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Businesses and pinpoint accuracy of sick leave
Companies are currently complaining about high levels of sickness absence, often at specific points in time, for example following a termination of employment. In such cases, doubts can arise as to whether the incapacity for work actually exists. Do employers always have to accept these certificates of incapacity for work?
Medical certificates of incapacity for work
generally have a high evidential value. Nevertheless, an employer may have doubts as to whether the employee is unfit for work, especially in situations where the time of the illness is almost ‘too’ convenient, such as around school holidays, on bank holidays or after a dismissal. However, the employer does not always have to accept a certificate of incapacity for work if there are serious doubts.
In the case of serious doubts
about the accuracy of a medical certificate, the employer can undermine the probative value of the certificate with corresponding consequences under labour law, such as refusal of continued payment of remuneration or, in extreme cases, dismissal. These doubts may exist (and the probative value of the certificate may be undermined), for example, if the incapacity for work coincides exactly with the period of notice. If the employer can prove the serious doubts, the burden of proof is reversed and the employee must then prove that they were unable to perform the work they actually owed as a result of the specific illness. This is because not every illness automatically leads to an inability to work. For example, sedentary secretarial work can also be carried out with toe in a cast. In such cases, the employee must then release the doctor treating them from their duty of confidentiality and explain specifically which illnesses and health restrictions were present, as well as which behavioural measures or medication were prescribed by the doctor and why these do not permit the actual work performance owed.
The Kreuzer tip
Doubts about a certificate of incapacity for work that is too precise can lead to the employee having to prove their incapacity for work over and above the certificate.Legal advice is therefore urgently required in order to examine the procedure to be followed in the event of doubts about certificates of incapacity for work (as well as any consequences under labour law).
If you have any further questions, please do not hesitate to contact us.
Companies and the application of the Dismissal Protection Act during the probationary period
When companies hire new employees, they want to be sure that they can test the skills of the new employees, but that they can also part ways with these employees if they do not fulfil expectations.
The agreement of a probationary period
is a good way of fulfilling this aim. This period can be up to six months by law, although it should be noted that collective agreements may deviate from the norm and special rules apply to certain employees, such as pregnant women. The probationary period and its exhaustion are generally a matter for negotiation between the parties to the employment contract. The notice period during this period is two weeks, i.e. it is shortened, even if the works council – if it exists - must be consulted. Furthermore, no reason for dismissal has to be given.
The Dismissal Protection Act
is generally applicable in companies with more than ten employees (possibly as few as five in the case of long-established employees). In this case, special requirements must be observed in the event of a dismissal, which means a considerable amount of work. In companies where the Dismissal Protection Act applies, for example, contractual dismissal for operational reasons must be socially justified. This means that, among other things, a specific reason for dismissal (e.g. loss of working place) must be presented in detail and a correct social selection must have been made. However, a further requirement for the application of the Dismissal Protection Act is that the employment relationship must have existed for at least six months. This means, however, that a dismissal is possible within this six-month period without observing the above-mentioned special requirements.
The Kreuzer tip
The agreement of a probationary period is a good addition to new employment contracts from the point of view of the shortenable notice period. Legal advice is therefore urgently required in order to examine the structuring options for a probationary period agreement (including provisions under collective bargaining law) in companies with more than 10 (or 5, see above) employees.
Company Acquisition at a Glance
A large number of companies are already up for sale today, but the number will only increase in the coming years due to the retirement of the baby boomer generation. Even if there are differences in the details (especially when comparing partnerships and corporations), some more general points should always be taken into account.
The confidentiality obligation
also known as a non-disclosure agreement or confidential disclosure agreement, should always be included at the beginning of negotiations and the exchange of company information, but at the latest before the start of due diligence. After all, the process includes the exchange of internal company information and other data which is not intended for the public, so that the buyer can examine the technical, financial and legal details of the company from the point of view of the company's intrinsic value. From a legal perspective, e.g., all existing contracts have to be analysed for risks relevant to the purchase price.
At the end of this review, the purchase agreement is signed,
in the form of an asset deal (for assets and sole proprietorships) and/or a share deal (for shares in corporations). There are numerous points to consider here, particularly with regard to the contracts to be taken over, guarantees, and the liability for liabilities stemming from the past. In the case of partial share sales, it is also necessary to check whether managing director contracts need to be amended, as shareholder-managing directors can become normal employees in the case of partial share sales. There are also numerous options for structuring the exit of the previous shareholder, especially if company shares are initially only to be partially transferred and the exit is only to take place after a certain period. Constellations in which investors are to be taken on as shareholders with a simultaneous capital increase are comparably complex. This may even entail a change in the legal form, or at least provisions on holding and purchase options.
The Kreuzer Tip
A company acquisition presents the parties involved with numerous legal issues and problems, but also offers many structuring options in the various phases from the initial discussions to the sale. Legal advice is therefore urgently required.
Companies in the estate - Part 1
A large number of companies and company shares are already being inherited, but this will increase in the coming years. This can lead to problems for a community of heirs.
