wide-ranging nature of the Directive, its cross-over with the Corporate Sustainability Reporting Directive and its impact on a series of key strategic areas for HR..

Employee data protection in internal investigations

Internal investigations are a key part of a modern compliance management system. This article will discuss where exactly the tension lies with regard to employee data protection in internal investigations and how this can be resolved. In addition, the question of the extent to which employees are entitled to information rights under the General Data Protection Regulation (GDPR) and the extent to which they can request information about their processed data will be addressed.

BaFin-FAQ on the Remuneration Ordinance for Institutions

On 13 June 2024, BaFin has published the final version of the "Questions and Answers on the Remuneration Ordinance for Institutions" ("FAQ IVV"). In this Client Alert, we summarise the key findings from the FAQ IVV and evaluate them in relation to legal practice to date.

The IVV FAQs include the first official BaFin announcement on the new version of the German Remuneration Ordinance for Institutions (Institutsvergütungsverordnung, IVV) dated 20 September 2021 (IVV 4.0, now in the version dated 14 February 2023)) and on the EBA Guidelines on sound remuneration policies dated 2 July 2021 (EBA/GL/2021/04, "EBA-GSR 2.0"). The interpretative guidance on the IVV published by BaFin on 16 February 2018 ("BaFin Interpretative Guidance") still referred to the IVV in force at the time (IVV 3.0). Practitioners had expected BaFin to issue (new) pronouncements on, among other things, the guiding principle of gender-neutral remuneration (Section 5 (1) no. 6 IVV, see also our Client Alert), the implementation of ESG criteria in the remuneration systems and the implementation of the extended requirements of section 27 IVV 4.0 for group-wide remuneration systems. These expectations were (only) partially met by the draft FAQ IVV ("FAQ IVV-E") published on 21 June 2023 (see our Client Alert). In the consultation process, practitioners provided many suggestions regarding the individual statements made by BaFin in FAQ IVV-E - some of which BaFin implemented in the final version of FAQ IVV.

"Deutschlands Beste Anwälte 2024"

We are delighted to announce that 27 lawyers from Deloitte Legal have been recommended as "The Best Lawyers in Germany - 2025 Edition" in this year's ranking by the renowned US publisher Best LawyersTM and as "Deutschlands Beste Anwälte 2024" by Handelsblatt.

"Monthly Dose" Employment Law: 05/2024

The fifth 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 20 July 2023 (9 AZR 43/22) on protection against dismissal and transfer of a managing director's employment relationship,

(2) the BAG dated 20 October 2023 (7 ABR 34/20) on the application of the German Federal Holiday Act to third-party managers of a GmbH,

(3) the BAG dated 13 December 2023 (5 AZR 307/22) on Hypotax procedure for temporary secondments,

(4) the Regional Labour Court (Landesarbeitsgericht, LAG) Mecklenburg-Vorpommern dated 18 July 2023 (2 Sa 31/23) on the reemployment claim after the expiry of the notice period and conclusion of a settlement agreement if continued employment is possible,

(5) the LAG Hamm dated 23 January 2024 (6 Sa 1030/23) on the (in)effectiveness of the withdrawal of a company car due to a changed work assignment and

(6) the Court of Justice of the European Union (ECJ) dated 20 January 2024 (C-715/20) on strengthening the fundamental right to effective legal remedy for temporary employees.

Transaction News

We at Deloitte Legal Germany are constantly advising on numerous complex transactions and challenging projects.We would be delighted to explain our services portfolio to you and discuss with you how we at Deloitte Legal Germany can assist you with your projects, whether in the field of Corporate Reorganizations, M&A transactions, including carve-outs, general commercial, employment law, IT/IP or LMC/LMS. Just reach out to us!

In order for you to better understand how we have helped other clients, we would like to hereinafter showcase information on one project that our teams have recently advised on.

Deloitte Legal advises Main Capital Partners portfolio company Zig on the strategic combination with Doozer Real Estate Systems

A Deloitte Legal team co-led by Max Lüerßen (Partner) and Felix Felleisen (Partner, both Corporate/M&A, Dusseldorf) has advised Zig on joining forces with Doozer Real Estate Systems GmbH. Zig and Doozer both are leading software providers for the real estate sector in the Netherlands respectively in Germany. The strategic combination was backed by Main Capital Partners (“Main”), a private equity investor focused exclusively on the software sector.

Read more here!

Deloitte Legal advises DATEV on the acquisition of b4 value.net GmbH

A Deloitte Legal team jointly led by Niko Jakovou (Partner, Corporate/M&A/Capital Markets) and Christoph Meves (Counsel, Corporate/M&A, both Düsseldorf) has advised Nuremberg-based DATEV Beteiligungen GmbH, a subsidiary of DATEV eG, on the two-step acquisition of all shares in b4 value.net GmbH based in Kaiserslautern, Germany. The first step of the transaction, aimed at acquiring a qualified majority of 75% of the shares, was completed on June 7, 2024. Besides Deloitte Legal, Deloitte Tax and Financial Advisory teams were also involved in the transaction.

Read more here!

Deloitte Legal Webcast Series

In our German language Deloitte Legal Update webcast series, we address current legal issues and developments that are important for corporate practice.

In our upcoming "Legal Update" webcast we will discuss:

Sound Compensation Update 2024 – Aktuelle arbeitsrechtliche und aufsichtsrechtliche Themen und Entwicklungen für die Vergütungssysteme von Instituten

Wednesday, 03 July 2024 | 11:00 - 11:45 a.m.
Register here (Webcast in German language)

The carousel of regulatory framework conditions for remuneration systems in credit and financial services institutions continues to turn this year. On June 13, 2024, BaFin published the final version of the "Questions and Answers on the Remuneration Ordinance for Institutions" (FAQ IVV). 

In our webcast, we will explain these current regulatory and employment law developments and outline structuring options for legally compliant implementation.

Our experts Dr. Lars Hinrichs, Leonie Wüpper, Elisa Ultsch and Katharina Gohlke will guide you through the webcast.

You can download the presentations of our further recent webcasts here:

• Legal Update Webcast #11/2024 - Employment law and data protection in the successful implementation of IT systems: Best practice approaches (in German language): In our Deloitte Legal Update Webcast on June 05, 2024, our experts Jan Rudolph (Counsel Deloitte Legal), Anna Mafalda Bock (Senior Associate Deloitte Legal) and Pascal Terwedow (Manager Deloitte Consulting) addressed the following topics during the webcast: Successful implementation of IT systems from the perspective of the implementation partner - practical experience, do's & don'ts, Best practice in winning over employee representative bodies as supporters for the implementation of IT systems and Ensuring data protection-compliant implementation of IT systems in companies, with a particular focus on data transfer within corporate groups.

In our Webcast Archive, you can find a list of previous webcasts and also download the corresponding presentations.

Should you be interested in topics discussed during one of our German language webcasts, do not hesitate to contact the respective presenters – they will be delighted to provide you with additional information in the English language.