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					                                                                Die Unternehmer-Anwälte

Newsletter, 4rd Quarter 2009

Employment Law
Works Council Elections 2010                                                Page 2

Paradigm Shift in Employee Invention Law                                    Page 4

Permissibility of Repeated Limitation for Objective Reasons
(BAG, Ruling dated 25 March 2009 – 7 AZR 34/08)                             Page 6

Permitted Unequal Treatment with Respect to Increase in Wages
(BAG, Ruling dated 15 July 2009 – 4 AZR 486/08)                             Page 7

Replacement of a Company Practice by a Works Agreement
(BAG, Ruling dated 5 August 2009 – 10 AZR 483/08)                           Page 8

Cap on Social Compensation Plan Severance Payments
(BAG, Ruling dated 21 July 2009 – 1 AZR 566/08)                             Page 9

No Ban on „Flash Mobs“ in Industrial Action
(BAG, Ruling dated 22 September 2009 – 1 AZR 972/08)                        Page 10

Workshops and Conferences                                                   Page 12
Luther Rechtsanwaltsgesellschaft mbH                                                                                                      2

    Works Council Elections 2010

    In the year 2010 the regular works council elections will be        classified as employees has an influence on the size of the
    held between 1 March and 31 May, which only happens                 workforce and, hence, also on the size of the works coun-
    once in 4 years.                                                    cil. As the election committee often consists of existing works
                                                                        council members who quite often wish to run for the office of
    As a rule, the works council initiates works council elections      works council again, neutrality is not ensured in this regard.
    by appointing an election committee. This election commit-
    tee then handles the election. Despite this fact, such elec-        The employer can offer its assistance to the election com-
    tions are important for employers. After all, the employer’s        mittee also with respect to the further preliminary work.
    negotiation partners within the company are elected for the         Carrying out the election with as few mistakes as possible
    next four years.                                                    is also in the interests of the undertaking, given that later
                                                                        corrections or even new elections following the contestation
    Election Process from the Viewpoint of Employers                    of an incorrect election tie up resources and cause consider-
       Within the scope of the regular election process for larger      able costs, as well as unrest among the workforce.
    undertakings, the works council must appoint the election
    committee at least 10 weeks before the expiry of its                Upon issuance (= display) of the election notice, employees
    term of office (which is exactly four years after its com-          have two weeks time to propose candidates to the election
    mencement); in undertakings which have regularly up to 50           committee. In larger undertakings with more than 51 employ-
    employees who are entitled to vote, the works council must          ees entitled to vote, the proposals must be filed in the form
    carry out the appointment no later than four weeks prior to         of lists in which the proposed candidates (inter alia) must
    the expiry of its term of office.                                   be listed in a clear order and which should contain twice as
                                                                        many candidates as there are seats to be awarded on the
    The election committee must then prepare the election. The          works council. These lists must be accompanied by the sig-
    committee must, in particular, prepare the comprehensive and        natures of the undertaking’s employees who are entitled to
    error-prone election notice, through the display of which the       vote and who support the list. Each list must be supported
    works council election commences in the legal sense. This           by at least five percent of the employees who are entitled to
    itself requires a considerable amount of preliminary work. The      vote; a minimum of 50 employees is in any case sufficient.
    election committee must especially determine the size of the        The election committee must review the lists with regard to
    works council, the minimum number of works council mem-             their admissibility and make a decision in this respect. This
    bers of the minority sex, as well as the deadlines and dates to     assessment is rather difficult and is prone to error, which is
    be observed during the election process.                            why the employer should monitor the assessment carefully.

    Moreover, the election committee must compile a list of             During the same two-week period, objections to the list
    voters and continuously update this list up until the election      of employees entitled to vote can be filed. The employ-
    day. This list must include all employees of the undertaking        er does not have the right to file an objection. Of course,
    who are entitled to vote. Only employees included in this list      the employer can point out short-comings to the election
    will be permitted to vote on the election day and may run for       committee and urge the election committee to correct these
    the office of works council. The employer must assist the           short-comings. If the election committee then fails to act, the
    works council according to the election rules with regard to        employer can make use of legal remedies.
    the creation of the list of voters by providing the necessary
    documentation. Employers should in any case do so on their          If a representative body for executive employees is elected at
    own initiative, as this gives them the opportunity to more or       the same time, the two election committees need to apply a
    less ensure that only such employees are included in the list       specific procedure to agree on whether to classify the single
    as are actually entitled to vote. The assessment of whether         members of the executive staff as employees or executive
    a person is considered an employee and whether he or she            employees. During this procedure, the employer is explicitly
    is entitled to vote is sometimes difficult. Besides, the election   obligated to provide support if the election committees re-
    committee may be tempted to carry out this assessment to            sponsible for the two elections cannot reach an agreement
    the company’s disadvantage, given that whether persons are          and a mediator becomes involved.
Newsletter, 4rd Quarter | Employment Law                                                                                                    3

