Aus E-Mag M&A China/Deutschland 2013
German labor law still has the reputation of being one of the most employee-protective labor laws in the world. But is it really that scary for investors?
Looking at the legal frameworks in Germany and China, one notices that there are many similarities between German and Chinese labor law and that the level of protection is not so different. This article cannot provide a comprehensive overview of German labor law but aims to highlight some of its most important cornerstones, which may appear surprisingly familiar to Chinese investors and can certainly be handled with good local advice.
Legislation and Case Law
In Germany, the law on individual employment contracts is provided in the German Civil Code and supplemented by a number of separate statutes, e.g. on part-time and fixed-term employment, vacation, termination protection and worker constitution. Trade union or works council agreements may also apply. In contrast with China, laws and regulations are not delegated to local labor bureaus for implementation, which avoids variances in employment laws in different regions, provinces and municipalities at the legislative level. While German case law plays an important role in labor law, which may lead to minor differences in individual cases, the German legislative and jurisdictional system offers a very high level of predictability.
As with Chinese law, the German law does not allow employers to terminate an employee’s contract “at will”. In Germany, “protection against unfair dismissal” only applies if an employer employs more than 10 full-time employees and the employee was employed for more than six months. If these conditions are met, a dismissal will be considered unfair unless the employer can show that sufficient personal, conduct or business reasons exist. Unlike China, German law does not allow for termination of an employee if the employee is incompetent and remains incompetent after training or adjustment of his or her position.
In Germany, a dismissal for personal reasons in practice often comes into play in cases of illness or if the permission for foreign work expires. A dismissal for conduct generally (exemptions are rare) requires a prior warning for comparable misbehavior. A dismissal for operation reasons (e.g. a redundancy) requires inter alia a social selection process. Employers are obliged to choose those employees who will be least severely affected by the termination based on the factors of age, seniority, disability and maintenance obligations. Such termination is invalid if it is possible to maintain employment even under different conditions, e.g. reduced working time or the employee is assigned to another position.
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