Succession to the company
or to a company share can be provided only for certain co-heirs. This procedure is recommended if this successor is already involved in the company and the other co-heirs lack the interest and qualifications for succession. In addition to such a testamentary arrangement, a corresponding provision should be included in the partnership agreement - insofar as this is possible under company law - so that the succession is clearly regulated.
Alternatively, the testator may not make any specific arrangements for the company or the company share. In this case, however, the co-heirs generally succeed jointly and in accordance with their co-heir quota. It is up to the community of heirs to decide whether the company or company share is managed jointly or by an administrator until the community of heirs is divided.
In any case
the company or the company share is a ‘normal’ object of the estate. Two aspects in particular play a special role in the dispute: On the one hand, it is decisive whether or not the value should be taken into account in the event of a specific succession arrangement. Secondly, it must be clarified how the value of the company or the company share is to be calculated. In view of the fact that a comprehensive reform of company law took place at the beginning of the year, which in particular also contained changes with regard to the continued existence of the company, it should be checked whether the testamentary and company law arrangements and contracts are still up to date.
The Kreuzer tip
The inheritance of a company or a company share in a community of heirs presents the testator with numerous legal questions and problems, but also offers many structuring options in the various phases. Legal advice is therefore urgently required so that arrangements can be found that do not lead to disputes between the heirs and jeopardise the existence of the company.
Companies in the estate - Part 1
A large number of companies and company shares are already being inherited, but this will increase in the coming years. This can lead to problems for a community of heirs.
Succession to the company
or to a company share can be provided only for certain co-heirs. This procedure is recommended if this successor is already involved in the company and the other co-heirs lack the interest and qualifications for succession. In addition to such a testamentary arrangement, a corresponding provision should be included in the partnership agreement - insofar as this is possible under company law - so that the succession is clearly regulated.
Alternatively, the testator may not make any specific arrangements for the company or the company share. In this case, however, the co-heirs generally succeed jointly and in accordance with their co-heir quota. It is up to the community of heirs to decide whether the company or company share is managed jointly or by an administrator until the community of heirs is divided.
In any case
the company or the company share is a ‘normal’ object of the estate. Two aspects in particular play a special role in the dispute: On the one hand, it is decisive whether or not the value should be taken into account in the event of a specific succession arrangement. Secondly, it must be clarified how the value of the company or the company share is to be calculated. In view of the fact that a comprehensive reform of company law took place at the beginning of the year, which in particular also contained changes with regard to the continued existence of the company, it should be checked whether the testamentary and company law arrangements and contracts are still up to date.
The Kreuzer tip
The inheritance of a company or a company share in a community of heirs presents the testator with numerous legal questions and problems, but also offers many structuring options in the various phases. Legal advice is therefore urgently required so that arrangements can be found that do not lead to disputes between the heirs and jeopardise the existence of the company.
Companies in the estate - Part 2
A large number of companies and company shares are already being inherited, but this will increase in the coming years. This can lead to problems for a community of heirs.
Before the death
extensive arrangements can already be made in order to minimise problems in the context of the inheritance law settlement of the community of heirs and to ensure the smoothest possible continuation of the company. In particular, care should be taken to ensure that testamentary provisions and company law provisions run in parallel. In particular, a fundamental decision can be made as to whether the succession should be specifically arranged or ultimately be in the hands of the community of heirs. If the sucession is to be allocated to certain co-heirs, it should also be clearly clarified whether or not this value is to be taken into account in the settlement of the community of heirs.
After the death
difficulties arise above all in the valuation of the inherited company or company share and as a consequence of the principle of joint administration. The chosen valuation method can have a significant impact on the overall estate value and the equalisation claims between the co-heirs. Ambiguities in the testamentary disposition with regard to chargeability can lead to considerable disputes. The (partial) division of the community of heirs also harbours the problem of how the management of the company or the company shares is to be taken into account. Disagreement between the co-heirs can even lead to the company being terminated or sold to third parties, as no agreement can be reached on how to continue the business (and with whom).
The Kreuzer tip
The inheritance of a company or a company share in a community of heirs presents the testator and the community of heirs with numerous legal issues and problems, but also offers many structuring options in the various phases. Legal advice is therefore urgently required, especially in good time.
Entrepreneurs and the reform of civil law partnerships
On 1 January 2024, a far-reaching reform of the civil law partnership came into force, which introduced far-reaching and practically very relevant innovations, especially for the entrepreneurial BGB partnership, in addition to the introduction of a company register and harmonisation with other company forms such as OHG, KG and GmbH.
The legal capacity of the entrepreneurial BGB company
is now expressly regulated, it is removed from the assets of its individual shareholders. Only the shares in the company remain in the assets of the respective partners. The BGB company only comes into existence vis-à-vis outsiders if it is to participate in legal transactions with the consent of all shareholders. In addition to the regulation on the management of all partners, it is likely to be of particular practical relevance that - with the exception of the withdrawal of the penultimate partner, which leads to the cancellation of the company without liquidation - the company is now no longer dissolved in the event of the withdrawal of a partner (e.g. due to death or termination), but is continued, if necessary also with the heirs. This also applies to companies founded before 1 January 2024.
