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12-28-2021Article

Labor law plans of the "traffic light coalition“

Update Employment Law January 2022

The governing parties SPD, Bündnis 90/Die Grünen and FDP have presented their coalition agreement for the coming legislative period, which outlines the political plans for the next years in a total of nine chapters. The statements of the new government coalition with reference to labor law can be found primarily in the fourth chapter entitled "Respect, opportunities and social security in the modern world of work", in which a separate section deals with the topic of "work". The references to labor law in the coalition agreement that are particularly relevant in our view are summarized in the following overview.

  • Working hours: The new coalition agreement focuses on the issue of working hours. The coalition parties emphasize that they want to retain the principle of the eight-hour day, but at the same time promote flexible working time models. In this context, a temporary regulation with an evaluation clause is to be created in the coming year 2022, which shall make it possible - but only within the framework of collective agreements - for employees to organize their working hours more flexibly under certain conditions. For maximum working hours, there shall be an unspecified "experimental space" for deviating regulations in collective agreements and works agreements. Furthermore, the governing coalition intends to examine the need for adjustments in working time law, with explicit reference to the case law of the European Court of Justice (ECJ). This is likely to refer in particular to the much-discussed decision of the ECJ on the recording of daily working hours of May 14, 2019 in the case "Federación de Servicios de Comisiones Obreras (CCOO)/Deutsche Bank SAE" (case number C-55/18). However, the coalition agreement emphasizes that flexible working time models - with reference to trust-based working time as an example - should remain possible.
  • Fixed-term contracts: The coalition plans to make a particularly practical change to fixed-term employment law. Fixed-term contracts with a objective reason under Section 14 (1) of the Part-time Work and Fixed-term Employment Contracts Act (TzBfG) shall be restricted by limiting them in future to a maximum duration of six years with one employer. However, it shall be possible to exceed this maximum duration "in narrowly defined exceptions". It remains to be seen how these exceptions will be structured, as the coalition agreement does not contain any further details. In practice, the introduction of this maximum period will lead to some difficulties. In particular, if the six-year maximum duration is strictly applied, a fixed-term contract until the regular retirement age is reached would regularly no longer be legally valid in the future. In addition, budgetary fixed-term employment in the public sector (Section 14 (1) sentence 2 no. 7 TzBfG) is to be completely abolished. Otherwise, for the time being - contrary to earlier considerations - there will be no further restrictions on fixed-term employment contracts without an objective reason pursuant to Section 14 (2) TzBfG except those cases where the federal government acts as employer. 
  • Mobile working: Another focus for the "traffic light coalition" is mobile working, which in the future - at least according to the announcement in the coalition agreement - shall be possible throughout the EU without any issues. The governing parties emphasize that the home office is to be legally distinguished from teleworking and the scope of the Workplace Ordinance. The statement that employers can only reject an employee's request for mobile work if operational concerns are opposed deserves particular attention. According to the coalition agreement, arbitrary or unrelated refusals are to be ruled out. However, it remains unclear how important the conflicting business interests must ultimately be in order to justify a refusal. Based on the case law of the Federal Labor Court on similar provisions - above all Section 8 (4) and Section 9a (2) TzBfG - employers are likely to face relatively high hurdles if they want to reject a home office request. A fundamental "right to home office" is thus taking shape. In addition, "occupational safety, good working conditions and the existence of a company workplace" are to be prerequisites for mobile work. Employees "in suitable jobs" are also to have a right to discuss mobile working and home office with their employer. However, it is stated that there must be room for deviating collective bargaining and company regulations.
  • Increase in the minimum wage and further development of the Pay Transparency Act: The intended increase in the statutory minimum wage to initially EUR 12 per hour should be highlighted. Subsequently, the independent Minimum Wage Commission will discuss further increases. At the same time, the governing coalition supports the plan for an EU-wide directive on appropriate poverty-proof minimum wages to strengthen the collective bargaining system. Furthermore, the wage gap between women and men shall be closed. To this end, the government coalition intends to further develop the Pay Transparency Act and strengthen its enforcement by enabling individual employee rights to be asserted by associations by way of so-called litigation. 
  • Bridge part-time work: In the future, more employees shall be able to take advantage of bridge part-time work pursuant to Section 9a TzBfG. To achieve this goal, the "excessive demands clause" of Section 9a (2) sentence 2 TzBfG will be revised. Up to now, this clause has allowed employers with no more than 200 employees to reject part-time requests if a certain number of other employees - graded according to the number of employees in the company - have already taken advantage of bridge part-time work. In view of the objective of expanding bridge part-time working, it is to be expected that it will be more difficult to reject part-time requests under Section 9a (2) TzBfG in the future.
  • Further training and qualification: In connection with further training and qualification, the coalition plans to introduce a training (part) time "based on the Austrian model". In Austria, an employee can reduce his or her weekly working hours by 25 percent to 50 percent for a maximum period of 24 months, subject to certain other conditions, in order to undergo training or further education. A similar arrangement is now apparently to be introduced in Germany. In addition, the Federal Employment Agency is to enable companies undergoing structural change to retain their employees through training with a "qualification allowance" similar to the short-time working allowance. The prerequisite for this is the conclusion of a corresponding company agreement. In addition, the government parties want to create incentives for transformation collective agreements, expand the transfer short-time allowance and further develop the instruments of SGB III in transfer companies.
