Thematic feature - individual labour/employment disputes and the courts
This article examines how individual labour/employment disputes are handled through the courts in Germany, as at March 2004.
In March 2004, the EIRO national centres in 24 European countries were asked, in response to a questionnaire, to give a brief overview of their country's system for dealing with individual labour/employment disputes through the courts, along with data on: the volume of cases; the costs; the timeframe; alternatives to going to court; and any current debate on these issues. The German responses are set out below (along with the questions asked).
Please give a brief description of how disputes concerning individual employees' employment and labour rights are handled in your country by courts, tribunals or other official judicial bodies.
In Germany, labour law concerns the rules that are applicable to the employment relationship and that structure the collective relationship between employers and labour. Individual labour law focuses on the individual employment relationship, while collective labour law focuses on the structure of industrial relations. Despite this seeming dichotomy, the two areas are closely interrelated. In particular, the distinction between individual and collective labour disputes is of no relevance for the jurisdiction of the labour courts: their jurisdiction covers both types of disputes. In Germany, labour courts are the principal mechanism of conflict resolution, in individual as well as in collective labour disputes.
Labour law is applicable only to relationships based on private contract. Career public servants (Beamte), in the strict sense of the term, are excluded from labour law. The relationship between career public servants and the state is not a private contractual relationship, but is defined by, and based on, public law. This is why the law on career public servants (Beamtenrecht) is considered to be a special section of public law. Disputes concerning career public servants are not settled by labour courts, but by administrative courts. Nonetheless, labour law covers a part of the public sector, namely the blue- and white-collar workers employed in the public service: 'These public employees are ordinary employees with a normal contractual employment relationship and are therefore covered by labour law' (Labour law and industrial relations in Germany, Manfred Weiss and Marlene Schmidt, Kluwer Law International, The Hague, London and Boston, 3rd revised edition, 2000).
The German labour court system is three-tiered: labour courts of first instance (Arbeitsgerichte); higher labour courts (courts of appeal) in the second instance (Landesarbeitsgerichte); and, at the top, the Federal Labour Court (Bundesarbeitsgericht), which has the final say in labour law matters (only cases that are believed to infringe constitutional rights may be sent, on further appeal, to the Federal Constitutional Court). These courts deal with private law disputes involving statutory rights - such as wrongful dismissal, infringement of works council procedures, disputes over wage payments and the interpretation of collective agreements (see below). In other words: 'Labour courts have exclusive jurisdiction in matters involving civil legal disputes between employer and employee arising from an employment relationship, in questions relating to the existence or non-existence of an employment contract, as regards obligations remaining after the dissolution of an employment contract, and, in addition, in civil legal disputes involving torts, in so far as these are connected with the employment relationship. This means that labour courts have exclusive jurisdiction over virtually all legal conflicts between employer and employee arising from the employment relationship. In this context the notion employee includes manual workers, white-collar workers, apprentices and even employee-like persons' (Weiss and Schmidt, 2000, cited above).
Each labour court contains a mixture of professional and lay judges. A labour court of first instance is composed of one professional (Berufsrichter) and two lay members (ehrenamtliche Richter) drawn mainly from representatives nominated by employers' organisations and trade unions. According to the law, the organisations nominating the lay judges are prevented from exerting influence on the courtroom decisions of the lay judges. In practice, however, this may be different. In the process of decision-making, the votes of the lay members carry as much weight as those of professional judges, which at least theoretically opens up the possibility of the professional judges in the labour courts of first instance and courts of appeal being outvoted. This, however, seems to happen only very rarely, reportedly because the extensive, and sometimes very complicated, regulation of industrial relations in Germany gives the professional judge the upper hand vis-à-vis the lay judges.
Representation by counsel is optional in labour courts of first instance. It is, however, required at higher levels - that is to say, the parties involved in the dispute must be represented either by an attorney, or by an employers’ association official, or by a trade union official. Any attorney admitted to practise in Germany can represent clients before any labour court of any instance.
Social security cases are heard by separate courts. This is due to the fact that social security law in Germany is strictly separated from labour law, and is understood to be a part of public law. Therefore, disputes arising in the field of social security are not settled by labour courts (or administrative courts), but by special social security courts (Sozialgerichte). Around 250,000 cases are heard by social security courts each year; the large majority of these cases deal with questions concerning either the statutory pension scheme or unemployment insurance or total disability law. As the focus of this article is on labour courts, these social security courts will not be dealt with in any greater detail here.
Civil law courts play a role mainly in two respects. First, all problems relating to the field of workers’ representation on company supervisory boards are dealt with by the civil courts (this is because civil courts are responsible for the settlement of company law cases, and workers’ representation is partly embedded within the traditional structures of company law). Second, civil courts decide disputes of rights referring to the internal structure of trade unions and employers’ associations. For example, disputes concerning whether or not a union member can be excluded or not are decided by the ordinary civil courts (see Dispute resolution systems in EU state nations and their practices, Rolf Birk and Bernd Waas, Institute for Labour Law and Industrial Relations in the European Union Discussion Paper, Trier, 1997).
