Silicon Valley | Tuesday, January 14, 2020

DLA Piper Employment Training CLE Session: Germany - Challenges and Trends

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ContentsIns and outs of German employment law

Terminations

Work councils

DLA Piper’s Global Employment resources

DLA Piper presenter biographies

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Ins and outs of German employment law

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In and outs of German employment law

Agenda1. Employment contract1.1 Contract negotiations1.2 Formal requirements1.3 Fixed-term employment2. During employment

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Typically misunderstood topicsHolidayHolidayEmployment relationshipEmployment relationshipRemunerationRemuneration

Notice of terminationNotice of terminationWorks councilWorks council

Dismissal protectionDismissal protection

Employment relationshipEmployment relationshipContract typesContract types

Working timeWorking time SicknessSickness

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Contract initiationMisconception

• A job applicant must always tell the truth in a job interviewClarification

• A job applicant must only answer "admissible" questions truthfullyo "Right to lie"o Might even leave out previous criminal convictions

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Formal requirementsMisconception

• Only written employment contracts are validClarification

• Oral employment agreements are valid if they include essential componentsContracting parties Start date

Activity RemunerationBe aware!

• Special terms and conditions require written form –otherwise they are void or unenforceable• Examples:

o Fixed-term employmento Post-contractual non-compete covenant

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MisconceptionFixed-term employment• Fixed-term employment can be agreed with any employee at any time• Extension of a fixed-term employment contract is possible without restriction

• Fixed-term employment generally requires a reason for the time limitation• Exception: fixed-term up to a maximum of two years does not require a reason

o Cannot be agreed with employee who has previously been employed with the employer• Fixed-term agreement requires written form prior to commencement of employment• A void fixed-term agreement constitutes a permanent employment relationship

Clarification

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In and outs of German employment law

Agenda1. Employment contract2. During employment2.1 Probationary period2.2 Holiday2.3 Secondary employment2.4 Overtime

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MisconceptionProbationary period I• An employer may dismiss an employee without notice and for any reason during the first six months of employment

• Probationary period has to be agreed• Up to a maximum of six months• Notice period of two weeks applies

Clarification

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MisconceptionProbationary period II• If no probationary period is agreed, dismissal protection regulations apply from the first day of employment

• Protection Against Unfair Dismissal Act applies after employment has lasted for at least 6 months• Regardless of agreed probationary period• If no probationary period is agreed, notice period of four weeks to the 15th or the end of a month applies

Clarification

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Holiday I

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Misconception Clarification• No holiday entitlement during probationary period• Sickness during holiday leave is irrelevant• Holiday leave does not have to be granted, but can be paid off instead

• Pro-rated holiday entitlement accrued for each full month• Sick days do not count towards the employee's holiday leave entitlement• Holiday leave cannot be paid off (exemption: end of employment)

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Holiday II

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Misconception Clarification• Requested holiday leave can be rejected for no reason• Holiday leave can be taken away after it has been granted to the employee

• Requested holiday leave can only be rejected for urgent operational reasons • Granted holiday leave may not be taken away (rare exemption: cases of operational emergencies)

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Secondary employment

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Any form of secondary employment can be prohibited in the employment contractVolunteer work may constitute impermissible secondary employmentSecondary employment always requires the main employer's approvalWhich one is correct?

• Generally: freedom to take on secondary employment without approval• Impermissible (even volunteer work) if:

o Employee's working power is significantly impaired oro Secondary employment clashes with the employer's competitive interests.