   In the following, the election committee prepares the actu-           Correction of Mistakes
   al election process; in particular, it publicly announces who            Mistakes are probably made in any election. The most
   from among the proposed candidates has been admitted,                 frequent sources of error are the election notice and the data
   arranges for the preparation of the ballot papers and the fur-        required in such notice, the determination of the employees
   ther election documents, and organizes the absentee ballot.           entitled to vote, and the compilation and review of the lists of
   In smaller undertakings with up to 50 employees who are
   entitled to vote, the election process is extremely speeded           There are two legal remedies available to employers. They
   up by operation of law. According to legislation, the process         can normally try to enforce corrections during the election
   can easily be handled within four weeks, as is evidenced by           process by obtaining a preliminary injunction from a la-
   the aforementioned four-week deadline by which the works              bor court. However, there are large regional differences in
   council must appoint the election committee before the ex-            case law concerning the permissibility of this course of ac-
   piry of its term of office. The process is called “simplified”.       tion. Employers must at any rate be quick in applying for a
   De facto, however, this election process tends to be prone            preliminary injunction.
   to error because it is more compact.
                                                                         In addition, the employer has the right to (subsequently)
   Employers have a particular influence on the election in under-       contest the election if mistakes have been made where it
   takings with 51 to 100 employees entitled to vote: although           cannot be excluded that they have affected the outcome of
   here the regular election process applies as a rule, the employ-      the election. The contestation of the election must, however,
   er can (voluntarily) agree with the election committee on an          be filed with the labor court within a period of two weeks.
   election for which the “simplified” election process is applied.
                                                                         Hence, in both cases speed is of the essence as the time
   Limitation of Influence                                               periods are extremely short. An employer who has doubts
       Employers pursue their own interests both with respect to         about the accuracy of the election should therefore immedi-
   the outcome of the election and, in part, with respect to the         ately consult an expert.
   election process. However, interfering without restriction is
   very risky as any obstruction of the works council elec-              After these time periods have expired, the only possibility left
   tion or the exertion of influence in combination with the             over to anyone wishing to proceed against the election is to
   promise of advantages or the infliction of disadvantages is           plead that the election is null and void. In order for this to
   punishable (Sec. 119 German Works Constitution Act (Be-               be possible, however, it must be evident that the election has
   triebsverfassungsgesetz – BetrVG)). Exerting influence on             grossly deviated from the general statutory rules.
   the works council elections can hence be a balancing act
   and needs to be considered carefully.                                 Costs
                                                                            Talking about cost issues is superfluous under works
   It is certainly permitted to campaign for participation in the        constitution law: the necessary costs are always borne by
   election and to encourage single members of staff to actively         the employer – even if a faulty election has been carried out
   get involved. Likewise, an employer is on the safe side if it         or a trade union contests the election. This may be a reason
   informs the election committee or the workforce objectively           for employers to immediately stop elections in the event of
   of facts or of the (objectively correct!) legal situation. At least   significant mistakes being made.
   when providing information about the legal situation, how-
   ever, it is recommended that employers first persuade them-
   selves by seeking the advice of an expert.

   In contrast, employers should not promise single candidates                               Dietmar Heise, Partner
   advantages or threaten them with disadvantages, regard-                                   Luther Rechtsanwaltsgesellschaft mbH,
   less of whether these candidates should run for the office of                             Stuttgart
   works council or refrain from doing so in the opinion of the                              dietmar.heise@luther-lawfirm.com
   employer. Engaging in election propaganda or offering single                              Phone +49 711 9338 12894
   candidates or lists of candidates special support in kind is
   likewise prohibited.
Luther Rechtsanwaltsgesellschaft mbH                                                                                                           4

    Further reading on this subject

    Heise/Merten: Betriebsratswahlen leicht gemacht

                            Dietmar Heise, Stuttgart
                            Dr. Philip Merten, Neuss

                            Making works council elections easy: a guide for employers, employees,
                            election committees and works councils 4th ed.
                            Rudolf Haufe Verlag, Freiburg i. Br./ Berlin/ München, 2009
                            359 pages

    Heise/Lembke/v. Steinau-Steinrück: Betriebsverfassungsgesetz

                            Dietmar Heise, Stuttgart
                            Dr. Mark Lembke, Heidelberg
                            Dr. Robert von Steinau-Steinrück, Berlin

                            Works Constitution Act: Commentary on the Works Constitution Act
                            with organizational considerations and practical examples
                            Rudolf Haufe Verlag, Freiburg i. Br., 2008, 1520 pages

