Update Employment Law October 2023
Letter of notification pursuant to section 613a (5) BGB does not require informing an employee not covered by collective bargaining agreements about collective bargaining agreements that do not apply
Federal Labour Court, Judgment of 29 June 2023 – 2 AZR 326/22
A transfer of an undertaking is often linked with drastic changes for the workforce of the undertaking concerned. Frequently, a transfer of an undertaking is not only related with a change of the contractual employer, but also with a change in the organisational structures of the undertaking. Also, because the latter in particular can lead to significant changes in the collective working conditions of the affected employees as a result of the transfer of the business, according to section 613a para (5) BGB the employer is obliged to inform these employees in particular about the legal, economic and social consequences of the transfer. In practice, informing the workforce without errors often poses problems for employers, as the required content has been specified in great detail by case law over time. If proper information is lacking, the employee is granted an unlimited right of objection that can only be forfeited, which can present employers with considerable litigation risks.
In this context, the Federal Labour Court recently had to decide on the individual question of whether an employee not covered by collective bargaining agreements must also be informed in the letter of notification about collective bargaining agreements that are not applicable to him.
In the case mentioned, the parties disputed the continuation of the employment relationship after the plaintiff objected to a transfer of business.
The plaintiff, who had been working for the energy group RWE since 2014, was not a member of a trade union and carried out his work as an IT officer as a non-tariff employee of the group company RWE IT GmbH. As it was the case with other group companies, the “collective agreement on the socially acceptable accompaniment of personnel adjustment measures in the RWE Group” had been applied to all employees covered by collective agreements at the plaintiff's employer since the end of 2014.
In 2015, the RWE Group decided to outsource the IT services previously provided internally by the employer to an external service provider with effect from February 2017. At the end of 2016, the employer and the external service provider informed the plaintiff in a letter about the planned transfer of operations on the occasion of an all-day information event. Since February 2017, the plaintiff then performed his work exclusively for the external service provider. Shortly afterwards, in April 2017, the employer merged with another group company.
It was not until 2019 that the plaintiff objected to the transfer of his employment relationship to the external service provider and sought a declaration of the existence of his employment relationship with the employer's legal successor. In doing so, the plaintiff argued that the one-month period for the objection had not begun to run because the notification had been incorrect. In particular, the plaintiff argued, there was no information on whether certain collective agreement provisions applied to his employment relationship under individual or collective law.
At first instance, the Essen Labour Court did not follow the plaintiff's argumentation and dismissed the action. The Dusseldorf Higher Labour Court (LAG Düsseldorf), on the other hand, held that the letter of notification had been incorrect and therefore upheld the claim at second instance. On the one hand, even after more than two years, according to court there were no circumstances for a forfeiture of the right of objection. Secondly, the letter of notification was defective because it was not clear from it whether the collective agreement, which was partly applicable to the employer, was now applicable or not. The appeal of the defendant, the legal successor of the employer, was directed against this decision.
The Federal Labour Court (Bundesarbeitsgericht – BAG) now upheld the employer and dismissed the plaintiff’s action for a declaration of the existence of the employment relationship with the defendant legal successor.
According to the Federal Labour Court, as an employee not covered by collective bargaining agreements, the plaintiff did not have to be informed about a collective bargaining agreement which did not apply to him either at the seller of the business (the employer) or at the acquirer of the business (the external service provider) by way of a norm or on the basis of a reference clause. It is true that according to section 613a para 5 no. 3 BGB an employer must inform the employee which collective bargaining provisions are applicable or, if applicable, how they are superseded at the acquirer. This is because the information is intended to enable the employee to make an informed decision on whether or not to object to the transfer of his or her employment relationship.
In the present case, however, there were no recognisable facts according to which the application of the collective agreement to the non-unionised plaintiff could not be excluded. The vague declaration of intent contained in the collective agreement to extend its provisions to non-unionised workers at a later date was in any case not sufficient. Rather, it remained the case that the collective agreement had not been applicable to the plaintiff's employment relationship either before or after the transfer of the business. For employees such as the plaintiff, to whom no collective agreement applies due to the lack of a collective agreement or reference clause at the transferor of the business, it was not necessary to point out in the letter of notification that this legal situation would not be changed by the transfer of the business.
Finally, the Federal Labour Court emphasised that it was not necessary to prepare different letters of notification for the individual groups of employees (employees covered by collective agreements/non-tariff employees), but that all groups could be informed with a single letter of notification. However, the standard letter must cover any special features of the employment relationship.
Cases such as these show how important it is to ensure that information is correct before a transfer of an undertaking. Otherwise, there is a risk that former employees can still assert their right of objection years after the transfer of the business and claim continued employment with the previous employer.
Even if the Federal Labour Court convincingly explains in this case that the continued non-applicability of collective agreements before and after the transfer of the business does not have to be mentioned in the letter of notification, it is better to include one sentence too many than one sentence too few in order to avoid disputes. This is because letters of notification on the transfer of an undertaking are per se very prone to errors, as case law already derives very far-reaching contents of notification from the contents mentioned in section 613a para 5 BGB.