In addition, a company register was
was introduced. Despite its voluntary nature, there is a de facto obligation to register certain transactions such as property disposals or shareholdings in other companies. The register has the same publicising effect as the commercial register (with similar information). In the event of registration, the company's name must bear a corresponding addition.
The Kreuzer tip
The reform of BGB company law affects every BGB company engaged in business. In addition to examining the extent to which an entry should be made in the company register (or must be made in fact), it is particularly important to check whether the contractual provisions on the withdrawal of a shareholder and the shareholdings need to be adapted to the new legal situation (or whether a provision needs to be made at all). Legal advice is therefore urgently required.
Entrepreneurs and the obligation to issue electronic invoices
As part of the Growth Opportunities Act, which is due to be passed soon, a far-reaching and practically very relevant innovation will be introduced - even if the name does not necessarily suggest it - namely new requirements for electronic invoices and the basic obligation to issue electronic invoices for B2B transactions.
From 01.01.2025
electronic invoices must fulfil additional technical criteria according to the new definition. This requires invoice issuers and invoice recipients to agree on the use of a specific structured electronic format so that the information relevant for VAT purposes can be read out of the invoice in a specific technical manner and format or that this read-out data is compatible with specific technical requirements. In practical terms, this means above all that a PDF invoice sent by email is no longer an electronic invoice within the meaning of the VAT Act. The necessary consent to such an electronic format can be given by way of general terms and conditions and is already required for electronic invoicing at the present time. It should be noted that existing GTC clauses must be checked to see whether they cover the new requirements.
The introduction of electronic invoicing is mandatory
for all B2B transactions as of 1 January 2025, although there are transitional periods until 31 December 2026 or - for invoicing by companies with a total turnover of up to €800,000 in the previous calendar year - until 31 December 2027 for transactions carried out from 1 January 2025 until the end of the transitional period. After the end of the transition period or if it is not utilised, the invoice recipient's consent is no longer required for electronic invoices that fulfil these technical requirements.
The Kreuzer tip
Electronic invoicing affects every company. In addition to introducing the relevant technical requirements and adapting the invoicing process, it may be necessary to adapt the general terms and conditions with regard to the consent requirement. As consent to electronic invoicing (e.g. by way of general terms and conditions) is already required at this point in time in accordance with Section 14 (1) penultimate sentence of the Value Added Tax Act, legal advice is urgently required and recommended in good time.
Entrepreneurs and reporting obligations for the transparency register
The scope of the information that must be communicated to the transparency register introduced under the Money Laundering Act, as well as the types of companies affected by notification obligations, is constantly increasing and is becoming increasingly important for companies and their beneficial owners of all kinds. A large number of processes, which concern, for example, the structuring of the transfer of company shares as part of inheritance or marriage contracts, must be checked for notification obligations, especially with regard to changing economic rights.
From January 1st, 2024
civil law companies, foundations and associations registered in the company register, are also obliged to make notifications to the transparency register. It is therefore urgent to check the notification obligation yourself now, and to understand what information must be provided, to avoid the risk of sanctions.
Special verification obligations of what must be reported
arise in the event of a company succession, whether by inter vivos or by death, regardless of the expansion of the circle of those obliged to notify. Particularly in the case of succession due to death, whether economic rights are terminated and/or re-established must be checked, and whether deletions, in addition to new entries, are to be made in the transparency register. In addition to the actual death, this can lead to notification obligations for contractually granted special rights within the scope of anticipated inheritance.
The Kreuzer tip
In addition to checking whether the company has notification obligations, a company's inspection and notification obligations with regard to the transparency register lead to a large number of legal and practical consequences, both with regard to purely social contractual arrangements (including inheritance and family law contracts) and also with regard to practical verification obligations regarding economic authorization. Legal advice is urgently and promptly recommended to ensure protection and structuring, especially in conjunction with will and family law regulations. Due to the expansion of the circle of those obliged to report, it is urgent to check whether, and if so, what information must be communicated to the transparency register, for which legal advice is also urgently and promptly recommended. Contact us!
Entrepreneurs and marriage contracts
In the case of family businesses in particular, considerable legal, practical and financial problems can arise in the event of divorce or death if the married entrepreneur has not concluded a marriage contract, especially if provisions have been made in the will. This is all the more important if both partners own a business.
It is obvious to make the agreement of a
modified community of accrued gains as part of a marriage contract, which must be notarised. In this way, it is possible to ensure that the statutory rule of community of accrued gains remains in place, but - in addition to maintenance and equalisation arrangements, for example - it is possible to specify which assets are to be included in the accrued gains and which are not. At the same time, a limited waiver of a compulsory portion can be agreed in this regard. Such arrangements should, if necessary, be supplemented by corresponding provisions in partnership agreements, living wills or powers of attorney for care.