   Paradigm Shift in Employee
   Invention Law

    Effective as of 1 October 2009, a long-discussed amend-                vides for compensation for the inventor, such compensation
    ment of the German Employee Invention Act (Gesetz über                 to meet certain requirements.
    Arbeitnehmererfindungen – AErfG) has come into force:
    with the “Patent Law Simplification and Modernization Act”             Former Legal Situation
    (Gesetz zur Vereinfachung und Modernisierung des Patent-                  According to the formerly applicable law, the employer
    rechts), the key provisions governing the transfer of the rights       was obligated to state within a period of four months of the
    to an employee invention, i.e. the rules for “laying claim to the      notification of the invention whether it laid claim to the inven-
    invention” pursuant to Sec. 6 AErfG, have been reformed.               tion. In the event the employer unrestrictedly laid claim to
                                                                           the invention, all (exploitation) rights were transferred to the
    Pursuant to the principles of the AErfG, employees are obli-           employer. If the employer failed to lay claim to the invention
    gated to notify their employer of any work-related inventions.         within the aforesaid time period, the invention became “free”
    At that point in time, all rights to exploit the invention are still   and could then be exploited exclusively by the employee.
    attributed to the employee. If these exploitation rights are
    subsequently transferred to the employer, the AErfG pro-
Newsletter, 4rd Quarter | Employment Law                                                                                                      5

   This was problematic in cases where the employer, misjudg-             These risks are limited by the still existing possibility for the
   ing the legal situation, failed to formally lay claim to the in-       employer to release the invention again at any time (Sec. 8
   vention but nevertheless went ahead with its exploitation, for         AErfG). In this manner, the commitment – as the case may
   example, by applying for a patent and going into production            be, in combination with an obligation to pay compensation –
   accordingly. As, due to the employer’s failure to lay claim to         can be cancelled at least for the future.
   the invention, exclusively the employee was the owner of the
   exploitation rights, the employer was faced with extensive             Conclusion
   claims of the inventor: for example, the employee could de-               This reform is welcome because it does away with the
   mand the transfer of the intellectual property right obtained          problems resulting from failure to lay claim to an invention
   (and hence prevent production by the employer, amongst                 despite this invention being exploited in business operations,
   other things) or assert claims against the employer for unjust         which has often occurred in practice. Employers are never-
   enrichment with respect to the unjustified exploitation of the         theless advised not to become too relaxed if they do not
   intellectual property right in the past.                               wish to bear the consequences of an unintentional transfer
                                                                          of the rights to an invention.
   In this context, the “adhesive label” decision by the German
   Federal Court of Justice (Bundesgerichtshof – BGH) from                At least in businesses where inventions are made with a cer-
   the year 2006 caused a sensation: in said decision the BGH             tain frequency, it should also be ensured in future that noti-
   held that even if an invention had not been properly notified          fications of inventions are handled in a reliable manner. For
   by the employee, the aforementioned 4-month period during              this purpose, drawing up appropriate company guidelines
   which to lay claim to the invention could commence as soon             which clearly state the single steps to be taken in connec-
   as the employer had obtained the relevant information about            tion with employee inventions is helpful, as this results in the
   the invention and applied for an intellectual property right.          information of the persons involved. It is also recommended
                                                                          that appropriate standard forms for notification by inventors
   New Legal Situation                                                    be made available and used. Only if an employer is suffi-
       The new legal provisions deal differently with the issue           ciently informed of an invention can they decide on a reliable
   concerning the transfer of the inventor’s rights. Pursuant to          basis on whether to release the invention.
   the new Sec. 6 (2) AErfG, the employer is deemed to have
   laid claim to the invention unless the invention is explicitly
   released by the employer before the expiry of the 4-month
   period following the receipt of the inventor’s notification. This
   means that in the absence of a reaction from the employer                                   Dr. Gerald Peter Müller
   following notification by the inventor, the invention is trans-                             Luther Rechtsanwaltsgesellschaft mbH,
   ferred to the employer without restriction. The above-                                      Cologne
   described risks for employers which result from failure to                                  gerald.peter.mueller@luther-lawfirm.com
   lay claim to an invention despite its exploitation have thus                                Phone +49 211 9937 11484
   been removed.

