Election of New Works Councils During March 1 Through May 31

The works council is the employees’ representative body which is provided with extensive information and consultation rights. The works council is established by the employees on their own initiative through a predetermined election process. Regular re-elections of the works council members are generally held every four years from March 1 through May 31 respectively. 2014 is a re-election year. The election process requires as a first step the establishment by the existing works council of an election committee (Wahlvorstand) which has to consist of at least three employees. The election committee is then in charge of officially initiating the process through issuing an invitation to all employees with information on the various steps of the election process, the employees’ rights, the date and time of casting of votes and many other aspects relevant to the election process. Violations of the statutory regulations governing the election process can render the election of the new works council void. All costs related to the election process have to be borne by the employer.

Cut Off Date as Condition for Pay-Out of a Bonus Is Not Permissible

The Federal Labour Court (Bundesarbeitsgericht) confirmed in a recent ruling dated November 13, 2013, that the pay-out of a performance rewarding compensation element cannot be made conditional upon the continued employment of the employee on a certain cut-off date (10 AZR 848/12). In the case that had to be decided the employment contract provided for a “Christmas allowance” (Weihnachtsgeld) which was annually payable in November and was sought to reward company loyalty on the one hand but also the employee’s performance during the ongoing financial year on the other hand. According to the contract any right to receive the Christmas allowance was forfeited if notice of termination of the employment was served by December 31 of the ongoing year. The court held that the forfeiture provision would inadequately discriminate the employee and that it is therefore void. According to the court the Christmas allowance had to pay on a pro rata basis taking into account the period worked by the employee until the termination date. 

Dismissal for Operational Reasons - No Requirement to Alternatively Offer Job in a Company’s Operation Outside Germany

In a judgement dated August 29, 2013, the Federal Labour Court ruled that there is no obligation for an employer to offer to an employee who is to be dismissed for operational reasons (aus dringenden betrieblichen Gründen) a vacant job in an operation run by the employer outside of Germany (2 AZR 809/12). The ruling finally clarified that the ultima ratio requirement imposed by the German Protection against Dismissal Act (Kündigungsschutzgesetz), meaning that the employer is obliged to consider any and all alternatives, including continued employment on other vacant positions available within the company, before terminating an employment relationship, does not include consideration of vacant job positions outside Germany.

No Obligation to Inform Employees About Possibility to Convert Part of Salary Into Contributions to a Pension Scheme 

The Federal Labour Court (Bundesarbeitsgericht) ruled on January 21, 2014, that there is no legal obligation for employers to inform employees about their right to convert part of their compensation into contributions to a pension scheme (betriebliche Altersvorsorge). According to § 1a(i) of the Company Pension Act (Gesetz zur Verbesserung der betrieblichen Altersversorgung) employees are entitled to convert part of their salary into contributions to a pension scheme which is usually operated by a pension insurance. For 2014 the maximum annual amount that can be converted into contributions to the pension scheme is EUR 2,856.00. Those contributions are tax exempted and not subject to any social security contributions. In the case decided by the court an employee claimed damages from the employer arguing that he had not been informed about his right to convert part of his salary into contributions to a pension scheme. The Federal Labour Court ruled that employers do not have an obligation to inform employees about these rights and that, as a consequence, there is no right for the employee to claim damages.