In the case of a modified community of accrued gains
companies can therefore be excluded from the assets relevant for the calculation of accrued gains. In particular, this means that in the event of a divorce, the spouse does not receive any equalisation of gains with regard to the company. Liquidity required for the business is therefore not lost. Equalisation arrangements can also be made in the event that the spouse works (unpaid) in the company. It may also be possible to minimise the (inheritance) tax disadvantages of pure separation of property through a modified community of accrued gains. However, it must be taken into account that there are limits to how the contract can be drafted and that one partner cannot be unreasonably disadvantaged, which may be the case if there is a large economic gap between the spouses. In view of the fact that marriage contracts are also subject to review with regard to their appropriateness in the event of divorce, it is advisable to include a comparison of the spouses' assets in the marriage contract in advance.
The Kreuzer tip
The treatment of a company in a marriage contract leads to a large number of legal and practical consequences. Legal advice is urgently recommended in good time to secure and structure the marriage contract, especially in conjunction with testamentary provisions. Get in touch with us!
Family businesses in the drafting of wills
In the case of family businesses in particular, there is a desire to ensure that the business is kept in the family for several generations and is not accessible to relatives by marriage. There are considerable legal and practical problems here.
The arrangement of a prior and subsequent inheritance is obvious; in addition to this arrangement, further divisions with regard to certain assets (e.g. advance legacies to the prior heir) and conditions can be arranged so that a separate arrangement can be made for the remaining assets. Such arrangements should, if necessary, be supplemented by corresponding provisions, in particular compensation provisions, in marriage contracts, living wills, power of attorney for care, etc.
In the case of prior and subsequent inheritance
inheritance takes place in several stages. Upon the death of the business owner and testator, the first heir is the prior heir or several prior heirs as a community of heirs. These prior heirs can be specifically named or - within narrow limits - selection criteria can be established for the choice of the prior heir. In order to preserve the business in the family, prohibitions on sale can also be ordered. Upon the death of the previous heir or heirs, the subsequent heir or heirs become heirs, whereby this is the inheritance after the business owner and not the inheritance after the previous heir - meaning that several inheritances may exist at the same time. The arrangement can end with this second inheritance, for example to give the heirs the opportunity to react to changed circumstances. The company then becomes part of the assets of the subsequent heirs and merges with them. They can then, for example, sell it freely. However, it can also be stipulated that with this second inheritance, the subsequent heir becomes the previous heir and new subsequent heirs are added, such as the grandchildren's generation. This link over several generations takes away the room for manoeuvre of each increasingly distant generation, making it more likely with each subsequent generation that an inheritance will be waived. This risk also needs to be considered.
The Kreuzer tip
Inheriting a family business and ensuring that it remains in the family has a large number of legal and practical consequences. Legal advice is urgently recommended in good time to secure and organise a secure inheritance. Get in touch with us!
Inheritance: Companies and a Community of Heirs (German Law)
When companies or company shares are inherited, significant legal and practical problems arise, especially in the case where a community of co-heirs assumes the position of the testator (company owner), even if the question of compensation for heirs who are not appointed to the company does not arise .
All inheritance cases are affected in which
there is more than one heir (whether due to legal regulations or due to a will), and the inheritance includes a company or shares in a company.
Until the estate is divided
or at least until the partial dissolution of the company occurs, the administration, management and liability are generally the responsibility of the co-heirs as the new owners, which may be the case for years. It is irrelevant whether one or more of the co-heirs were involved in the management of the company before the inheritance. A co-heir’s previously granted power of attorney expires upon the death of the testator, which must be reported to the commercial register. A co-heir, especially if he or she managed the company alone before the inheritance, cannot generally deny the co-heirs' rights to inspect the business documents. As part of the basic joint administration, the co-heirs can appoint one of the co-heirs or a third party to manage the company, but this administrator is accountable to the community of heirs and is internally liable for any damage caused by him. Only in emergency transactions, which are therefore absolutely necessary to maintain the company, are individual co-heirs entitled to carry out transactions without prior coordination with the other co-heirs, for which they are then also liable and for which they are accountable. If joint administration is not possible, each co-heir can apply to the court to appoint a (third-party) administrator, who can then also be a completely uninvolved third party.
The Kreuzer Tip
Companies in the estate lead to a large number of legal and practical consequences for a community of co-heirs, especially with regard to liability and the further administration and management of the company. In order to protect the individual co-heirs, including with regard to compensation obligations, legal advice is urgently and promptly recommended.
Contact us!
Heirs and life insurance in the event of death (German Law)
Life insurance plays a large role in transferring assets after the policyholder's death. Given the high levels of assets that will be inherited in Germany in the next few years, this role will become increasingly relevant.
All inheritance cases are affected in which
In addition to the heirs (by will or by law), third parties should be considered as beneficiaries through life insurance policies of the testator. This can then lead to a race between heirs and beneficiaries. In the event of the death of the policyholder, the question usually arises as to whether a beneficiary agreement can be concluded between the testator and the beneficiary, which cannot be revoked and reclaimed by the heir. To convey the intention to make such an irrevocable assignment, intervention of a messenger is required.