   This new situation gives rise to a new risk, however: if the
   employer is not interested in exploiting the invention but
   fails to give sufficient notice of its release of the invention, all
   rights to the invention will pass to the employer. The employ-
   er is normally obligated to apply for an intellectual property
   right (Sec. 13 (1) AErfG). If the employer fails to comply with
   this duty, the employee will be entitled to apply for an intellec-
   tual property right (Sec. 13 (3) AErfG). If an intellectual prop-
   erty right is then granted, the employer may be obligated to
   pay compensation although it does not exploit the invention.
   In this context, it should also be noted that an employer’s
   failure to apply for an intellectual property right may give rise
   to claims of the inventor for damages.
Luther Rechtsanwaltsgesellschaft mbH                                                                                                        6

    Permissibility of Repeated Limitation
    for Objective Reasons
    (BAG, Ruling dated 25 March 2009 – 7 AZR 34/08)

    The Case                                                            objectively justified pursuant to Sec. 14 (1) sentence 2 no. 3
        The claimant was employed with the defendant as a de-           German Law governing Part-Time Work and Temporary Em-
    liverer over a period of almost three years. The employment         ployment Contracts (Gesetz über Teilzeitarbeit und befristete
    was based on numerous short temporary employment con-               Arbeitsverträge – TzBfG) by the substitution of civil servant
    tracts. The term of the last employment contract was from           V. The fact that a large number of contracts were concluded
    1 June 2006 through 31 July 2006. In the last eleven con-           in the past does not affect this assessment. Whenever ente-
    tracts entered into with the claimant during the last year, the     ring into a new contract, the employer forecast the probable
    reason given for the limitation in time was the substitution of     duration of the substitution. The repeated conclusion of tem-
    civil servant V, who was on leave. The latter had been a “float-    porary contracts is said not to conflict with the future absence
    er” at the delivery point L and had last worked in 1992. She        of a need for substitution. Only if an employer must have con-
    had since been on parental leave and on unpaid vacation for         siderable doubts about whether the regular staff member to
    the time period until 15 April 2008.                                be substituted will ever return to his or her place of work can
                                                                        this be an indication that the objective reason for substitution
    On 31 July 2006, the employment relationship between the            is only a pretext.
    parties ended because of the last limitation in time. The claim-
    ant brought an action against the termination, arguing that a       The BAG held further that the work carried out by the tem-
    valid limitation in time did not exist. The claimant claimed that   porary employee may differ from the work of the substituted
    she had neither directly nor indirectly substituted civil servant   employee. It must only be possible for the employer, both le-
    V, as she had carried out additional work as compared to the        gally and de facto, to assign the tasks performed by the sub-
    latter. Whereas civil servant V had only worked as a “floater”      stitute to the substituted person. This is said to be the case if
    in the town of L, the claimant, acting as a substitute, had         the employer would, according to the employment contract,
    taken charge of any district where the responsible regular          be entitled to assign the tasks carried out by the substitute,
    deliverer was unavailable and had therefore worked in various       rather than the substituted person’s previous tasks, to the
    delivery districts. In the claimant’s opinion, the large number     substituted person after his or her return to work.
    of temporary employment contracts further showed that a
    reason for the limitation in time did not exist. The numerous       Finally, the term of the employment contract concluded for
    temporary contracts were said to contrast with the long-time        substitution purposes need not correspond to the probable
    absence of civil servant V, which could not justify the short-      duration of the substituted person’s absence from work, but
    term limitations.                                                   can be shorter. As the employer is free to decide whether to
                                                                        bridge the gap created by the absence of an employee with a
    The Decision                                                        substitute, the employer is also free to hire the substitute for
        The German Federal Labor Court (Bundesarbeitsgericht –          a shorter period of time only.
    BAG) has dismissed the action, thus deciding in line with the
    lower-instance courts. The BAG first confirmed its previous         Our Comment
    rulings, according to which it is always only the last limita-          With this decision, the BAG relaxes the requirements for
    tion in time which is subject to review by the courts. Through      frequent and short temporary employment contracts for sub-
    the conclusion of a further temporary employment contract           stitution purposes, thus enabling employers to handle such
    without reservations, the employment relationship is given a        cases with more flexibility. The BAG also makes it clear, how-
    new legal basis, and a possibly existing open-ended employ-         ever, that the connection between the limitation in time and
    ment relationship is thus cancelled.                                the need for a substitute must not be “fabricated”. Employers
                                                                        are on the safe side if the employee to be substituted is men-
    As to the claimant’s pleading, the BAG has declared that the        tioned in the employment contract or in the co-determination
    limitation in time of the last employment contract had been         procedure with the works council pursuant to Sec. 99 Ger-
Newsletter, 4rd Quarter | Employment Law                                                                                                     7

   man Works Constitution Act (Betriebsverfassungsgesetz –                only holds true, however, if the temporary contract includes no
   BetrVG), or if at least the reason for the limitation in time is       reservations and if it is not merely an annex to a previous con-
   explicitly included in the employment contract.                        tract. In this respect, the wording should be chosen carefully.