• Any contractual clause must take this into accounto Otherwise: clause will be considered void

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MisconceptionWorking time• Employees have to work overtime if required by the employer

• Employees only have to work overtime if it has been contractually agreed• Only rare exceptions in special cases

• Working Time Act has to be observed –maximum working hours• Generally, overtime hours have to be additionally remunerated

• Only if approved by the employer beforehand• "Overtime hours covered by basic salary"? Only if the employee can anticipate the amount of overtime hours he will have to work

Clarification

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Terminations

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Terminations

Agenda

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3. Termination of employment3.1 General information on dismissal protection3.2 Notice of termination3.3 Dismissal for conduct3.4 Dismissal during periods of sickness

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German Act on Protection Against Dismissal (KSchG)

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Examples of special protection against dismissal: • During maternity leave• Works council members• Employees with severe disabilities• Apprentices after the probationary period

Applicability Consequences• Six months of employment• At least ten employees in the operation

• Valid dismissal requires social justification• Justification only for specific reasons

o Employee conduct (eg, criminal actions)o Operational reasons (eg, redundancies)o Personal reasons (eg, long sickness)

• Must be ultima ratio and reasonable

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Notice of termination

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Misconception• "You are fired!" • E-mail• Copy of an original• Docusign

Clarification• Original document• Written form required• Wet-ink signed • Authorized representative

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MisconceptionDismissal for conduct I• Dismissal is valid after three written warnings

• Dismissal as ultima ratioo Restrictive means to be executed in advanceo Examples: Warning, notice of termination pending a change of contract

• Valid dismissal for conduct generally requires prior written warning for similar conduct• But:

o Court won't count the number of warningso Severe breach of contract may validate an immediate terminationo The older a warning, the more likely it is to not be taken into consideration

Clarification

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Dismissal for conduct II

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Misconception• Dismissal for bad performance is valid

Clarification• Bad performance generally does not constitute a reason to socially justify a dismissal• Very rare exceptions on a case-to-case basis

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Dismissal during periods of sickness

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Misconception• Employees may not be dismissed while they are sick

Clarification• There is no provision that prevents an employer from dismissing employees while they are sick• In exceptional cases, sickness may even qualify as a reason to socially justify a dismissal

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Work councils

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Works councils

Agenda

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4. Works councils4.1 Establishment and members4.2 Rights of the works council

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Works council I: establishment and members

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Misconception Clarification• Establishment only if 15 or more employees are employed in the operation

• Members of works council can be dismissed if they become unpleasant• Establishment / elections can be prevented or stopped by employer

• Works council may be established if at least five employees are employed in an operation • Employer cannot prevent the establishment or the election of a works council• Members of the works council enjoy special dismissal protection and cannot be ordinarily terminated

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Works council II: rights of the works council

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Misconception Clarification• Employer can enforce any decisions / measures without having to worry about an existing works council• Works council can be forced to agree to employer's ideas

• Co-determination rights need to be observed prior to enforcement• Employer has to reach an agreement with works council regarding certain measures – otherwise, an arbitration board will decideBe aware! Failure to observe works council rights may render a measure void!

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DLA Piper’s Global Employment resources

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DLA Piper’s Global Employment resourcesWe offer a range of additional complimentary services to help our clients reduce risk, improve efficiency and save money, including:

GENIE

A single point of access for employment, labor and pensions law guides covering a wide range of topics for 60+ countries across

Europe, the Middle East, Asia Pacific, Africa and the Americas. Please let us know if you are interested in signing up or receiving more

information about GENIE and its offerings. Global Expansion Checklist

Highlights issues, including corporate set-up and governance, regulatory, tax, commercial and compliance, employment, global equity,

data privacy and intellectual property and technology, for companies to consider when expanding.Guides to Going Global

Domestic and international guides on key employment and labor issues, including our Employment Guide to Going Global, which covers

all of the employment and labor basics in over 60 key jurisdictions across the Americas, Asia Pacific, Europe, the Middle East and

Africa.Be Global Employment Newsletter

This publication provides the latest employment updates around the world. Please let us know if you would like to sign up to receive

future issues, our newsletters and alerts.The Labor Dish

The Labor Dish is an employment and labor blog about legal issues important to US employers. Please let us know if you would like to

subscribe to the blog.