Fact is: Before the beneficiary receives the information
That he/she is beneficiary the heir can revoke the donation if this is provided in the contract of the life insurance.The will of the testator can be subsequently "cancelled" if the heirs act quickly. An offer made after such a revocation is then no longer effective and cannot be accepted as such, which can lead to repayment obligations. Additional problems may arise from the fact that the insurance allows excessively long processing times.
The Kreuzer tip
Unless a life insurance beneficiary is irrevocably appointed, heirs may need to act quickly in the event of death to prevent unwanted life insurance payout claims from arising. Both in the event of death and before taking out life insurance, legal advice is urgently and promptly recommended due to the impact on heirs and estate as well as to secure any beneficiary benefits to be made.
Get in touch with us!
Statutory limitation for holiday entitlements and holiday compensation claims
In its judgement of 20 December 2022 (case no. 9 AZR 266/20), the Federal Labour Court ruled that an employee's holiday entitlement is generally subject to the statute of limitations, but that the limitation period only begins to run once the employer has fulfilled his duty to inform and notify employees in this regard. In order to fulfil these obligations, the employer must inform his employees once a year about any outstanding holiday and summon them to take it, pointing out that it would otherwise expire.
The holiday entitlement
is aimed at release from the obligation to work for recreational purposes with continued payment of wages.
The general limitation period
of three years from § 195 BGB is also applicable to the holiday entitlement.
The period however only begins
at the end of the year in which the employer has fulfilled his duty to inform and notify the employee of the outstanding holiday and its expiry and the employee has nevertheless failed to take the holiday of his own accord.
The consequence of this is
that the employee's holiday entitlement cannot expire as long as the employer has not fulfilled his information and notification obligations. Under certain circumstances, a large number of untaken holiday days can therefore accumulate during the current employment relationship.
The entitlement to holiday pay in lieu
is due upon termination of the employment relationship and serves as financial compensation for outstanding holiday days. It is a purely monetary claim. This claim is subject to its own three-year limitation period and begins at the end of the year in which the employment relationship ends. In the case of this claim, however, the employer's co-operation has no influence on the start of the limitation period.
A transitional period applies
for the start of the limitation period for holiday pay compensation claims, as the rules for the forfeiture of holiday have only been established since the judgement of the European Court of Justice of 6 November 2018 (case C-684/16).
Kreuzer tip
Employers are strongly recommended to inform their employees once a year of any outstanding holiday, to ask them to take it and to point out that the holiday days will otherwise expire. This will prevent the accumulation of holiday days over many years, which may still be granted during the current employment relationship or may be paid out in cash upon termination.
Please contact us if you need more information on this matter.
Companies and the new Whistleblower Protection Law (Germany Law)
The new Whistleblower Protection Act (HinSchG) will implement EU law and uniformly regulate and comprehensively change the protection of whistleblowers.
All companies are affected, no matter the size.The implementation
and operation of an internal reporting system is required in companies with 49 or more employees, although a whistleblower can also contact an external reporting office. Internal reports do not have priority. In addition to certain criminal behavior and conduct subject to fines, violations of certain national and EU regulations mentioned in Section 2 Paragraph 1 No. 3 HinSchG are now also covered by the very broad scope of protection. This includes not only violations by a company, but also misconduct by employees to the detriment of other employees or the company. Whether the reporting channel is anonymous or not depends on numerous factors.
The requirements for setting up and organizing these reporting channels are regulated by law in detail in Section 17 HinSchG, as is data protection in Section 11 HinSchG. It is also possible to pass the information to be reported on to a responsible authority. The reporting points can be operated and staffed by third parties or company’s own employees. The protection of the whistleblower requires that the information reported and already known to the whistleblower is correct or that the whistleblower had sufficient reason to believe that it was correct at the time of reporting. The law does not offer general protection against dismissals, but it does standardize claims for damages.
What has changed is that fines and compensation
will be attached when breach of confidentiality occurs. This applies in particular to the reporting office. In contrast to public bodies, the identity of the whistleblower may only be revealed to the employer with express consent, likely too in court proceedings. Jurisprudence will probably have to clarify how the confidentiality requirement and the data protection right to information can be reconciled. To protect whistleblowers from reprisals, a reversal of the burden of proof is introduced.
The Kreuzer Tip
Small and medium-sized companies in particular must set up internal, not necessarily anonymous, reporting channels very quickly, with Works Council and Data Protection Officer involvement. Legal advice is urgently and promptly recommended for the arrangement.
Get in touch with us!
Business and Inflation Compensation Premium
With the “Law for the temporary reduction of the sales tax rate from gas deliveries via the natural gas network”, announced on October 25, 2022, the basis for an inflation compensation premium came into force retroactively to October 1, 2022. The premium is regulated as a tax allowance in Section 3 No. 11c EstG. It is intended to mitigate the rise in consumer prices.