   A further positive aspect worth mentioning is that the BAG has
   adopted a more relaxed attitude towards repeated limitations
   in time over a longer time period. In this case, too, employers
   can expect that the substituted employee will return to work                               Erika Stander
   at any time, provided that the employee to be substituted has                              Luther Rechtsanwaltsgesellschaft mbH,
   not yet made a binding statement to the contrary.                                          Stuttgart
   In the event of actions being brought against repeated limita-                             Phone +49 711 9338 12894
   tions in time, employers always benefit from the fact that only
   the last limitation in time is subject to review by the courts. This

   Permitted Unequal Treatment with
   Respect to Increase in Wages
   (BAG, Ruling dated 15 July 2009 – 4 AZR 486/08)

   The Case                                                               for the purpose of compensating at least part of the loss of
      While in a difficult economic situation, the employer offered       income suffered two years before due to the execution of the
   his employees a new standard employment contract in which              new standard employment contract. The cancellation of the
   the annual vacation was reduced from 30 to 25 days and                 additional vacation pay alone has led to an annual loss of in-
   where the additional vacation pay, the contributions to private        come equivalent to 111 working hours. The 2.5 % increase in
   capital formation and the refund of bank account manage-               wages compensates this loss to the extent of approximately
   ment fees were cancelled. With the exception of 14 employ-             50 hours per annum. The employer has pursued no further,
   ees, all of the approximately 300 employees accepted the               conflicting purposes with the increase in wages according to
   offer. Some two years later, when the economic situation had           the BAG.
   improved, the employer thanked those who had signed the
   new standard employment contract by granting a 2.5% in-                Our Comment
   crease in wages. The employees who had refused to sign                    Whenever the regular remuneration is increased or special
   were to be granted the increase in wages only if they agreed           payments are granted and the increase or special payment
   to sign now. The suing employee, who had not signed the                concerns only part of the workforce, the principle of equal
   new standard employment contract, demanded higher wa-                  treatment needs to be observed. The mere fact that a new
   ges on the basis of the granted increase in wages.                     employment contract with new employment conditions has
                                                                          not been signed is not a sufficient objective reason for un-
   The Decision                                                           equal treatment. Before making a decision, employers must
      The Federal Labor Court (Bundesarbeitsgericht – BAG)                carefully consider what disadvantages exist for employees
   has dismissed the claimant’s appeal against the decision               refusing to sign and whether and to what extent the in-
   by the Regional Labor Court (Landesarbeitsgericht – LAG),              crease in remuneration or the special payment can constitute
   which had dismissed the action. The BAG does not see any               compensation for the disadvantages suffered. The wording of
   violation of the ban on discrimination. The unequal treatment          the announcement letter must be chosen with due care, so
   of the two groups of employees is objectively justified in the         that labor courts cannot see further (unintended) purposes
   opinion of the BAG. The increase in wages has been made                and admit actions. As soon as a further purpose is pursued
Luther Rechtsanwaltsgesellschaft mbH                                                                                                        8

    with the increase in remuneration or the special payment and       It also means, however, that employees must accept they be
    the suing employee meets the indicated requirements, the           treated in line with their will if they reject the change offered.
    employee has a good chance of achieving that the difference        Anything else would be inadmissible “cherry-picking”.
    in treatment is removed to his or her advantage. Today, a
    considerable part of the labor litigation cases concern discri-
    mination issues. Employers can only stand their ground in
    court if they prepare sufficiently for the accusations.
                                                                                            Dr. Roman Frik, LL.M. (Köln/Paris)
    It has not yet been decided whether or not the subsequent                               Luther Rechtsanwaltsgesellschaft mbH,
    offer to those who have refused to sign so far to enter into the                        Stuttgart
    new standard employment contract in connection with the in-                             roman.frik@luther-lawfirm.com
    crease in remuneration, thereby benefiting from the increase,                           Phone +49 711 9338 12894
    is sufficient for there to be no discrimination. Freedom of con-
    tract means that the will of employees needs to be respected.

    Replacement of a Company Practice
    by a Works Agreement
    (BAG, Ruling dated 5 August 2009 – 10 AZR 483/08)