Unlike in some other countries, in Germany not only trade unions, but also - and, indeed, first and foremost - individual employees can be parties on the labour side to cases heard in labour courts. In other words, trade unions have no means of preventing an employee from going to court. Most lawsuits are initiated by individual employees, unions or works councils - see table 1 below.
|Cases still pending at the beginning of the year||99,975||262,599||199,469|
|New cases, of which:||325,969||659,185||625,323|
|initiated by employees, trade unions or works councils||315,902||637,486||607,467|
|initiated by employers or employers’ associations||9,841||21,373||17,417|
|initiated by state agencies||226||326||439|
|Total number of cases||425,944||921,784||824,792|
Source: Federal Ministry of Economics and Labour (Bundesministerium für Wirtschaft und Arbeit, BMWA) 2003; Weiss and Schmidt, 2000, cited above.
Labour court proceedings aim to be simple, speedy and inexpensive. Therefore, every case brought before a court of first instance begins with a conciliation hearing (Gütetermin), heard by the chair sitting alone. The purpose of this procedure is to achieve an amicable settlement - a compromise between the parties - without recourse to a formal hearing. If a settlement is concluded at this stage, the court will generally not charge court fees other than the initial filing fee. Although each party must meet its own costs for legal representation in a labour court of first instance, the losing party will have to pay court fees plus witness expenses. In the other labour courts, the losing party must bear the attorney fees of both parties. However, if one of the parties is unable to pay the costs of the proceedings without jeopardising his or her family’s income, state legal aid is, under certain conditions, available (for details, see Weiss and Schneider, 2000, cited above).
Cases are not generally expected to go to mediation before being heard by a labour court. The only exceptions are, first, if the case concerns vocational training or, second, if mediation is built into a relevant collective agreement.
There is an automatic right of appeal for all cases before the labour courts of first instance within one month, provided that: the award is in excess of EUR 600; or the existence or termination of an employment relationship is at stake; or appeal is explicitly admitted by the labour court of first instance. A right to appeal must be granted if either: the dispute is of fundamental importance or deals with matters relating to collective bargaining in the wider sense; or the decision of the labour court of first instance is, amongst other points, based on a deviation from an earlier decision of a higher labour court.
The higher labour court reviews the case in complete detail, both on points of law and on matters of fact. Normally, an appeal to the Federal Labour Court requires consent either from a higher labour court or (on complaint) from the Federal Court itself; this consent has to be issued within one month of the ruling by the higher labour court. The appeal may be based on points of law (Berufung) in the case of civil proceedings and through a petition for review (Beschwerde) in the case of collective proceedings (that is, all matters arising in connection with the Works Constitution Act). The Federal Labour Court gives decisions only with regard to questions of law. German labour court proceedings recognise two forms of appeal.
Number of cases/disputes and costs, and litigation timeframe
How many cases have been dealt with in your legal system by each category of court? Where possible, please provide statistics on the number of disputes in your country each year from 1990 to 2003 (or the latest year for which data are available). Where possible, please provide statistics on costs.
Where possible, please provide statistics on the timeframe within which court cases over individual labour/employment disputes are settled.
Information on the overall number of new and pending cases before labour courts of first instance is provided in table 1 above. Table 2 below breaks down the labour court of first instance cases closed each year by the issue concerned.
|Type of dispute||1990||1991||1992||1993||1994||1995||1996||1997||1998||1999||2000||2001||2002|
|(Correction of) certificate of employment||10,203||10,775||11,417||11,910||12,457||14,089||15,395||15,939||17,585||21,254||23,425||25,878||27,908|
|Holidays, holiday bonus||12,306||12,932||13,034||12,308||12,908||16,533||17,209||19,331||19,307||23,399||20,026||22,741||19,819|
|Total closed cases*||320,298||330,298||383,545||441,920||472,816||621,460||656,207||672,804||625,462||589,531||574,644||582,598||610,079|
* The sum of closed cases by type of dispute is higher than closed cases in total due to multiple claims in some cases.
Source: Federal Statistical Office (Statistisches Bundesamt, destatis), various years.
Tables 3 and 4 below give figures for how long cases before labour courts of first instance take to be dealt with.
|% of cases closed after 6 months||86||85||82||81||77||76||78||75||75||73||81||82|
|% of cases closed after 12 months||97||97||97||96||95||94||95||95||94||90||96||97|
|No. of pending cases at end of year||105,646||117,531||149,797||185,055||176,410||243,509||262,572||248,980||208,178||192,539||187,001||199,564|
Source: Destatis; various years.
|Duration from filing complaint until settlement - dismissal cases|
|Duration from filing complaint until settlement - all other cases|
|Disputes not yet settled at end of year||105,646||248,980||214,713|
Source: BMWA 2003; Weiss and Schmidt, cited above, 2000.
