This article was authored by Dr. Daniel Hund.

Employers subject to a strike: examination of possible violation of Duty to Keep the Peace is essential

Unlike some other European countries, Germany does not have a tradition of extensive labor disputes between unions and employers. Even though wages are still largely determined by collective bargaining agreements, labor unions in Germany are relatively reluctant to force employers into collective bargaining agreements by means of long-lasting strikes. This might have to do with the German mindset and culture that generally tends toward consensus. Furthermore, Germans typically associate strikes with chaos and disorder – things Germans despise probably even more than warm beer or not reaching at least the semifinals of a World Cup.

Nevertheless, it would be incorrect to say that there have not been any severe strikes in the past. In recent years, Germany has indeed experienced painful strikes initiated by unions representing a relatively small group of key employees with tremendous bargaining power (for example, in the air- and rail-traffic sectors). Whether it is the pilots’ union COCKPIT, the air traffic controllers’ union (Gewerkschaft der Fluglotsen – GdF) or the locomotive engineers’ union (Gewerkschaft der Lokführer) – they all have in common that (despite constituting a relatively small group of employees within the organization) they can cause huge damage to the relevant employer companies if they go on strike. Very recently, the Federal Labor Court (Bundesarbeitsgericht – the court of last resort in labor-related disputes in Germany) rendered a judgment on one of these strikes that was warmly welcomed by the employer community. Apart from constitutional questions, only the labor court system (Arbeitsgerichtsbarkeit) has jurisdiction over labor-related disputes between a union and an employer company in Germany.

Violations against the Duty to Keep the Peace

Generally speaking, a labor union in Germany has the right to strike unless the strike violates the concept called the Duty to Keep the Peace (Friedenspflicht) or is disproportional. A strike violates the Duty to Keep the Peace when it aims to reach a goal that is regulated by an effective collective bargaining agreement applying to the parties. Typically, strikes aim to reach more than just one goal, and often it is anything but obvious if one of the strike’s goals violates the Duty to Keep the Peace. If it does, the strike as a whole is tainted due to the principle known as the Scrambled Eggs Doctrine (Rühreitheorie). And, as a consequence, it can be stopped by a restraining order issued by a Labor Court (Arbeitsgericht). Moreover, if an unlawful strike causes financial damages on the employer’s side, the employer can file a claim in court for compensatory damages against the union.

In the case recently decided on by the Federal Labor Court, the GdF called a strike against the company operating Frankfurt International Airport (Fraport). The strike sought to reach many different goals, one of which was regulated by an effective collective bargaining agreement between the GdF and Fraport. And since a regulation in the collective bargaining agreement covered the underlying issue, the goal was prohibited. This prohibited goal tainted the strike as a whole and made it unlawful; however, presumably for a lack of due diligence on the GdF’s side, the union moved forward with the strike.

Even though Fraport could stop the strike quite quickly by means of a restraining order, the strike caused damages in the amount of €5.17 million. Consequently, Fraport sued the labor union for compensatory damages. In court, the GdF argued the strike would have taken place to reach goals other than the prohibited one in any case; and since the damages would have occurred anyway, there would be no liability.

Compensation even though the strike would have happened anyway?

That meant the issue the Federal Labor Court had to decide on was whether a labor union is obliged to pay compensation for damages caused by an unlawful strike should the strike in any case have happened to reach goals other than the one violating the Duty to Keep the Peace. To the delight of Fraport, the Court ruled against the union. It held that whether the union would have called a strike in any case to reach goals other than the prohibited one was not decisive. If so, it would have been a different strike but not the strike the Court had to decide on. The strike at hand, however, was unlawful due to the prohibited goal, and the strike resulted in damages for which the union was liable.

Practical consequences

This case demonstrates just how crucial it is for an employer subject to a strike to carefully examine if the strike aims to reach any goal that violates the Duty to Keep the Peace. And it can be even more important for the union itself to do so. If a strike aims to reach any goal violating the Duty to Keep the Peace, the employer can do more than just stop the strike by means of a restraining order and prevent more damages from happening. The employer can also sue the union for compensatory damages in court. By doing this, the employer is able to not only compensate for its own financial losses. Such lawsuits can also decrease the probability of the union going on strike again in the future. To call a strike, the union requires money. According to German employment law, the employer does not have to pay striking workers for the duration of the strike. The striking union members are (to a certain extent) to be compensated by the union. According to its bylaws, a union is typically obliged to issue strike pay (Streikgeld) to its striking members during the strike. And the less money the union has in its strike pay “war chest,” the less its willingness to call for a strike. That means, the union will probably be more reluctant to call a strike in the future if they have to pay compensation to the employer for an unlawful strike. This applies especially to unions representing key employees who can cause severe damages once they are on strike.

Whether case law like the one at hand results from the German mindset and culture or the other way around is hard to say. In the end, it may be similar to the chicken and egg question. In any event, the Federal Labor Court has certainly not increased a union’s willingness to go on strike with its decision. At least the employer community can be happy about it.