Author: Julia Christina König

Firm: Kliemt.HR Lawyers

This series of articles addresses and corrects some of the most common misconceptions in German employment law. Part One deals with the duration of employment contracts following the transfer of a business, payment of overtime and second jobs.

Germany does not have a legal code in which all employment law is collated. Instead, the regulations relevant to employment relationships are scattered across a wide range of legislation, from the General Equal Treatment Act via the Federal Holiday Act, the Dismissal Protection Act and the Civil Code, even extending to the Collective Bargaining Act. In addition, in view of the numerous vague legal concepts and the lack of codification of important areas of employment law, the labour legislation system has developed its own regulations and institutions. For these reasons, there are many misconceptions relating to German labour law that instead of being critically examined, tend to be simply passed on by ‘word-of-mouth’. This series aims to uncover and clarify frequently occurring legal errors.

Employment law regulations are difficult for non-lawyers to find and to understand. This leads to frequent legal errors in almost all areas. These can include issues relating to claims for compensation from dismissed employees, the duty to tell the truth at interviews and the number of warnings required before giving notice of termination. They can also relate to the formal requirements relating to the conclusion or termination of an employment contract, protection from dismissal without a probationary period, the payment of overtime, the time limit for bringing legal action and who bears the cost of proceedings before the labour courts.

In this series we will be presenting and clarifying what in our experience are the 15 most frequent employment law misconceptions. In this first part, we tackle common errors 15 to 13, relating to the rules on duration of employment contracts following the transfer of a business, payment for overtime and employee’s ‘side jobs’.

After a transfer of an undertaking, employment contracts only remain valid for one year

Not true! After the transfer of undertaking (TUPE) the transferee enters into the rights and obligations arising from the employment relationships existing at the time of the change of ownership. There is no time limit on this. However, the law does not prohibit an employee and the transferee from agreeing individually on a change in the continuing working conditions, such as weekly working hours or remuneration, after TUPE. Only works agreements and collective bargaining agreements that are transformed as a result of the transfer of the business and which do not continue to apply under collective law are protected for one year. There is no comparable protection for individual contractual provisions. This means that the parties to the employment agreement can change the working conditions regulated in it both before and after TUPE. The transferee and the employee can also conclude new employment agreement, but there is no obligation to do so.

Overtime must always be paid

Not true! There is no general principle of law according to which all additional work or presence on company premises outside of regular working hours must be remunerated (Federal Labour Court, judgement of 21.9.11 – 5 AZR 629/10, NZA 12, 145, 148). An employee only receives overtime pay if the employment agreement or a collective bargaining wage agreement applicable to the employment relationship include a provision under which the obligation to pay overtime arises. If there is no such express provision, the employee may base a claim on Sec. 612 para.2 German Civil Code.

This provision specifies that overtime pay is regarded as having been tacitly agreed if, in view of the circumstances, the work would only be executed because the worker expects to be paid. This objective expectation of remuneration (required under Sec. 612 para.2 Civil Code) may be regarded as a matter of course in large parts of working life. However, as stated above, there is no general legal principle according to which every hour of overtime must be paid. The expectation of remuneration must always be determined on the basis of an objective standard, taking into account common practice, the nature, scope and duration of the service provided, and the position of the parties in relation to each other. It is not determined on the basis of personal opinion. According to general principles, the employee bears the burden of proving there is an expectation of payment.

Second jobs always require the main employer’s approval

Not true! In principle, an employer does not have to give approval for an employee’s second job. However, the employee is obliged to report a planned secondary working activity if the interests of the employer could be affected (Federal Labour Court 18..1.96, NZA 97,41). This is the case, for example, if the employee wants to take up an activity that is in competition with the main employer’s business (Federal Labour Court 13.3.03 – 6 AZR 585/01, NZA 03, 976). A duty of disclosure agreed in the employment contract, according to which all side employment is to be notified to the employer or approved by the employer, is permissible (Federal Labour Court 11.12.01 - 9 AZR 464/00, NZA 02, 965). However, such a provision only serves to enable the employer to check whether the activities in question could be contrary to the interests of the business. This means an employee has the right to have their second job approved if it does not conflict with company interests (Federal Labour Court 11.12.01).

Caution! Please note, however, that in contrast to employees working in the private sector, civil servants are required by law to obtain approval for secondary working activities (§ 42 of the Civil Service Framework Act (BRRG), § 64 et seq. of the Federal Civil Service Act and the corresponding provisions of the State Civil Service Acts).

Conclusion

In conclusion, the first part of this series on popular legal misconceptions in employment law demonstrates that:

  • The protection of existing rights after TUPE depends on the nature of the right in question and the validity of employment contracts following TUPE is not limited to one year.
  • Overtime need not always be paid.
  • Second jobs do not always require the main employer’s consent.