By judgment of 18 February 2020 (docket number: 3 AZR 206/18) the Federal Labour Court has ruled that if an employer provides information on occupational pensions such information must be correct, clear and complete. However, there is no general obligation to provide information on the social security treatment of pension benefits.
The plaintiff participated in a captive pension insurance scheme (Pensionskasse) which was funded by himself via salary conversion. Prior to the conclusion of the corresponding insurance policy in 2003 he attended a works meeting on which an external advisor informed the employees about the financial chances such participation in the scheme provides. In 2015 the plaintiff decided to choose a one-time payment instead of an ongoing pension ( – as this was permitted according to the insurance policy). Due to a law change in 2003 the employee was obliged to pay social contributions for this one-time payment. As a result, the plaintiff sued the employer and claimed damages, stating that the employer was obliged to inform him about the law change. Then, so the plaintiff, he would not have chosen to receive a one-time payment instead of an ongoing pension.
The Federal Labour Court rejected the claim. The employer is not obliged to safeguard the employee’s asset interests which are related to participation in a deferred compensation scheme. Thus, there was no particular obligation for the employer to inform the employee about the law change which took place in 2003. However, the court (generally) stated that in the event that an employer provides information on occupational pensions – no matter if he is obliged to do so or if he provides information supplementary – such information must be correct, clear and complete.
Generally, obligations to provide information exist in the event that such obligations are explicitly provided under law. According to the German Occupational Pensions Act (Betriebsrentengesetz) the employer is obliged, for instance, to provide certain information on the development of a pension entitlement, on the amount of the future pension benefits or on the question how the termination of employment effects the pension entitlements. Also, an obligation to provide information may arise if there are any special circumstances, such as a glaring gap in information between the employer and the employee. However, there is no general obligation to provide information on the tax or social security treatment of employee benefits, as the employer is not obliged to act as the employee’s financial advisor. The present decision shows that this this also applies to deferred compensation (salary conversion).