international employment law firm alliance L&E Global

Germany: Invalid compensation agreement with works council member results in a reimbursement claim of employer

The plaintiff was employed as a newspaper deliverer and was also chairperson of the works council. The works council activity was pursued outside of the regular working hours. In 2015 the employer had to supplement the salary of the newspaper deliverer several times in order to comply with the minimum wage requirements (EUR 8.50, since 1 January 2017 EUR 8.84). In addition to the contractual salary the employer paid compensation for the works council activities, amounting to EUR 18.07 per hour. These payments, however, were not included in the calculation of the continued remuneration for vacation and sickness, which resulted in a court claim of the employee for the relevant amounts. The employer raised a counterclaim regarding a reimbursement of the additional compensation payments.

The Federal Labour Court stated that additional compensation for works council activities outside of working hours is in breach of the prohibition of favouritism stipulated in the Works Constitution Act, if it is not based on objective reasons. Otherwise works council members, who receive such compensation, would be favoured compared to employees who are not able to receive it, especially because the normal salary of the newspaper deliverer at times did not even meet minimum wage requirements. This indicates that his average salary was considerably lower than the agreed upon compensation for the works council activities.

Due to the invalidity of the compensation agreement the employer was entitled to reclaim the payments it had made.

The claim was not excluded because the employer itself was party to the invalid agreement and as such not worthy of protection because it could have foreseen the invalidity. Reason for this is that the prohibition of favouritism does not only serve the purpose of preventing unfair advantages for works council members, but shall also ensure the functionality of the works council and protect the represented employees from the influence of works council members who may have been corrupted by favouritism. A right of the works council member to keep such unlawful payments would be contrary to such purpose of the law.