    The Case                                                           becomes binding for the employer. The claimant’s claim for
       The parties are in dispute about the payment of a spe-          payment of the Christmas bonus on the basis of the existing
    cial annual benefit (Christmas bonus) for the year 2006. For       company practice has not been cancelled through the works
    a period of more than ten years, the sued employer paid the        agreement either, given that claims for remuneration which
    claimant and the other employees a Christmas bonus in the          arise from a more favorable individual contractual arrange-
    amount of a constant percentage rate with the remuneration         ment take priority over the provisions of a works agreement.
    for November without making any reservations. In Novem-            In this respect, the BAG explains that a legal claim which has
    ber 2006, due to problems with production, the defendant           arisen according to company practice rules is not a contrac-
    entered into a works agreement with its works council for all      tual claim of inferior legal validity. Consequently, the employer
    the employees working for the company according to which           cannot cancel this claim more easily than a claim of the em-
    no Christmas bonus should be paid for the calendar year            ployee which has been created through an explicit arrange-
    2006. Consequently, the claimant and the other employees           ment in the employment contract. Claims for remuneration
    received no Christmas bonus for the year 2006. With this ac-       created by company practice are, therefore, not normally
    tion, the claimant asserts a claim for payment of the Christmas    subject to modification or cancellation by works agreement.
    bonus for the year 2006, as arising from company practice.         If an employer wishes to make a special payment to its em-
                                                                       ployees while reserving the right to change or discontinue
    The Decision                                                       this practice through a superseding works agreement, this
       Like the Regional Labor Court (Landesarbeitsgericht –           reservation – just as the reservation of the right to revoke a
    LAG) before, the Federal Labor Court (Bundesarbeitsgericht         bonus or reservations as to the voluntary nature of a bonus
    – BAG) admitted the action, arguing that the claimant was          – must comply with the transparency requirement stipulated
    entitled to a Christmas bonus for the year 2006 as a result        in Sec. 307 (1) sentence 2 German Civil Code (Bürgerliches
    of the corresponding company practice. The BAG has thus            Gesetzbuch – BGB). For this reason, the employer must state
    confirmed its previous case law, according to which the rule       clearly and unambiguously that it intends to make the special
    exists with respect to bonuses paid each year to the entire        payment only subject to modification or cancellation by works
    workforce that a bonus paid three times without reservations       agreement. If the employer fails to do so, a judicious employ-
Newsletter, 4rd Quarter | Employment Law                                                                                                  9

    ee need not expect that a claim created through company            or that it may be modified or cancelled through a superseding
    practice can be modified or cancelled through a subsequent         works agreement. Pointing out the voluntary nature of the
    works agreement.                                                   benefit or reserving the right to revoke the benefit seems pre-
                                                                       ferable to reserving the right to modify or cancel the benefit
    Our Comment                                                        by means of a superseding works agreement, given that the
       With this judgment, the BAG confirms and further deve-          latter requires an agreement with the works council. As such
    lops its established rulings concerning the legal concept of       reservations must comply with the transparency requirement
    company practice. According to the established case law of         pursuant to Sec. 307 (1) sentence 2 BGB, their wording must
    the BAG, granting an annual bonus to the entire workforce          be chosen very carefully. The requirements stipulated by the
    three times without reservations generally gives rise to a fu-     BAG with respect to the wording of such reservations are
    ture legal claim of the employees as a result of such com-         very strict and often lead to the invalidity of the reservations
    pany practice. The BAG has additionally clarified that claims      which have been agreed upon.
    arising from company practice are not normally subject to
    a superseding works agreement. This means that employers
    must be careful when repeatedly granting benefits to employ-
    ees. If the benefit is granted repeatedly without reservations,
    the employer is bound by its conduct in future. Subsequently                           Achim Braner
    cancelling a claim so created is not easy and can only be                              Luther Rechtsanwaltsgesellschaft mbH,
    done through termination or a corresponding agreement with                             Eschborn/Frankfurt a. M.
    the employee. It is therefore recommended that employers                               achim.braner@luther-lawfirm.com
    who wish to grant benefits to employees explicitly include a                           Phone +49 6196 592 23839
    reservation either to the effect that the benefit may be re-
    voked or to the effect that the benefit is a voluntary payment

   Cap on Social Compensation Plan
   Severance Payments
   (BAG, Ruling dated 21 July 2009 – 1 AZR 566/08)

   The Case                                                            The Decision
       Within the scope of staff cutbacks, the 58-year-old claim-         The BAG agreed with the courts of lower instance and
   ant left the defendant’s company. According to the calculation      considered the cap to be valid, therefore dismissing the case.
   formula in the social compensation plan, he would have been         The BAG first described the general principles. Severance
   entitled to severance pay of approx. 242,000.00 Euro. The           pay under a social compensation plan is not consideration
   social compensation plan however provided that the sev-             for past services, but rather compensation for future losses.
   erance pay be capped at 85,000.00 Euro. The claimant filed          With severance pay which is calculated according to the pe-
   a claim for the difference. He argued that the capped sever-        riod of employment and earnings, caps are permitted in or-
   ance pay was too low to compensate for the 5-year shortfall         der to allow the fair distribution of social compensation plan
   in income between drawing his unemployment benefit and his          funds amongst all persons concerned. Whether a maximum
   pension. In addition, he claimed that a severance payment           amount is sufficient to bring about a substantial mitigation of
   the amount of which depended on the length of service with a        economic losses is subject to the parties‘ own assessment.
   company could not be capped as it compensated the emplo-            In this respect, it may be assumed that a cap will primarily
   yee for his or her loyalty to the company. He finally argued that   affect long-serving and, therefore, older employees, who can
   the cap was age discrimination, as it primarily affected older      typically claim a state pension in the near future.
   employes, who generally have a longer term of service.
Luther Rechtsanwaltsgesellschaft mbH                                                                                                      10