  • Mini- and midi-jobs: There are important adjustments in marginal employment and in the so-called transitional area. For example, the midi-job limit is to be increased to EUR 1,600 per month, while the mini-job limit will in future run at a weekly working time of ten hours at minimum wage conditions (i. e. initially EUR 520 per month). At the same time, there are to be stronger controls on compliance with applicable labor law in the case of mini-jobs. 
  • Third-party personnel deployment: The "traffic light coalition" also addresses the issue of third-party personnel deployment. The coalition agreement recognizes contracts for work and temporary employment as "necessary instruments". At the same time, it is emphasized that effective law enforcement should prevent systematic violations of labor law and occupational health and safety. Furthermore, the coalition wants to examine whether changes need to be made to the Temporary Employment Act (AÜG). The context of this wording remains unclear at first glance, but it can be assumed that the coalition agreement refers to proceedings currently pending before the ECJ - and in particular concerns the legal question of the extent to which collective agreements may deviate from the principle of equal treatment between permanent and temporary workers.
  • Platform work: The government coalition is also focusing on so-called platform work, for example in the form of "crowdworking." Crowdworking" has now become part of German labor law, at the latest since the Federal Labor Court ruled in a high-profile ruling on December 1, 2020, that the execution of orders by the user of an online platform can lead to the existence of an employment relationship (case number 9 AZR 102/20). The coalition agreement describes platform work as an enrichment for the world of work, but the text of the agreement does not reveal any specific plans. The intention is, among other things, to review existing law and to engage in a dialog with platform providers, platform workers, the self-employed and social partners. 
  • Collective bargaining law: The "traffic light coalition" wants to strengthen collective bargaining autonomy within the framework of collective bargaining law. To this end, the awarding of public contracts by the federal government is to be linked to compliance with a collective agreement that is representative of the relevant sector. Furthermore, it is intended to prevent company spin-offs "where the previous owner is identical for the purpose of wage evasion" by ensuring that the applicable collective agreement continues to apply.
  • Workplace co-determination: The coalition agreement places a further focus on the area of workplace co-determination. First of all, it is emphasized that works councils should be able to decide for themselves whether to work in analog or digital form. In addition, there will be a pilot project for "online works council elections" - which have already been frequently called for in practice. The trade unions represented in the company are to be given the right to "digital access" to the company in the future. Criminal offenses against democratic co-determination - by which is probably meant in particular the criminal provision of Section 119 of the Works Council Constitution Act (BetrVG) - are to be official offenses in the future. This means that they can be prosecuted by the criminal prosecution authorities "ex officio" and not merely after application. 
  • Corporate co-determination: The governing coalition emphasizes that abusive circumvention of current co-determination law shall be prevented. At the same time, the German government is committed to further developing corporate co-determination. Specifically, the coalition agreement mentions the case where corporate co-determination is avoided when SE companies grow as a result of the "freezing effect". This option is no longer to exist in the future. The coalition also wants to transfer the group attribution from the Co-Determination Act (MitbestG) to the One-Third Participation Act (DrittelbG) if there is de facto real control. In practice, this is likely to result in more companies being subject to co-determination under the One-Third Participation Act in the future.
  • Occupational health and safety: The coalition agreement includes a brief paragraph on occupational health and safety. It announces that the coalition intends to focus intensively on mental health and strengthen occupational integration management. Besides, it mentions the goal of making occupational integration management mandatory across the board in accordance with uniform quality standards.
  • Company pension plans: According to the coalition agreement, company pensions are to be strengthened, among other things by allowing investment opportunities with higher returns. In addition, the social partner model already initiated with the Company Pension Strengthening Act is to be implemented in the new legislative period.
  • Employee data protection: The issue of data protection is also addressed - albeit with little specificity. For example, the governing coalition wants to create regulations on employee data protection in order to establish legal clarity and effectively protect personal rights. It is worth mentioning in this context that the EU Whistleblower Directive is to be implemented "in a legally secure and practicable manner" according to the coalition agreement. In the meantime, such implementation is urgently needed anyway, because the two-year implementation deadline expires this year.
  • Church labor law: Finally, the governing coalition wants to examine the extent to which church labor law - with the exception of "proclamation-related activities" - can be brought into line with state labor law. However, the scope of this project remains unclear.

Overall, as the above summary shows, the coalition agreement contains a large number of projects relating to labor law. Unfortunately, the presentation of the individual topics by the "traffic light coalition" remains unspecific in many places, so that the actual effects of the change of government for companies and their workforces will only become apparent in the course of the new legislative period. Further developments will have to be observed with interest.

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