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Germany: Legally effective introduction of short-time work requires legal basis in the concrete employment relationship

Recently, a German labour court had to rule on a case in which an employee sued his employer for full payment of hie remuneration. The plaintiff was employed as a bus driver in a company that did not have a works council. In March 2020, the employer informed the plaintiff that short-time work will have to be implemented in various areas of the company and that this will affect the plaintiff as well. No agreement about short-time work was concluded with the employee and his employment contract did not contain a clause allowing the employer to unilaterally instruct short-time work.

The employer reduced the employee’s salary from March 2020 onwards and designated payments as “short-time allowance” in the pay slips issued. The employee terminated the employment relationship himself without notice and sued for his full salary.

The labour court ruled that the employee was entitled to full pay, as there was no legal basis for the implementation of short-time work. The employer was neither entitled to unilaterally instruct short-time work under the existing employment contract, nor did he conclude an effective individual agreement on short-time work with the employee. Furthermore, works agreements on short-time work could not be concluded, as a works council did not exist, and the applicable collective agreement did also not contain any provision regarding short-time work. Thus, the implementation of short-time work was inadmissible, and the employer had to pay full remuneration.

This ruling shows that employers may not simply introduce short-time work, even in the extraordinary situation many are facing due to the current pandemic but must make sure a valid legal basis exists. In establishments without a works council and applicable collective agreements, employers must try to reach an agreement with the individual employee. In case the employee refuses to agree, employers have the option of issuing a dismissal with the option of altered conditions of employment. The altered conditions would include the possibility to implement short-time work. The legal prerequisites for such dismissals are high, but it is possible, as a recent ruling by the labour court Stuttgart shows. The court upheld an extraordinary termination with the option of altered conditions, with which the employer wanted to introduce short-time work vis à vis an employee who had refused to conclude a mutual agreement.


For more information on these articles or any other issues involving labour and employment matters in Germany, please contact Dr. Tobias Pusch (Partner) of Pusch Wahlig Workplace Law at pusch@pwwl.de or visit www.pwwl.de.