Littler Global Guide - Germany - Q2 2023

Browse through brief employment and labor law updates from around the globe. Contact a Littler attorney for more information or view our global locations.

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German Whistleblower Protection Act

New Legislation Enacted

Author: Matthias Pallentin, Partner – vangard | Littler

After long discussions and more than one draft bill, the German Whistleblower Protection Act (the “Act”) will finally become effective on July 2, 2023, implementing the EU Whistleblower Directive (2019/1937) and establishing whistleblower protection in German law for the first time. Under the Act, employers will be required to set up internal reporting channels. Initially, only employers with at least 250 employees are obligated to set up these channels. Companies with 50 or more employees will be covered from December 17, 2023. Contrary to public statements by the EU Commission and corresponding transposition laws in other EU member states, the draft law allows for more flexibility and the use of centrally provided reporting systems, e.g., at a group parent company.

The Act includes comprehensive protection for whistleblowers against all forms of retaliation. In addition, under the Act, the whistleblower can decide whether to report a violation internally to the body set up by the company or externally to the body set up at the Federal Department of Justice. Immediate disclosure to the public will be required only in exceptional cases. Given the whistleblower’s ability to decide the reporting channel and the fines that will apply if employers fail to establish and operate internal reporting channels, employers should consider evaluating whether their whistleblowing channels meet the new requirements. Making internal reporting channels attractive will be particularly important in order to provide a clear incentive to report internally and to avoid the potential reputational damage that could result if employees prefer to report externally from the outset.

Visit Littler | Whistle Protect, the whistleblowing tool we have developed to help you comply with the relevant legal standards.

Federal Labor Court Questions Consequences of Mistakes in Mass Redundancy Notifications

Precedential Decision by Judiciary or Regulatory Agency

Author: Pia Papke, LL.M., Associate – vangard | Littler

The Federal Labor Court has called into question its past decisions stating that, in the event of a workforce reduction, mistakes in submitting the mass redundancy notification result in the ineffectiveness of terminations. The court has asked the European Court of Justice (ECJ) for clarification on potential consequences of mistakes (May 11, 2023 – ref. no. 6 AZR 157/22). Until the ECJ decides whether the ineffectiveness of terminations is a proportionate consequence for potential mistakes, the Federal Labor Court has paused the underlying proceeding.

In the underlying case, the employer assumed it was not obligated to submit a mass redundancy notification on the basis that the relevant thresholds had not been reached, which the court found to be wrong. The employer had calculated the number of employees by checking the amount on a record date rather than using the required method of a backwards assessment of past headcount numbers and estimate of future headcount developments. While the ECJ may release employers of a significant burden when planning a reduction in force, employers should still consider the significant risks allocated to mass redundancy notifications when planning personnel developments.

No Equal Pay for Temporary Workers

Precedential Decision by Judiciary or Regulatory Agency

Author: Kim Kleinert, Associate – vangard | Littler

On May 31, 2023 (5 AZR 143/19), the Federal Labor Court (Bundesarbeitsgericht – BAG) decided that temporary workers may be paid less for the same work than permanent employees of the hiring company. This unequal treatment is ultimately compensated for in other ways according to the court. Collective agreements can deviate from the principle of equal pay in this respect. This was decided by the court after a referral to the European Court of Justice, thus putting an end to the fight of a temporary worker for higher payment.

The court stipulated that temporary employment agencies must bear the economic and operational risk for periods during which the temporary workers are not hired out. The court added that the collectively agreed remuneration of temporary agency workers may not fall below the lower wage limits set by the state and the statutory minimum wage. Finally, employers should keep in mind that the principle of equal pay may only be diverted from during the first nine months of the temporary employment relationship.

Draft Law on Working Time Recording

Proposed Bill or Initiative

Author: Dr. Sabine Vianden, Associate – vangard | Littler

On April 18, 2023, the Federal Ministry of Labor and Social Affairs presented a draft law on working time recording. This draft has been eagerly awaited following the Federal Labor Court’s decision from September 13, 2022, that employers must implement a comprehensive system for recording the working time of employees (Case No. 1 ABR 22/21). The draft bill provides for amendments to both the Working Hours Act and the Youth Employment Protection Act.

The draft bill stipulates electronic recording on the day the work is performed and only allows parties to a collective bargaining agreement leeway for deviations. The records must be kept available in German for at least two years. A copy of these records and information on the recorded working time must be provided by the employer to the employee upon request.

The draft has now been passed over to Committee for Labor and Social Affairs to be discussed with experts before it potentially will be amended and discussed in parliament.

Easier Access to Short-Time Allowance Expires

Proposed Bill or Initiative

Author: Lucas A. Gropengiesser, Associate – vangard | Littler

On June 30, 2023, the easier access to short-time work allowance, implemented by the German government during the COVID-19 pandemic, will expire. After a boom during the economic downturn of the COVID-19 pandemic, there is a low prevalence of companies implementing short-time work. However, to prevent job losses, short-time work remains a valuable strategy to offset temporary revenue setbacks. This tool allows companies to retain their workforce even during periods of reduced orders.

As was the case before the pandemic, at least one-third of a company's employees will have to be affected by short-time work to qualify for short-term allowance, instead of the ten percent required during the pandemic. Moreover, if this type of working time arrangement is customary in the company, employees will have to build up negative working time balances again before short-time work takes effect.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.