The compensation bonus
allows employers to give their employees an amount of 3,000 euros tax- and duty-free for a limited period from October 26, 2022 to December 31, 2024. This is a voluntary employer benefit, to which employees generally have no enforceable claim.
The payment of the bonus
is not regulated in more detail by law and can be made during the benefit period in the form of a one-off payment, but also in partial payments or staggered payments, whereby the full amount does not have to be used. A cash reward does not necessarily have to be paid; benefits in kind can also be granted. The Works Council has a right of co-determination regarding the “how” of awarding bonuses. When granting the bonus, the employer must make it clear that the corresponding amount is related to increased consumer prices. For example, a note on the transfer slip as part of the payroll is sufficient. It could also be regulated through a personal letter to the employees or through a company agreement that the benefit is the compensation bonus.
Other contractually provided employer benefits
such as Christmas bonuses or bonus payments may not be converted into the inflation compensation bonus. The payment of the premium therefore has no influence on benefits already granted or to be granted by the employer based on an employment or collective agreement.
The Kreuzer Tipp
Many companies are currently considering how they can support their employees financially. The tax- and duty-free inflation compensation bonus has recently been considered for this purpose. A cover letter to the beneficiaries, a company agreement or a note on the pay slip can be used to ensure that the compensation bonus is a voluntary employer benefit. When formulating it, it is advisable to use the wording of Section 3 No. 11c EstG, which regulates the premium, as a guide. We would be happy to advise you on this and other options for supporting your employees financially.
Business and Time Keeping
In its decision of September 13, 2022 - 1 ABR 22/21, the Federal Labor Court decided that employers are obliged to record employees' working hours due to the current legal situation. This results from the Union-compliant interpretation of Section 3 Paragraph 2 No. 1 ArbSchG, according to which the employer must ensure a suitable organization, taking into account the type of activities and the number of employees, and must provide the necessary resources for this.
Time recording systems
serve to check compliance with the maximum weekly working hours and thus counteract risks for employees such as unpaid overtime and violation of rest breaks.
The time recording requirement
already existed before the decision of the Federal Labor Court and affects all employers. It requires the actual recording of the location, start, duration and end of working hours, so that simply providing a system by the employer is not enough.
The design of the time recording system
does not necessarily have to be electronic, so handwritten records are sufficient. Time recording does not necessarily have to be carried out by the employer; delegation to the individual employee is permitted. However, the employer must specify how time recording is designed and must also check that working hours are documented.
In case of violations,
according to the current legal situation, there is no immediate threat of a fine. However, it cannot be ruled out that the legislature will soon impose sanctions in the area of time recording. Even if there is no immediate threat of sanctions, employees can still assert a claim against their employer for the introduction of a time recording system, including through legal action.
The Kreuzer Tipp
If it does not already exist, it is advisable to introduce a time recording system according to the standards specified by the Federal Labor Court or to adapt existing time recording systems to these standards. For example, an Excel table or even a handwritten time recording kept by the respective employee is sufficient. We would be happy to advise you on implementing a time recording system – contact us!
COMPANY AND WORKING TIME ACCOUNTS
In its judgment of November 20, 2019 - 5 AZR 578/18, the Federal Labor Court decided that when a working time account is set up by mutual agreement, it is implicitly agreed that the account must be financially balanced at the end of the employment relationship at the latest, unless otherwise agreed.
The establishment of working time accounts
serves to determine the time scope of the employee's work for which he can claim his remuneration.
The reduction of a working time account
takes place according to the underlying agreement (contract, works agreement, collective agreement), often through compensatory time off.
After termination of the employment relationship
compensatory time off is no longer possible. In the absence of an express agreement, according to case law, the mutual establishment of a working time account constitutes an implied agreement to settle the account financially upon termination at the latest.
No exclusion periods apply
if the credit hours have been established without dispute because a balance in the working time account has been unreservedly shown in favor of the employee and has not been reduced until termination.
The Kreuzer Tipp
In addition to an employment contract agreement, it can also make sense to declare the time off (also) to fulfill the entitlement to compensatory time off when paid time off is declared following a dismissal and taken into account against certain entitlements. We would be happy to advise you on how to proceed.
COMPANIES AND PROOF IN CASES OF INABILITY TO WORK
With an important decision, the Federal Labor Court now gives the employer, under certain circumstances, the opportunity to undermine the high evidentiary value of a certificate of incapacity for work (AU certificate).
Obligation to provide evidence
by the employee for his illness, in principle by presenting a medical certificate of AU, which is usually sufficient as proof - even in legal proceedings.
The consequence
is that the employer must present and prove actual circumstances that raise doubts about the employee's illness.
If there is a coincidence or coincidence between the AU period and the termination and the subsequent end of the employment relationship
In case of doubt, the employee must provide concrete evidence of circumstances that indicate an existing illness and actual AU.
