Employment law in Germany Employee claims. Verena Braeckeler-Kogel

Transcription

1 Employment law in Germany Employee claims Verena Braeckeler-Kogel 01 December 2016

2 Agenda Rules of legal procedure Labour courts Course of the proceedings Evidence Common claims and employer pitfalls Dismissal protection Bonus/Variable compensation Others 1 / L_LIVE_EMEA2: v1

3 Choice of court Labour courts Claims deriving from the employment relationship between employee and employer Claims deriving from the relationship between trade union/ works council and the employer Civil courts Claims deriving from the service relationship between company and managing director (legal representatives of the company) Claims deriving from the service relationship with freelancers, consultants, etc. What if the parties are in disagreement about the employee status of an individual? Individual may choose to bring claim to labour courts (Exception: legal representatives for as long as they are appointed) 2 / L_LIVE_EMEA2: v1

4 Court proceedings First instance proceedings Court Decision Approx.4 to 7 months 3 / L_LIVE_EMEA2: v1

5 Court proceedings Stages of proceedings Labour Court Always the court of first instance Legal representation not necessary but common Regional Labour Court Appeal always admissible In practice, extensive second review of the case (including the review of new evidence) Legal representation required Federal Labour Court Appeal only admissible in exceptional circumstances Review of the legal reasoning only Legal representation required 4 / L_LIVE_EMEA2: v1

6 Legal representation No differentiation between barristers and solicitors All attorneys are eligible to represent their clients in court Depending on the type of employee (white vs. blue collar) and the geographical area of the court case (bigger cities vs. rural areas), the employee s attorney may be inexperienced or uninformed Strong tendency of the courts to overcome such imbalance by overlooking procedural errors of employee attorneys 5 / L_LIVE_EMEA2: v1

7 Rules of evidence No disclosure obligations of the employer Whether a conversation/document is privileged is therefore insignificant Instead: Secondary burden of proof with the employer With regard to most claims, the employee is only obliged to demonstrate minor indications which argue his case Burden of proof then shifts to the employer who is obliged to demonstrate the opposite Contrary to our UK colleagues, we are not afraid of finding harmful documents in preparation of a court case, but of finding no documentation! HR should document decisions made and the reasons for it. 6 / L_LIVE_EMEA2: v1

8 Costs of court proceedings Attorney fees In first instance proceedings, the parties bear their own attorney s costs In the appeal proceedings, the losing party bears the other party s costs (but only the mandatory minimum fees according to the Act on Lawyer Remuneration RVG) The losing party bears the court fees which are determined based on the value of the claim No court fees if case is settled Due to the lack of disclosure procedures, court proceedings are in general a lot cheaper than in the UK 7 / L_LIVE_EMEA2: v1

9 Common employee claims and employer pitfalls General rules Document decisions and their background Ensure handover of information in case of staff changes (eg change of manager, changes in HR or Employment Legal) Ensure that the documentation is correct and that appraisals are accurate Use forfeiture provisions Seek legal advice prior to the commencement of court proceedings 8 / L_LIVE_EMEA2: v1

10 Dismissal protection claim Most common claim in German labour courts Time limitation: Employee must claim unfair dismissal within three weeks of receiving notice of termination Otherwise the termination will be deemed fair Consequence of an unfair dismissal is reinstatement In practice, however, 80 per cent of the cases are settled in court Severance calculation: Factor x Tenure with the Company (in years) x gross monthly salary The factor varies depending on the chances of the case, and would typically be between 0.5 and 1.5 in an average proceeding (but may well reach or even higher in exceptional circumstances) 9 / L_LIVE_EMEA2: v1

11 Dismissal protection claim Common employer pitfalls Notice of termination is not issued properly (original signed copy issued by a duly authorised legal representative of the employing entity) Works council has not been (properly) involved prior to giving notice Lapse of the two weeks period to issue a termination without notice Reasons for the dismissal are not documented properly Performance of the employee is not reviewed prior to the expiry of the probation period Alleged low performer has received very good appraisals and high bonuses 10 / L_LIVE_EMEA2: v1

12 Bonus claim Common claim after the employment relationship has been terminated Use of forfeiture provisions limits the employer s risk to claims which have become due in the last three months forfeiture clause Case law differentiates between the different reasons for providing variable compensation Performance-related bonus: Incentive for enhanced effort usually prorated bonus required for leavers Loyalty bonus: Appreciation of past loyalty How to solve the conflict between case law restrictions on bonus agreements and regulatory requirements? 11 / L_LIVE_EMEA2: v1

13 Bonus claim New legislation on forfeiture provisions in employment contracts Contractual provision may only provide for text form in agreements from 1 October 2016 Includes s, telefax and unsigned documents Uncertain whether this will also apply to amendments to existing agreements The parties must submit any claims against each other in text form (sec. 126b German Civil Code) within three months after maturity at the latest. Demands, which are not claimed within this period, are forfeited. If the other party rejects the claim in text form (sec. 126b German Civil Code) or does not react to the claim within a period of one month after the submission of the claim, the claim will forfeit if it is not sued for within a period of three months after such rejection or expiry of the one month period. 12 / L_LIVE_EMEA2: v1

14 Bonus claim Common employer pitfalls Targets are not agreed in time Targets are not objective and measurable Forfeiture clause is ineffective/not provided for Bonus provision combines performance targets and a unilateral right to revoke/ full discretion Appraisal is not in line with bonus determination Allocation of bonuses to comparable employees is not properly documented 13 / L_LIVE_EMEA2: v1

15 Other employee claims Discrimination claim Rather uncommon in Germany Time limitation: Claim within two months after becoming aware of the discrimination The courts are reluctant to award compensation for non financial damages Thus, the amount of such compensation payments will be a lot less than those seen in the US or UK The employer can avoid vicarious liability if they can show that they provided special sensitivity training to prevent discrimination The employer is potentially liable for any acts of discrimination by an employee against another employee in the course of employment 14 / L_LIVE_EMEA2: v1

16 Other employee claims Whistleblowing No specific legislation on whistleblowing or grievance procedures in Germany Whistleblowers generally do not enjoy special protection against dismissal but are covered by general dismissal protection and victimisation rules Only exception: financial institutions As a general rule, a disclosure should be made to the employer in the first instance Failure to do so may result in disciplinary matters 15 / L_LIVE_EMEA2: v1

17 Verena Braeckeler-Kogel National Practice Group Head Employment, Germany Simmons & Simmons LLP DD simmons-simmons.com simmons-simmons.com elexica.com 16 / L_LIVE_EMEA2: v1

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