Reform of Temporary Employment Act
Flexi-pension and reform of retirement system
The legislative period is slowly coming to an end, and the last legislation projects under the coalition agreement concluded by the Christian Democratic Union, the Christian Social Union of Bavaria and the Social Democrats are still being implemented. This update discusses amendments of statutes expected in 2017.
The Federal Cabinet passed a bill to revise the legislation on maternity protection on May 4 2016. Parliament and the Federal Council welcomed the bill for the most part. The reform of the 65-year-old law is intended to adapt maternity protection to today's work environment, taking new developments in health science and society into account. The main changes include:
- the inclusion of school and university students;
- the adjustment of protection periods after the birth of a disabled child (12 weeks rather than eight); and
- the introduction of protection against dismissal in the event of miscarriage.
At the same time, maternity protection should be more flexible with respect to work on Sundays and holidays, in that the mothers-to-be can decide whether they want to perform such work. However, for employers the bill provides for increased documentation and information duties and strict requirements concerning the conducting of job hazard analyses. Under Section 9 of the Maternity Protection Act, as amended, the duty to conduct a general job hazard analysis is specifically imposed on companies. Within the framework of the analysis of the working conditions pursuant to Section 5 of the Occupational Health and Safety Act, employers must thus analyse the risk to which a pregnant or nursing woman can be exposed for each type of work. They must document the result of this general job hazard analysis and inform all the individuals who work for them of this and of the need for protective measures. For this reason, the employers and employer associations are already up in arms about the bill. It is still possible to make corrections to the bill in the course of the discussion in Parliament. The act entered into force on January 1 2017.
Reform of Temporary Employment Act
In its session on October 21 2016, Parliament discussed the reform of the Temporary Employment Act in its second and third readings and adopted the act. The general structure of the reform of the Temporary Employment Act was not changed. The maximum period for temporary agency work remains 18 months; depending on the individual employee, this period may deviate upwards or downwards based on a collective bargaining agreement for the sector in which the temporary worker is employed or a works agreement set up on the basis of such a collective bargaining agreement. The mandatory application of the equal pay principle as of the ninth month will be codified without a precise definition or formula of what equal pay actually means or how this is to be determined in practice being included in the act. Collective bargaining agreements on sector allowances can still make it possible to deviate from the equal pay principle.
Parachute solutions will be excluded in the future, due to the introduction of a disclosure and substantiation obligation. The general ban on strikes for temporary agency workers also remains unchanged. Temporary workers will continue to count with regard to the thresholds for works constitution law and corporate codetermination.
However, a few changes were made to the government's bill (BT-Drucksache 18/9232) as a result of the recommendation made by the leading committee for labour and social affairs on October 19 2016 (BT-Drucksache 18/10064). The retention declaration by the temporary worker was primarily subject to considerable adjustments, due to which it was able to prevent the legal fiction of employment with the client in the event tha:
- the temporary agency work is illegal;
- the maximum period for temporary agency work is exceeded; and
- there is a breach of the disclosure and substantiation obligation.
This declaration is supposed to be valid, according to Section 9(2) of the Temporary Employment Act as amended, only if:
- the temporary worker presents it personally at an office of the Agency for Employment before it is submitted;
- the agency marks the declaration to be submitted with the date on which it was presented and a note that it has checked the identity of the temporary worker; and
- the declaration is received by the personnel service provider or the client on or before the third day after it was presented at the agency.
The act is due to come into force on April 1 2017. This means that the changes introduced in the course of the reform (among others, the disclosure and substantiation obligation pursuant to Section 1(1) Sentences 5 and 6 of the Temporary Employment Act, as amended) will not be heeded until then.
Consequently, Section 19(2) of the Temporary Employment Act, as amended, was adapted. Periods during which temporary workers are provided before April 1 2017 will not be taken into account in the calculation of the maximum period pursuant to Section 1(1)b of the act, as amended, and the calculation of the periods during which temporary workers are provided pursuant to Section 8(4) Sentence 1 of the act. This means that the statutory maximum period for the temporary worker to be employed (18 months) can be reached as of October 1 2018 at the earliest. The mandatory application of the equal pay principle without the possibility of deviation must thus be heeded (at the earliest) as of January 1 2018.
The Federal Council will probably have to deal with the act on November 25 2017. However, it must be assumed that the Federal Council will wave it through without proposing any more changes. The reform will thus take place – as passed by Parliament – but with some surprising changes later.
Flexi-pension and reform of retirement system
There are a number of ways to keep on working despite approaching retirement age. Increasing life expectancy, lower retirement pensions and a lack of specialised workers has lead to a situation in which an increasing number of people want to keep working after reaching retirement age. On September 27 2016 the Federal Cabinet passed a bill to make the transition from working life to retirement more flexible and to strengthen prevention and rehabilitation during employment (the Flexible Retirement Act), which significantly expands the existing options and creates more flexibility. Parliament passed the act on October 21 2016. It is expected to come into force at the beginning of 2017. The act has two main goals:
- to promote flexible work up until normal retirement age; and
- to make attractive continued work after normal retirement age.
