Digitalization and automation will radically change the working environment. According to surveys, around 15 percent of the currently existing jobs in Germany will be eliminated in the next decade, and around 30 percent of the jobs will change significantly.[1] At the same time, new, completely different jobs will be created. For Germany, the federal government assumes that more new jobs will be created (about 2.1 million) than old jobs will be eliminated in the course of digitalization (about 1.3 million).[2] Nevertheless, each company must actively contribute to the shaping of this digital change in order to remain internationally competitive in the long term. But it is not only companies that need to equip themselves for the future by developing innovative business ideas and retraining their personnel; all employees are also challenged to actively keep themselves employable.

Siemens as a pioneer in structure-related continuing education and retraining

Due to the digitalization-related structural change, the Siemens Group and its general works council have agreed on a Future Fund amounting to 100 million euros.[3] The money will be used to prepare employees in Germany for the job market affected by digitalization. The fund is to be used to support continuing education projects for individual employees over the next four years. The declared aim of the Future Fund is to create a learning organization capable of coping adequately with constant change and adapting continuously by investing in the ability of employees to learn and adapt.[4] Especially, employees in the Siemens power plant division, in which 2900 jobs are to be eliminated in Germany, can particularly benefit from these retraining programs.[5] 

Government support for continuing education: a scarce commodity to date

Many industries are already feeling the effects of digital change, because their employees are no longer able to keep pace with the demands of digitalization. Up to now, the topics of continuing education during ongoing employment or retraining were left to the parties to the employment contracts. Without the consent of their employers, employees can continue their education while employed only in their free time. If the continuing education is designed as an all-day program, employees must take leave. If the continuing education takes place during working hours with employer's consent, the employer must continue to pay the wage costs, bear the continuing education costs and does not, at least during the continuing education program, benefit from the employee's labor. The scenarios for continuing education are therefore unattractive for both parties and can usually be financed only by large companies.

So far, legislative support for employees in their continuing education has been very sporadic. In addition to their normal leave entitlement, employees may apply for educational leave. This is governed by different state education laws and is usually five days a year. If the employer does not share the costs and if the continuing education is job-related, employees can only deduct the costs from their taxable income.

Government support for retraining and continuing education is therefore overdue. The lawmakers responded last year:

The Qualification Opportunities Act (Qualifizierungschancengesetz) as a response to digitalization-related job losses

The first part of the Act to Strengthen the Opportunities for Qualification and for More Protection in Unemployment Insurance (Gesetz zur Stärkung der Chancen für Qualifizierung und für mehr Schutz in der Arbeitslosenversicherung) came into force on January 1, 2019. The key reform of the act is that the Federal Employment Agency can provide advice and support continuing education programs also during ongoing employment and no longer only in the context of unemployment. The core element of the act is the newly created section 82 German Social Code III (SGB III). This provides for both employees and employers to be reimbursed for expenses incurred.

For employees to be eligible, it is necessary that:

  • Skills are taught that go beyond job-related training requirements,
  • The last vocational training was at least four years previously,
  • The employee has not taken part in any continuing education program eligible for support in the last four years,
  • The program takes place outside the establishment and has a duration of more than 160 hours,
  • The program and the executing agency are approved by the government and
  • The employer contributes to the costs to an appropriate extent. The appropriateness (0-80 percent of the fees) of the employer's contribution depends on the size of the establishment.

 

Furthermore, the funding should be aimed at supporting employees whose jobs are affected by (e.g. digitalization-related) structural change or are in special demand (bottleneck occupations). This restriction does not apply to employees in an establishment with fewer than 250 employees if they commence participation after December 31, 2020. Moreover, severely disabled employees and employees who have reached the age of 45 are exempt from the recommendatory provision. Compulsory continuing education is excluded from eligibility for funding.

 

  • can apply for grants for the remuneration of employees, provided that they make continuing education possible during ongoing employment and the prerequisites are fulfilled as for the support of employees. The eligible percentage (25-75 percent) depends on the size of the establishment.

What must be noted from the labor law perspective in Germany?

1) Employees are still not entitled to reimbursement of costs from their employers. Employers can refuse to cover the costs of useless continuing education. The act is merely an incentive system for the parties.

2) Since the continuing education takes place with continued payment of wages, the obligations under the employment contract continue to apply. This applies to working hours in particular, provided that the continuing education does not take place during (educational) leave. Continuing education programs and the performance of the work must therefore be coordinated between the employee and the employer. There is no entitlement to an adjustment of working hours or paid time off on certain dates.

3) In addition, employers should make the financing of retraining or continuing education conditional on a repayment agreement in the event of termination. The following must be noted in this context:

  • The continuing education takes place separately from the original job, so a separate agreement is required that can also be concluded after the commencement of the continuing education.
  • If the continuing education course takes more than one month, the agreement may have binding effect on the employee for a maximum of 24 months.
  • There is no reimbursement obligation if the training and continuing education bring internal advantages only for the employer and were initiated by the employer.
  • Repayment is conceivable only if the reason for termination of the contract is not attributable to the employer.[6]
  • The agreement must stipulate that if the employee leaves the company before the end of his or her term of employment, repayment must be made only in proportion to the remaining period of commitment. The relevant point in time is the completion of the continuing education program. It is also permissible to have the remaining amount become immediately repayable when the employment relationship ends.[7]

4) The works council has the right to propose collective continuing education and the right of consultation and codetermination regarding the implementation of specific educational programs. The decision whether a continuing education program is implemented or not is in principle up to the employer alone. How a continuing education program is implemented, on the other hand, must be agreed with the employee representatives.

If, however, the employees' jobs are changed in such a way that their current qualifications are no longer sufficient, employee representatives are also granted a right of codetermination regarding the introduction ("whether") of continuing education programs. This may well be the case for structure-related continuing education, with the result that all continuing education programs should be discussed extensively with the employee representatives and subsequently regulated within the framework of a works agreement. As a rule, employee representatives are very receptive to continuing education programs because they help to prevent dismissals of employees affected by structural change.