Example
On June 20, 2022, A terminates the employment relationship which ends on July 31, 2022. At the same time as his declaration of termination on June 20, 2022, he submits an initial AU certificate that initially gives him sick leave until July 15, 2022, then a follow-up certificate that gives him sick leave until July 31, 2022, i.e. the end of his employment relationship. If the employer now presents and proves circumstances that give rise to serious doubts about the inability to work, he may be able to undermine the evidentiary value of the AU certificate. Then A must explain in detail and prove that he was/is really unfit for work. For this purpose, for example, the doctor who took the sick note can also be interviewed after being released from the obligation of confidentiality.
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Sick notes around notice periods are subject to their own requirements and evidence. Legal advice is strongly recommended to assess doubts in individual cases. Contact us!
COMPANIES AND EXCLUSION PERIODS
In a ruling dated 25.10.2018 (14 Ca 2289/18), the Cologne Labor Court ruled that, due to a change in the law, an exclusion period in an employment contract, that is designed as a general term of business and makes the assertion of claims against the other party dependent on the written form, is invalid. This applies to all employment contracts concluded since 01.10.2016.The norm in employment contracts.
The rule in employment contracts
is the agreement of so-called two-stage exclusion periods. In the first stage, claims arising from the employment relationship must be asserted against the other party within a period of time. If the party does not respond to this, the claims must be asserted in court at the second stage within a further period.
If the assertion must be made to the contractual partner in writing
the clause is invalid pursuant to Section 309 No. 13 b) BGB. Accordingly, no form stricter than text form may be agreed. In contrast to the written form, assertion in text form also includes assertion by email, for example.
Consequence of ineffectiveness
at the first stage is the ineffectiveness of the exclusion period as a whole. The statutory limitation period of three years applies.
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It remains to be seen whether this case law will be confirmed by other courts. However, in order to guarantee the effectiveness of the limitation period, it is advisable to amend the contractual terms. Talk to us!
COMPANIES AND OBLIGATIONS TO PROVIDE EVIDENCE
The planned amendment to the German Act on Evidence (NachwG), which implements an EU directive, will in future oblige employers to record the key aspects of the employment relationship even more extensively in writing.
The expansion of the obligations to provide employment contract clarity
in the catalog of Section 2 NachwG, includes but is not limited to, the duration of the probationary period, overtime and modalities of shift work, and also comprehensive information related to the termination procedure.
The deadlines
for providing a written and signed employment contract have changed. For new employment relationships, the deadline has been shortened from one month to the first workday, in alignment with certain contractual conditions. In cases where there is an existing employment contract, and the employee requests a revised contract in alignment with the new regulations, this deadline has been extended to seven days after the request is made.
A new administrative fine
in the event of non-fulfilment, incomplete fulfilment, incorrect fulfilment, incorrect fulfilment in the prescribed manner or untimely fulfilment of the obligation to comply with the new regulations, has been introduced.
Companies and Enforcement Against Concealed Earned Income
Companies often obtain enforcement orders, but enforcement comes to nothing because the debtor's earnings only reach the garnishment exemption limit. If there is a suspicion of income concealment, the following steps can be taken:
Application for an attachment and transfer order
which also includes a fictitious claim to remuneration that may arise in the event of concealed income from employment.
Request for information
to the judgment debtor and the employer after or upon service of the attachment and transfer order with regard to the nature and temporal scope of the work.
Filing an action for recovery
against the employer for payment of the attachable part of the fictitious net remuneration after information has been provided.
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If you suspect that the debtor in execution is concealing his true income, you do not have to accept this! We will be happy to advise you on how to proceed.
Companies and Partial Retirement - Block Model
Partial retirement is becoming increasingly relevant. However, it is associated with obligations, particularly with regard to the credit balance from work performed in advance in the first block, as otherwise there is a risk of claims for damages, including against the managing director.
The credit balance
must be specially protected. The purpose is to grant the employee a right to segregation in the event of insolvency, as this is the only way to make his or her credit balance "insolvency-proof" and meet the legal requirements.
A trust agreement
with a third party who manages the gross credit balance (including social security contributions) transferred to him on behalf of third parties is effective and economically sensible and can be structured as a pledge model or as a so-called double-sided trust agreement. The latter is generally more practical and flexible.
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Securing this credit balance under insolvency law is mandatory, Section 8a of the German Partial Retirement Act (ATzG). Legal advice is strongly recommended for the structuring. Talk to us!
COMPANIES AND THEIR SUPPLY CHAINS
The new Supply Chain Due Diligence Act will bring far-reaching and extensive new obligations for companies to comply with human rights and environmental rights in their supply chains from 2023.
Almost every company
must monitor and document compliance with such standards throughout the entire supply chain (with gradations), regardless of its legal form. Risk analyses must be carried out.
Preventive measures
and risk management, including complaints procedures and a human rights officer, must also be established. In the event that companies fail to comply, fines of up to 8 million euros or 2% of the average annual turnover can be imposed and companies can be excluded from public contracts.
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The design of the measures to be taken still needs to be specified, but should be addressed now in preparation. Legal advice is urgently and promptly recommended for the structuring. Talk to us!