The act makes a number of major changes:
- Combination of part-time work and partial pension (retirement benefits) – the option (already in place, in principle) of supplementing part-time work with a partial pension before reaching normal retirement age is expected to be improved. In particular, it should become possible to combine a partial pension and supplemental earnings flexibly and individually. Supplemental earnings should be taken into account variably with respect to the pension from an annual point of view. The same is supposed to apply to pensions based on reduced earning capacity.
- Continuation of work while drawing full retirement benefits before reaching normal retirement age – an individual who draws full (old-age) retirement benefits before reaching normal retirement age and continues to work should be able to regularly increase his or her pension entitlements in the future. Individuals drawing full retirement benefits are also supposed to be required to pay into the federal retirement system until they reach normal retirement age.
- Continuation of work after reaching normal retirement age – in order to provide an incentive to continue working after reaching normal retirement age, an option to waive the existing exemption from insurance should be created. In choosing this option, employees should acquire additional personal earning points and thus increase their pension entitlement.
- Option of paying extra pension contributions – employees insured under the federal retirement system can pay extra contributions into the system earlier and more flexibly than previously, in order to compensate for pension reductions that would be associated with a planned early drawing of a retirement pension.
- Elimination of the employer's contribution to unemployment insurance – it is supposed to become more attractive for employers to employ older workers; to this end, the separate employer's contribution to unemployment insurance that was hitherto required for workers that have reached normal retirement age and are thus exempt from insurance will be eliminated for five years.
- Information about options – employees insured under the federal retirement system should be informed specifically about the options with regard to the transition from working life to retirement and the impact of these options on their pension entitlements.
The Federal Cabinet has passed the amended Workplace Regulation. The Workplace Regulation and the Regulation to Protect Employees from Hazards Caused by Artificial Optical Radiation have been amended, and the Screen Work Regulation has been integrated into the Workplace Regulation.
The most important changes include the following:
- The term 'health' as defined in Section 3 of the Workplace Regulation now includes both physical and mental health. Both factors must be taken into account when ensuring occupational health and safety.
- Section 3(a) of the Workplace Regulation requires that ergonomic equipment for the workplace does not mean only individual work materials, but that the overall design of the workplace and the workspace must meet this goal.
- Clear rules for teleworkstations were included in the Workplace Regulation (Section 2(7) of the Workplace Regulation). Teleworkstations are computer workstations set up by an employer in the employee's private sphere for a fixed period that require clear framework conditions agreed on between the employer and the employee. The basis for this is an agreement with the employee concerning equipping a computer workstation in the private sphere, the working hours and the working conditions, workplace, design and organisation. The revision of the law makes it clear at the same time – according to the press release issued by the Federal Ministry of Labour and Social Affairs on November 2 2016 – that job-related mobile work (eg, occasional work on a laptop outside working hours or mobile work, such as on a train) is not covered by the regulation.
- Section 5(2) of the regulation makes it clear that protective measures with regard to employees that do not smoke must also be implemented in areas that are open to the public.
- Rules for instructing employees that were previously to be found in Section 6 and the Annex of the regulation are now provided uniformly in Section 6. Owing to the instructions with regard to health and safety regulations, employees are enabled and actively expected to conduct themselves in accordance with safety regulations when at work and in emergencies. Although the obligation to provide such instruction existed previously, there were no relevant references with regard to what hazards the employees had to be instructed about (eg, fire prevention measures, first aid, escape routes and emergency exits). The new Section 6 fleshes out the obligations.
- Number 3.4 of the Annex to the Workplace Regulation provides that employers may use only areas as workspaces that have sufficient daylight and provide visual contact to the outside. However, many exceptions to this rule are also provided (eg, kitchenettes, shopping centres, parking garages and guest houses).
- The provision in Number 6 of the Annex will correspond in the future to the rules contained in the Screen Work Regulation. The Screen Work Regulation will be rescinded.
According to the cabinet resolution of November 2 2016, the regulation will soon be promulgated in the Federal Legislative Gazette and will enter into force the day after the promulgation.
The statutory minimum wage in Germany increased from €8.50 to €8.84 per hour as of January 1 2017. In principle, minimum wage applies, regardless of sector, to all employees working in Germany and cannot be contracted away. However, until December 31 2017, a few deviating provisions in collective bargaining agreements will take precedence over the minimum wage under certain circumstances (eg, the meat industry, agricultural and forestry industries, the horticultural sector and newspaper delivery staff). In these sectors, a minimum wage of €8.50 will apply in 2017. However, from of January 1 2018 these exceptions will no longer apply.
For further information on this topic please contact Stefanie Klein-Jahns or Jessica Blattner at CMS Hasche Sigle by telephone (+49 221 7716 0) or email ([email protected] or [email protected]). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.