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Germany

January 25, 2021

By Regina Engelstaedter and Jens Jensen 

Back to International Employment Law

Germany

KEY DEVELOPMENTS FOR 2020


 

Right to work from home?

Although many companies have traditionally been cautious to allow employees to work from home, this changed due to the spread of COVID-19. Millions of employees worked from home, and many still continue to do so. Therefore, it came as no surprise when Federal Secretary of Labour and Social Affairs Hubertus Heil announced in April that he would present a draft bill in Autumn 2020 setting out the prerequisites for a legal entitlement to work from home. Details of the draft bill have not yet become public at the time of writing, but it is expected that the draft bill may also address questions of occupational safety and whether employers are required to contribute towards homeworking costs.


 

Difficulties posed by recent employment trends in Germany

The rather dated German employment and labor law landscape is a tricky terrain when it comes to trends such as crowd work, micro jobs and the on-demand economy. No special provisions exist for these new types of work in German legislation, although almost 5% of all German employees are already involved in crowd work. In 2019, the first labor court rulings dealt with the question of whether crowd workers are employees or self-employed contractors. In late 2019, the Regional Labor Court Munich held that an individual who secures small mystery shopping jobs within a defined region through a smart phone app is not an employee. It seems that additional types of new work will be put to the test before the labor courts in the foreseeable future, which employers should follow closely to determine whether it has an impact on its existing business structure.

 

KEY DEVELOPMENTS FOR 2019


 

Employee data protection

The EU General Data Protection Regulations 2016/679 (“GDPR”) will remain a key topic in 2019. We anticipate a large number of lawsuits where employees will assert violation of their GDPR rights. Employee data protection has a particular impact on areas such as access control and time recording, video surveillance, voice recording as well as employee assessments and background checks.


 

Remote working and employee monitoring

The rising cross-industry trend of (partial) relocation of workplaces from traditional offices to the employee’s home office, together with the increasing use of mobile electronic devices enabling employers to monitor their employees’ work behaviour, regardless of their current location, raises various legal concerns. Employers need to be mindful and establish a suitable legal basis for such monitoring.


 

Remuneration conversion agreements

There is still a need for employers to implement the comprehensive reform of the company pension scheme introduced in 2018. The reform allows the employer to convert the remuneration of the employees thereby saving social security contributions. The employer is then obliged to pass these savings (lump sum of 15 per cent) on to his/her employees in order to increase their company pension. The reforms applies to new remuneration conversion agreements from 1 January 2019 and to existing agreements from 1 January 2022 onwards.

 

KEY DEVELOPMENTS FOR 2018


 

Legal framework for Establishing Gender-Related Pay Equalization (Entgelttransparenzgesetz)

On June 30, 2017 a new law was introduced requiring employers with more than 200 employees to provide equal pay to women and men for comparable work. Employees have the right to request information regarding the level and amount of remuneration for comparable positions. With respect to companies with more than 500 employees, additional reporting obligations have been introduced, such as reporting requirements on the status of pay equalization in the company.


 

New Legislation - Company Pensions

Employers are obliged to pay a contribution to a pension fund but are not obliged to guarantee a minimum pension amount. Consequently, the employees bear the investment risk if the pension fund generates poor profits.

In the case of deferred compensation (Entgeltumwandlung), the employer has to contribute an additional amount of 15% of the compensation contributed by the employee (Arbeitgeberzuschuss).


 

New Legislation on Temporary Employment (Arbeitnehmerüberlassung)

From April 1, 2017 temporary workers can be employed up to a maximum period of 18 months, however, collective agreements (Tarifvereinbarungen) and company agreements

(Betriebsvereinbarungen) allow for deviations. Furthermore, after 9 months of work, temporary workers have to be paid the same as permanent employees.


 

Proposal to Reduce Minimum Wage Bureaucracy

In order to reduce bureaucratic hurdles the bill provides for less documentation for employers relating to minimum wages obligations.


 

Increase of the social security contribution ceiling

There has been an increase in the social security contribution ceiling for statutory health insurance of up to EUR 59,400 with effect from January 1, 2018. The ceiling for the general pension insurance has been increased to EUR 6,500 per month in Western Germany and EUR 5,800 per month in Eastern Germany.


 

General Data Protection Regulation

The new Federal Data Protection Act (Bundesdatenschutzgesetz) will come into force simultaneously with the General Data Protection Regulation (Datenschutzgrundverordnung) on May 25, 2018. The Federal Data Protection Act has been completely revised and, in particular, increases the requirements for consent. In addition, the General Data Protection Regulation increases the obligations on employers regarding documentation, processing, storage and the erasure of personal data.

 

KEY DEVELOPMENTS FOR 2017


 

The national minimum wage was increased to EUR 8.84 as of 1 January 2017

A general statutory minimum wage was introduced in 2015 by the Minimum Wage Act (Mindestlohngesetz). As of 1 January 2017 this was increased to EUR 8.84. Transition periods which applied for collective bargaining agreements and certain sectors ended in 2016.


 

Strengthening of maternity laws

Employed women are protected by law during pregnancy and after childbirth (e.g., dismissal protection, employment prohibition, and workplace design). As a result of the revised Maternity Protection Act (Mutterschutzgesetz) these protections will also apply to students and trainees as of 1 January 2017. Mothers shall not be employed until eight weeks after childbirth and until 12 weeks in the case of premature, multiple births or the birth of a disabled child. Dismissal of women during pregnancy and in the first four months following childbirth is unlawful. This will also apply for women who have suffered a miscarriage.


 

Revisions to the financial services sector’s remuneration guidelines

The European Banking Authority (“EBA”) guidelines on sound remuneration policies (based on CRD IV (Directive 2013/36/EU)) applies as of 1 January 2017 to financial institutions across the EU, including subsidiaries which are not directly subject to CRD IV. The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) implemented the requirements of the guidelines into the revised Remuneration Ordinance for Institutions (ROFI). As a result, the obligation to identify risk-takers applies for all CRR-institutions and not only for significant institutions and variable remunerations (such as bonuses) will be subject to deferral and reduction regulations and clawbacks.

 

KEY DEVELOPMENTS FOR 2016


 

Implementation of 30% quotas of women (Frauenquote) on supervisory boards of listed companies

The law applies to companies that are listed on the German stock exchange and have a supervisory board subject to co-determination on a parity basis. Present board members can keep their positions until the end of the term but the quota has to be considered for newly appointed board members. If a company currently does not meet this quota, it is required to set targets for its implementation in supervisory boards.


 

New laws in relation to temporary employment and service contracts effective as of 1 April 2017

In November 2016 the revised German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz) was passed. For temporary employment and service contracts effective as of 1 April 2017, the law distinguishes more clearly between service contracts and usual work contracts. Additionally, temporary employment is now limited to a maximum duration of 18 months and temporary employees will receive the same salary as regular employees after nine months.


 

The General Data Protection Regulation (“GDPR”) was published

The GDPR will apply from 25 May 2018 but it still allows EU Member States to provide more specific rules in respect of the processing of employees’ personal data in the employment context. The Federal Data Protection Act (Bundesdatenschutzgesetz) will be revised completely to ensure compliance with the GDPR. The first draft law is currently under discussion; significant changes can be expected.

With thanks to Regina Engelstaedter and Jens Jensen of Paul Hastings LLP for their invaluable contribution on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department
Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department