Tables 5 and 6 below provide similar data on the number and duration of appeals in higher labour courts.
|Total no. of closed cases||16,019||14,823||15,643||17,963||20,202||26,646||25,133||27,062||29,109||27,134||25,224||22,701||21,145|
|% of cases closed after 6 months||72||71||73||72||68||60||60||62||59||56||62||64||na|
|% of cases closed after 12 months||91||91||92||91||90||86||86||88||87||86||88||89||na|
|No. of pending cases at end of year||7,700||7,802||9,234||11,084||11,711||15,016||15,866||17,280||16,191||14,145||11,970||11,221||11,356|
Source: Destatis, various years.
|Appeals still pending at beginning of year||7,936||15,865||11,221|
|Appeals settled within the year:||16,019||27,062||21,145|
|Duration from filing until settlement - dismissal cases|
|Duration from filing until settlement - all other cases|
|Appeals not yet settled at end of the year||7,744||17,280||11,356|
Source: BMWA 2003; Weiss and Schmidt, cited above, 2000.
Finally, tables 7 and 8 below provide data on the number and duration of cases in the Federal Labour Court.
|Total no. of closed cases||1,494||1,437||1,386||1,615||2,195||2,184||2,221||2,086||2,284||1,996||2,054||1,862|
|% of cases closed after 12 months||64||62||68||72||60||51||44||36||45||42||41||47|
|% of cases closed after 24 months||99||92||96||93||95||96||87||95||100||100||99||97|
|No. of pending cases at end of year||805||891||813||1,163||1,343||1,258||1,151||1,153||1,163||1,136||1,095||1,077|
Source: Destatis, various years.
|Appeals still pending at beginning of year||675||858||783|
|Appeals settled within in the year:||715||775||849|
|In cases of appeals settled by judgment on merits of the case, duration between filing appeal until settlement:|
|Appeals not yet settled at end of the year||618||857||629|
Source: BMWA 2003; Weiss and Schmidt, cited above, 2000.
The figures above for the ordinary labour courts show a significant increase in workload between 1990 and 1997, but a notable fall thereafter. As a consequence, the period it takes for cases to be settled increased until 1997, but decreased after that date. As far as the issues covered are concerned, the number of cases regarding dismissals, remuneration and classification is very high (the data source does not give any further information on the content of the 'others' category). With regard to the number of appeals to higher courts, there was, as with the general workload, a rise in the period between 1990 and 1997, and a decline in the number of appeals thereafter.
The Federal Ministry of Economics and Labour (Bundesministerium für Wirtschaft und Arbeit, BMWA) is responsible for publishing statistics on labour court issues. Detailed statistics on costs are not available in its current official data (Ergebnisse der Statistik der Arbeitsgerichtsbarkeit 2002, Bundesministerium für Wirtschaft und Arbeit, Referat III A 1, Berlin 2003).
Other means of resolving individual disputes
Is there any kind of legal mechanism forcing or encouraging the two parties (management and employees) to resolve a dispute by prior negotiation? Where there is such a mediation process foreseen, please give details. Is there any evidence that mediation has had an effect on the volume of claims handled by courts? Are there any corporate policies built into the structure of organisations in your country specifically to deal with disputes? How are the employees’ representative bodies involved in the process?
Labour courts have jurisdiction in disputes of rights. In matters of individual labour law, the jurisdiction of the labour courts comprises all types of cases listed in the Labour Courts Act. In most of these cases, the labour courts have exclusive jurisdiction. In other words, even if the participants wish, the case may not be heard by a different court. Only a small amount of leeway exists within which the conflicting parties can decide if they wish to have the case heard by a labour court or by an ordinary court of civil law.
Nonetheless, arbitration as an alternative or supplementary means of resolving disputes of rights exists in Germany. This is true even if it is only in rare and exceptional cases that arbitration tribunals may give decisions in the place of labour courts. Provision is made for private arbitration only where the people covered by a collective agreement are stage, screen or variety artists or members of a ship’s crew, and only when provision is made in the collective agreement for a decision to be given by an arbitration tribunal. Beyond this, however, a further important area of arbitration exists. The Works Constitution Act (Betriebsverfassungsgesetz) provides for arbitration in disputes of interests between works councils and the employer. The arbitration system was introduced through an amendment of the Works Constitution Act in 1972. If employer and works council disagree with regard to the justification of a complaint by an employee, who has reason to believe that he or she has been treated unfairly, has been discriminated against, or has otherwise been put at a disadvantage by the employer or by other employees at the plant, the works council may appeal to an arbitration committee. The arbitration committee consists of a certain number of members appointed by the employer and an equal number that is appointed by the works council, with an independent chair as the president of the committee. The number of members is determined by agreement between the employer and the works council. If the parties concerned fail to reach an agreement on the dispute, either side may request that the labour court decide the matter. Typical conflicts might include the conduct of workers, or the beginning and end of working hours (see Birk and Waas, 1997, cited above).