Companies, Home Office and Mobile Working
Working from home and mobile working have become increasingly important beyond mandatory offers, even more so since the coronavirus pandemic. However, they are legally different formats.
When working from home
the employee has a workplace in the same sense as a company workplace - including all occupational health and safety requirements.
Mobile working, on the other hand
means that the employee can work from any location. In this case, occupational health and safety requirements only need to be observed to a limited extent.
For both variants
agreements must be made on the basic permission by the employer and in particular on the work equipment used, data protection, confidentiality and, if applicable, the use of private end devices.
The Kreuzer tip
Mobile working offers more flexibility and does not require a "formally" set up workplace. A written agreement stipulating a comprehensive arrangement is strongly recommended. Talk to us!
Companies and Pandemic Rent
A higher court has now ruled on how to deal with commercial rents due to corona-related closures.
The BGH has clarified
that loss of turnover due to business closures does not constitute a rental defect; loss of turnover is generally the tenant's risk of use. However, there may be a claim for contract adjustment if the closure is ordered by the authorities.
Such pandemic-related closures
are outside the usage risk, at least in the case of rental agreements concluded before the pandemic, as they were not conceivable before the pandemic.
However, in contrast to previous case law, a rigid one-half distribution
of the risk is inappropriate and the distribution must be assessed according to the circumstances of each individual case.
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In ongoing disputes, the underlying contracts and the distribution of costs should be urgently reviewed. There is also a need to adjust new contracts with regard to the foreseeability of pandemic-related closures. Talk to us!
CORONA - THE CONSEQUENCES IN FAMILY LAW
The corona pandemic with the resulting legal regulations is causing considerable uncertainty in the family. Important aspects for you below:
Support for parents
If the child has not yet reached the age of 12, if the care facility or school is closed and there is no reasonable alternative care option, compensation of 67% of the net income, up to a maximum of EUR 2,016 per month, will be paid upon application. It is important to know that the application for compensation can still be submitted within twelve months.
If you have statutory health insurance, child illness benefit is paid for longer and special leave is granted if the child needs personal care and one parent cannot work. This also applies if parents have been asked not to bring their children to the facility. Parents who could theoretically work from home should also receive child sickness benefit. If child sickness benefit is claimed, both parents are not entitled to compensation (share of net income) during this time.
20 days of child illness benefit are provided per child per year. Single parents receive 40 days. Anyone who has several children can use the entitlement for up to 90 days. However, the child illness benefit must be stated in the tax return: The health insurance companies transmit the child illness benefit payments to the tax office.
Compensation benefits during quarantine
In the event of quarantine, employees will be paid compensation by their employer in the amount of the loss of earnings for the first 6 weeks. From the beginning of the 7th week, compensation equal to the sick pay is paid directly by the responsible authority. The employer has a claim to reimbursement from the state.
Bonus for employees in geriatric care and hospitals
The employers pay out another 1000 - 1500 EUR. The bonus is tax-free. Under family law, the increase in income resulting from the bonus payment is not counted towards spousal maintenance; in the case of maintenance for minors only if the minimum maintenance is not guaranteed.
Unemployment due to Corona
Anyone who is affected by unemployment as a result of Corona and is obliged to pay maintenance will be forced to use their unemployment benefit as a basis for calculating the amount of maintenance. The question arises as to whether a real employment opportunity still exists and whether a higher income can be achieved again in the future.
Short-time working allowance
There are different regulations for the crediting of additional earnings against short-time work benefits, depending on the proportion of reduced working hours and the employment from which the additional earnings result (system-relevant sectors and professions!). The short-time working allowance is tax-free, but is subject to the so-called progression reservation, like an unemployment benefit. This can result in increased income tax being incurred overall, although this can only be correctly determined with the annual income. If an increased income tax is incurred, the available net income is reduced. This can also affect the amount of maintenance obligations.
Obligation to file income tax returns
The employee is obliged to submit a tax return if tax-free payments are made, such as short-time work allowance, Corona aid or compensation under the Infection Protection Act. This may increase the tax burden, but this can only be determined later and can lead to problems in terms of maintenance law.
Corona vaccination for underage children
Disputes can arise between parents as to whether their children should be vaccinated. In the meantime, it was decided that the decision about vaccination should be transferred to the parent who supports the vaccination of the child in accordance with the recommendations of the STIKo, provided that the child does not have any particular vaccination risks. The child's will only conflicts with this if the child can form its own opinion on this subject in view of its age and development. In the case decided, the family court did not consider the will of the 12 and 14 year old children to be decisive for this issue of custody.
The Kreuzer Tip
Are you an employee? Check the options for support services. Have your maintenance obligations and possible options for modification checked! We offer help with checking maintenance obligations, assessing changes in income and additional income opportunities: There is a lot to consider due to the legal regulations in connection with Corona. We would be happy to check your maintenance obligations for you and provide you with comprehensive information about the applicable Corona regulations!