    By applying these principles, the BAG accepted the capping         has not examined the social compensation plan using the
    rule in the underlying case. The parties could assume that the     criteria set by the General Equal Treatment Act (Allgemeines
    maximum amount of 85,000.00 Euro was sufficient. It is true        Gleichbehandlungsgesetz – AGG) or by the European Direc-
    that employees who are further away from retirement age            tive 2000/78/EC, as the social compensation plan was agreed
    are more affected by the cap, as the shortfall in income until     upon before the effective date of the said Act and before the
    they can draw their pension is greater. In the BAG‘s opinion       expiration of the time allowed for the implementation of said
    this is, however, an acceptable hardship which typically ac-       Directive in German law. The reasons given for this decision
    companies lump-sum compensation. The BAG negated age               allow us, however, to reach the conclusion that the BAG will
    discrimination, as all employees are treated equally by the        also confirm the admissibility of severance pay cap clauses
    severance pay cap clause, irrespective of their age. This is       for social compensation plans which are agreed upon at a la-
    said to apply even though typically more older than younger        ter stage, as its benchmark is the principle of equal treatment,
    employees are affected.                                            as stipulated in Sec. 75 German Works Constitution Act (Be-
                                                                       triebsverfassungsgesetz – BetrVG), which also in its previous
    Our Comment                                                        form incorporated a ban on discrimination against employees
       The BAG‘s decision is just one in a series of decisions by      who have exceeded a certain age limit.
    the BAG in more recent times regarding the admissibility of se-
    verance pay regulations in social compensation plans which
    are detrimental to older employees (e. g. the decision from
    26 May 2009 – 1 AZR 198/08 – regarding the reduction of
    severance payments for those who are entitled to claim an                              Dr. Volker Schneider, Partner
    early pension). The BAG has decided liberally and confirms                             Luther Rechtsanwaltsgesellschaft mbH,
    that employers and works councils are quite free in their as-                          Hamburg
    sessment. This case shows that a cap is also admissable if it                          volker.schneider@luther-lawfirm.com
    leads to a substantial cut (of more than 60 %) in severance pay.                       Phone +49 40 18067 12195

    The BAG‘s decision confirms the existing case law (decision
    from 2 October 2007 – 1 AZN 793/07). It is true that the BAG

    No Ban on „Flash Mobs“
    in Industrial Action
    (BAG, Ruling dated 22 September 2009 – 1 AZR 972/08)

    The Case
       In December 2007, the sued trade union called for flash         least an hour by leaving shopping trolleys filled with goods
    mob events to be carried out in Berlin retail stores as part of    in the aisles and by purchasing large amounts of “nickel and
    an industrial action. In order to put pressure on retail compa-    dime goods”. The claimant sought injunctive relief for „flash
    nies which had replaced striking employees with temporary          mob“ events of this kind at the labor court.
    workers, members of the union together with non-members
    were asked to target individual supermarkets with a view to        The Decision
    „grinding them to a halt“. The time and place of the flash mob         The application for the injunction was unsuccessful in both
    events was conveyed via text message by the union to the           the first and second instances, as well as before the BAG. In
    participants. A couple of days later, 40 to 50 „flash mobbers“     its decision the BAG decided that a „flash mob“ event of this
    blocked the checkouts and the shop of one of the branches          sort could disrupt the course of business and interfere with
    of a member company of the suing retail association for at         the established and pursued business enterprise of the em-
Newsletter, 4rd Quarter | Employment Law                                                                                                    11

   ployer. To justify their actions, however, the union can plead         and are not recognizable as members of the „flash mob“. The
   freedom of choice regarding their actions in accordance with           suggestion that the employer should close its business for a
   Sec. 9 (3) German Constitutional Law (Grundgesetz - GG).               short period of time forces the employer to do itself financial
                                                                          harm. The employer can only try to claim compensation from
   Whether an action is lawful depends upon whether it is „ap-            the „flash mobbers“ after the event has already taken place.
   propriate“ in the particular case. Relevant in this case is            By involving third parties who are not members of a union, the
   whether the employer was in a position to fend off the attack          BAG appears to have overstepped the constitutional limits of
   on his legally protected interests. An employer can defend             Sec. 9 (3) German Constitutional Law.
   itself against „flash mobs“ in a retail store by exercising its
   right as owner of the premises or by closing the shop for a
   short period of time.
                                                                                              Dr. Robert von Steinau-Steinrück,
   Our Comment                                                                                Partner
       With this decision, the BAG continues with its series of de-                           Luther Rechtsanwaltsgesellschaft mbH,
   cisions to extend the scope of protection offered by Sec. 9 (3)                            Berlin
   German Constitutional Law at the expense of employers. The                                 robert.steinrueck@luther-lawfirm.com
   first senate of the BAG had on 24 April 2007 (1 AZR 252/06)                                Phone +49 30 52133 21142
   already decided that a strike regarding a collective social plan
   was admissible and thereby confirmed that a union can base
   its actions on Sec. 9 (3) German Constitutional Law even if, in
   terms of their scope, the demands intended to be enforced
   with the strike could prevent a planned relocation by the em-
   ployer. In its decision dated 19 July 2007 (1 AZR 396/06), the
   BAG allowed a union to plead according to Sec. 9 (3) Ger-
   man Constitutional Law, even though it called its members
   to strike within the scope of an industrial action which was
   carried out outside its own collective bargaining zone.