The procedure to be followed by an arbitration committee depends on whether the conflict involves a conflict of rights or a conflict of interests. If the complaint involves a conflict of rights, the decision of the arbitration committee can only serve as a recommendation to the employer and works council on how the case should be settled. In a conflict of interests, the decision of the arbitration committee supersedes any agreement between employer and works council. Either of these two bodies may appeal to the labour court, however, arguing that the arbitration committee has exceeded its jurisdiction.
In practice, at establishment level the initiation of the abovementioned complaint procedure as established in the Works Constitution Act is the exception rather than the rule. According to Weiss and Schmidt (2000, cited above), 'employees prefer to settle complaints, which do not end up in a lawsuit, on the shop floor with the personnel management and without any subsequent formal procedure whatsoever.'
Please summarise any current debate on the issue of employment/labour disputes litigated by courts in your country.
Generally, the subject of individual disputes at workplace level that are settled by courts is currently not a matter of heated debate in Germany. For example, the involvement of the social partners in the labour courts appears not to be questioned. There has not, recently, been any major new legislation specifically on the subject. Furthermore, a recent survey article pays no specific attention to this subject ('Recent developments in German and European labour law', Manfred Weiss, in The changing contours of German industrial relations, Walther Müller-Jentsch and Hansjörg Weitbrecht (eds), Rainer Hampp Verlag, Munich and Mering, 2003).
In the course of recent amendments of labour law, however, the idea was mooted of merging labour (and social) courts and ordinary courts - partly in order to save costs. The permanent committee of the ministers of justice of the German states (Länder), who are competent in this regard, have discussed this idea. It is, however, not clear at the moment if these discussions will result in new legislation. The German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) rejects this approach, even if no plans currently exist to change the involvement of the social partners in the courts, arguing: 'The incorporation of social and labour courts in administrative and ordinary courts would strongly threaten the continuity and acceptance of the current judgments. Social balance in conflicts is especially important during the current reconstruction of the social security system and the labour market. The contribution of judgments to this process should not be threatened.'
A further debate concerns the question of whether or not collective actors should have a specific right to take legal action (Verbandsklagerecht). DGB, for example, demands such a right to take legal action against what it sees as discrimination (DE0308101T). The Confederation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA), however, rejects such a right for associations.
The focus of discussions amongst employers’ federations has been on the more general costs linked to labour law and on the rising costs to firms that have resulted from recent changes in legislation with regard to, for example, the re-regulation of part-time working. These new regulations grant employees the right to demand part-time work, and this request can be refused only if the company can show that its urgent needs prohibit such part-time working. BDA supports, in general, fewer regulations in labour law. The BDA states: 'Labour law in Germany is currently highly complicated, extremely difficult to understand and unpredictable. It costs companies, especially small and medium-sized enterprises, time and money without positive effects for workers and job seekers on the other side of the balance sheet ... There can be no sustained expansion of employment without deregulation and a thinning of the forest of labour law. With this objective, BDA represents the interests of the German business community in all legislative proposals linked to labour law ... The tasks of BDA’s labour law department include a continuous analysis and interpretation of the current jurisprudence of labour courts and its implications for companies. BDA comments on new legislative rules and gives advice on how to apply them in day-to-day business practice.'
At the labour courts of first instance, trade unions provide legal counsel to their members at no cost: 'This, by the way, is for many employees the main reason for joining a trade union. Hence, trade unions serve in a way as a sort of legal expenses insurance' (Weiss and Schneider, 2000, cited above). In the higher labour courts of second instance, a union member may again be represented by legal counsel offered by his or her trade union free of charge. At this level, however, union membership does not automatically give the right to free legal counsel as the trade union decides in each case whether or not it is willing to offer legal aid for the second instance. This decision depends, for example, on the union’s evaluation of the member’s chances of winning the dispute. In 2003, DGB’s insurance scheme that covers legal fees (DGB Rechtsschutz GmbH) gave legal counsel to 164,600 trade union members at labour and social courts. The main areas covered concerned dismissal and remuneration disputes, and issues involving pensions, unemployment insurance and severe disability.
Finally, the labour courts do not have a formal say in the process of legislating in the field of labour law. There are major areas in German labour law, however, where no legislation exists at all; the law on strikes and lock-outs possibly forms the most important example. The courts fill these gaps by 'inventing' 'judge-made law' (richterliche Rechtsfortbildung) that is basically drawn from more fundamental principles such as the constitutional rights granted in the German Constitution. (Lothar Funk, Cologne Institute for Business Research, IW)