No short-time work without effective agreement
Update Employment Law February 2021
Labour Court Siegburg 11.11.2020 – 4 Ca 1240/20
Short-time work continues to be omnipresent in many sectors of the economy due to the Covid 19 pandemic. A recent decision by the Labor Court Siegburg once again emphasizes that the ordering and implementation of short-time work requires careful preparation on the part of the company in terms of labor law in order to avoid unpleasant surprises. It is essential to have a suitable legal basis for ordering short-time work, which can be an agreement in the employment contract or the relevant provisions of a collective agreement or works agreement. If there is no such legal basis, the introduction of short-time work is invalid. In such cases, the affected employees can regularly demand full remuneration even for the phases of reduced working hours, so that the aim of short-time work – to relieve the economic burden on the company by reducing personnel costs – is missed.
The plaintiff employee was employed by the defendant company as a bus driver with a gross monthly remuneration of EUR 2,100.00. The company did not have a works council. In a letter dated March 16, 2020, the defendant company informed the plaintiff – in addition to issuing a warning – that short-time work would have to be introduced in various departments of the company and that the plaintiff was scheduled for short-time work "initially in the week from March 23 to March 28, 2020." A separate short-time work agreement was not concluded with the plaintiff. After receiving the letter, the plaintiff offered the defendant his full work performance, which the defendant apparently did not accept. Instead, the defendant reduced part of the plaintiff's salary - corresponding to the reduced working hours – as of March 2020 and designated the reduced remuneration as "short-time allowance" in the settlement issued. The plaintiff terminated the employment relationship with the defendant without notice as of June 14, 2020.
After the end of the employment relationship, the plaintiff claimed – in addition to the issuance of corrected statements and a corrected printout of the electronic wage tax certificate for the year 2020 – the payment of the full remuneration for the period from March 2020 to mid-June 2020, during which work had been shortened in the defendant's company.
The Siegburg Labor Court granted the claim of the defendant's former employee in full and ordered the defendant company in particular to pay the full remuneration for the "short-time working period" from March 2020 to June 2020. According to the reasons for the decision given by the court, the plaintiff's claim for payment arises from the employment contract and the principles of default of acceptance (Secs. 611a (2), 615 BGB). The defendant had been in default of acceptance with part of the wages because short-time work had not been effectively agreed on with the plaintiff in the defendant's company. The company's letter of March 16, 2020, alone did not constitute a suitable legal basis. The Labor Court emphasized that short-time work may only be ordered by the employer if this is permitted by individual contract, works agreement or collective agreement. In the case of an order without legal basis, there is no entitlement to short-time allowance and employees retain their full wage claim against the employer, who is in default of acceptance of the full work performance of the employees concerned as a result of the invalidly ordered short-time work.
The decision of the Siegburg Labor Court deserves approval. The implementation of short-time work represents a significant interference in the exchange relationship between employer and employee. Therefore, a legal basis is required which permits such an intervention, but which was not evident in the facts underlying the decision of the Siegburg Labor Court. Since a collective agreement or a works agreement on short-time work did not apply in the present case, the defendant company should have entered into effective contractual short-time work arrangements with its employees. However, this did not happen, in particular not in the form of the unilateral notification in the letter of March 16, 2020.
If short-time work is not effectively implemented in terms of labor law, the employer, as the Siegburg Labor Court correctly emphasizes, is in default of acceptance of the work performance (Sec. 615 sentence 1 BGB). The principle of "no remuneration without work" is violated in corresponding cases in favor of the employees, who can thus demand their contractual remuneration even if the work performance is in fact reduced or completely omitted.
The implementation of short-time work is associated with numerous legal pitfalls. If mandatory requirements for ordering short-time work are not met, this can have consequences that threaten the existence of the company in the worst case. It is therefore all the more important to reach suitable and effective agreements with the employees or – if available – with the works council. While the implementation of short-time work in companies with a works council is subject to mandatory co-determination anyway (Sec. 87 (1) No. 2 and No. 3 BetrVG) and is therefore regularly regulated in the form of a works agreement, in companies without a works council it is essential to reach an individual agreement with the employees. Such agreement does not necessarily have to be a "case-by-case decision", but can also stipulate in abstract-general terms the conditions under which the employer can unilaterally order short-time work. In any case, it is essential that employees are not unfairly disadvantaged. This must be ensured, among other things, by the requirement of sufficient notice periods, which must be observed by the employer before the start of or any changes to short-time work.