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DLA Piper’s Global Employment resourcesWe offer a range of additional complimentary services to help our clients reduce risk, improve efficiency and save money, including:

Top 5 Labor and Employment Law Issues When Taking Your Startup Global

Reviews five critical issues for growing employers to consider before going global.

Top 10 Pitfalls in Managing Employment Contracts as You Go Global

Discussion of 10 important pitfalls to be aware of as you develop your global employment documentation.

Global RIFs: A Checklist Approach

For a checklist to implementing global RIFs.

Data Protection Laws of the World Handbook

A handbook offering a high-level snapshot of selected aspects of data protection laws across the globe, covering over 70 jurisdictions.

Legal Privilege Guide

In this handbook, organized by country, we point out policies that companies operating internationally should take into account when

defining their internal communication policies and legal strategies.

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DLA Piper presenter biographies

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Dr. Kai Bodenstedt focuses on providing legal advice to international corporate clients on all aspects of employment and labor-related projects and disputes.

Kai has particular experience in advising international companies in dealing with works councils (local works councils and European Works Councils). He has gained experience in representing employers in high-profile cases before reconciliation boards to negotiate on consultation obligations towards works councils and at labor courts in both works-council and individual employment law-related issues at local and higher labor courts and at Germany’s Federal Labor Court.

Kai heads DLA Piper’s German Employment group.

Kai BodenstedtKai BodenstedtPartnerHead of Employment, GermanyT: +49 40 188 88 158F: +49 40 188 88 111M:+49 17 224 95 904Alter Wall 4, 20457, Hamburg, Germanykai.bodenstedt@dlapiper.com

Education First state exam Johann-Wolfgang Goethe Universität, Frankfurt am MainSecond state exam Higher Regional Court of HamburgDr. jur. (Bucerius Law School, Hamburg)Certified Specialist for Labor Law: Hamburg Bar; LL.M.

Professional QualificationsRechtsanwalt admitted with HanseatischeRechtsanwaltskammer Hamburg

LanguagesGermanEnglish

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Ute Krudewagen focuses on providing multinational companies with solutions to the challenges presented in managing a global workforce. In addition, she counsels companies on employment issues triggered by cross-border transactions.

Ute advises international and cross-border clients on a broad range of complex global employment matters, serving as trusted advisor and managing international counsel for a broad range of multijurisdictional and multidisciplinary projects. Her vast experience includes advising on global background checks, employment and independent contractor agreements, discrimination and harassment claims, social media issues, global policies and procedures, non-compete and proprietary information agreements, works council and union issues, codes of conduct and social responsibility, workplace privacy, employee assignments and global mobility programs, global reductions in force, restructurings and severance and retention plans.

Ute also counsels global employers on the issues associated with transactions, including cross-border mergers and acquisitions, outsourcing, post-acquisition integrations and tax restructurings. She has successfully addressed employment issues in transactions with workforces in more than 60 jurisdictions in one transaction, with deal values ranging from US$2 million to US$8 billion, including negotiation and drafting of the deal agreement, employee transfers, consultations with unions and works councils, benefits harmonization, interim operating models and acquisition-related downsizings.

Her experience includes advising both emerging growth companies and Fortune 500 companies across a wide spectrum of industries and jurisdictions across the globe, including technology/software, fashion/retail, pharmaceuticals, life sciences, energy, manufacturing and distribution, and energy, as well as banking and finance.

Ute KrudewagenUte KrudewagenPartnerCo-Chair, International Labor and Employment practiceT: +(1) 650 833 2245F: +(1) 650 687 1245M:+(1) 650 521 41032000 University Avenue, East Palo Alto, California, 94303-2214, United Statesute.krudewagen@dlapiper.com

Education University of California at Berkeley LL.M.University of Cologne J.D.University of Cologne Dr. iur., summa cum laude

AdmissionsNew YorkCalifornia

LanguagesGermanSpanish

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Thank you

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