Germany: 2023, Looking ahead

In 2023, Looking ahead, we explore the most important trends and developments related to labour and employment law in Germany.

Litigation:

• BAG (Federal labour court) – Decision dated 13 September 2022 – 1 – ABR 22/21: Recording of working time: According to Section 3 (2) No. 1 of the Occupational Health and Safety Act (Arbeitsschutzgesetz –  ArbSchG), the employer is legally obligated to systematically record the working hours of the employees. With this ruling, the BAG ties in with the much-noticed so-called time clock ruling of the ECJ of 14 May 2019 (Ref.: C-55/18). Under current German law, the employer is only obligated to record the employees’ daily working time exceeding eight hours and the entire working time on Sundays and public holidays. The recent BAG ruling further increases the pressure on the German legislator to implement the ECJ ruling. Employers should monitor the further developments in case law and the legislative process. At the moment, the failure to implement a system for the recording of all working hours cannot be directly penalized by a fine (unless the competent authority directed the individual employer to implement such system), but individual employees could raise individual claims for working time recording.

• Vacation and statute of limitations: According to ECJ ruling dated 22 September2022 – C-120/21 -, the regular statute of limitations with regard to the statutory vacation entitlement does not begin to run if the employer has not enabled the employee to actually take the vacation. The employer must therefore comply with its obligation to provide information on the remaining vacation entitlement and its expiry, otherwise the limitation period does not begin to run. This new case law also calls into question the effectiveness of expiry clauses in employment contracts, as these usually do not contain any exception for vacation entitlements. Employers are advised to ensure they routinely inform employees about remaining vacation entitlements as well as the rules for their expiry and enable employees to actually take their vacation.

• Discrimination of part-time employees through common overtime clauses? Many collective bargaining agreements (CBAs) in Germany provide that overtime surcharges only become due when employees work more than the regular full-time working hours. It is disputed in Germany whether this constitutes a discrimination of part-time employees, for whom it will be more difficult in practice to obtain these surcharges compared to full-time employees. The BAG has now submitted various questions for a preliminary ruling to the ECJ. The ECJ decision is pending.

Legislation:

• Protection of whistleblowers: German transposition act expected in 2023: Since 2019 Germany was expected to implement the EU Whistleblower Protection Directive (2019/1937). After the implementation period expired in 2021, the German legislature was under pressure to finally comply with the implementation obligation. Finally, on 16 December 2022 the Parliament passed the draft of a Whistleblower Protection Act (Hinweisgeberschutzgesetz – HinSchG) which aims to implement the conditions found in the EU-directive. This national transposition act is expected to come into effect in April 2023.

The Act protects everyone that acquires and reports relevant information in the context of an employment relation. This includes applicants and former employees if they acquired the information during their interaction with the employer. Main mechanism behind the protection of whistleblowers will be the implementation of reporting systems that enables employees to report certain grievances, e.g. matters of criminal law, environmental protection and product safety. Besides the internal reporting systems in the companies there is also going to be an external one at the Federal Ministry of Justice.

Companies with more than 50 employees are obliged to set up such a reporting system. For companies with less than 250 employees there is an implementation period until 17 December 2023. However, certain types of companies in the financial services sector are obliged to implement the reporting system regardless of the numbers of employees.

For the implementation of the reporting system companies are allowed to use third parties like law firms.

Besides that the Whistleblower Protection Act prohibits sanctioning an employee for whistleblowing. As a consequence, it provides that the burden of proof lays with the employer for instances in which there is e.g. a termination after a whistleblowing. The employer then has to prove that the termination is not a reaction to the whistleblowing.

Non-compliance with the duty to implement a reporting system can be penalized with a fine of up to 20.000 EUR, sanctioning an employee for Whistleblowing can result in a fine of up to 100.000 EUR.

Companies  – in particular those with more than 250 employees – are strongly advised to prepare for the implementation of an appropriate reporting system.

• Electronic notification procedure for incapacity to work due to sickness: Since 1 January 2023, the electronic certificate of incapacity to work replaced the previous procedure of issuing a printed certificate of incapacity to work to the employee, which the employee then submitted to the employer. The physician issuing a certificate of incapacity for work now submits it to the competent health insurance fund. The employer has to retrieve the relevant data on the employees’ incapacity for work directly from the health insurance fund. Therefore, employees no longer have to submit a certificate of incapacity for work to their employer, but only have to notify the employer of their absence due to sickness. Exceptions apply for employees in private health insurance and for doctors who are not contract physicians of the statutory German health insurance (e.g. doctors practicing abroad).

• New Skilled Worker Immigration Act: The German government is working on a new Skilled Worker Immigration Act, which shall make it easier for skilled workers from abroad to work in Germany. For example, the income thresholds for the EU Blue Card shall be lowered and a recognized qualification shall entitle to any qualified employment in non-regulated professions (the latter shall make it easier for employers to assess whether a qualification qualifies for the intended employment).