   With its „flash mob“ decision, the BAG has broadened the
   scope of protection offered by Sec. 9 (3) German Constitution-
   al Law to cover measures which are primarily supported by
   third parties who are not part of a coalition. In the aforemen-
   tioned decision on supporting strikes, the BAG, when review-
   ing whether a union can in principle plead according to Sec. 9
   (3) German Constitutional Law, had already considered it to
   be sufficient that the union’s action is „coalition specific“, i.e.
   aimed at enforcing collective bargaining demands. By so de-
   ciding, the Court fails to realize that only coalitions are entitled
   to resort to industrial action pursuant to the unambiguous
   wording of Sec. 9 (3) sentence 3 German Constitutional Law.
   Third parties who are not part of a coalition do not normal-
   ly have this right. Measures which are primarily supported
   by people who cannot plead Sec. 9 (3) German Constitu-
   tional Law do not become coalition-specific measures merely
   because a trade union sets a goal for these persons from
   which they do not benefit. Once the scope of the principle of
   freedom of coalition is opened up to „flash mobs“, the princi-
   ple of proportionality can neither efficiently correct the broad
   scope of protection, nor does it provide for the necessary
   legal certainty. In this specific case the employer can hardly
   exercise its right as owner of the premises on the „flash mob-
   bers“ because they are disguised as supermarket customers
Luther Rechtsanwaltsgesellschaft mbH                                                                                   12

    Workshops and Conferences

    Date                      Subject/Speaker                                               Organisation/City

    02.12.2009                ProPer Executive: structuring a social partnership            DGFP,
                              (Axel Braun)                                                  Düsseldorf

    09.12.2009                Monitoring with(out) an end in sight? – How new data          Luther Rechtsanwalts-
                              protection laws affect working relationships                  gesellschaft mbH,
                              (Christian Dworschak, Silvia C. Bauer)                        Munich

    17.12.2009                Dealing with the works council in a company crisis            MAV Schweitzer Seminare,
                              (Dr. Robert von Steinau-Steinrück)                            Munich

    20.01.2010                Rights and duties of a Prokurist                              WSF Wirtschaftsseminare,
                              (Hans-Christian Ackermann)                                    Dusseldorf

    21.01.2010                Drafting and checking contracts                               Beck Verlag,
                              (Dr. Robert von Steinau-Steinrück)                            Frankfurt

    26.01.2010                Hidden costs in transactions - safeguard your business case   Luther/
                              using case management and employment law advice               Mühlenhoff & Partner,
                              (Dr. Kathrin Pietras)                                         Frankfurt

    10.02.2010                Changes in employment law                                     DGFP,
                              (Dr. Roman Frik)                                              Stuttgart
Newsletter, 4rd Quarter | Employment Law                                                                                             13

   Editor: Luther Rechtsanwaltsgesellschaft mbH, Anna-Schneider-Steig 22, 50678 Cologne, Phone +49 221 9937 0,
   Telefax +49 221 9937 110, contact@luther-lawfirm.com
   V.i.S.d.P.: Dr. Roman Frik, LL.M. (Paris/Köln), Luther Rechtsanwaltsgesellschaft mbH, Augustenstraße 7, 70178 Stuttgart,
   Phone +49 711 9338 12894, Telefax +49 711 9338 110, roman.frik@luther-lawfirm.com
   Layout/Art Direction: Vischer & Bernet GmbH, Agentur für Marketing und Werbung, Mittelstraße 11/1,
   70180 Stuttgart, Phone +49 711 23960 0, Telefax +49 711 23960 49, contact@vischer-bernet.de
   Copyright: These texts are protected by copyright. You are only permitted to use parts of the texts if you provide
   the source and have our written consent. Please contact us regarding this matter.

   Although every effort has been made to offer current and correct information, this publication may only give general guidelines
   and cannot substitute individual legal advice. The information contained in this newsletter does not constitute legal or tax
   advice and cannot substitute individual legal or tax advice. For legal or tax advice, please contact one of the contacts at our
   local offices.
                                                                                                              Die Unternehmer-Anwälte

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