The November 2023 edition of our Monthly Dose Employment Law on current case law summarizes the judgments (1) of the German Federal Labour Court (Bundesarbeitsgericht, BAG) dated 6 June 2023, on the conflict of interest between the activity as works council chairman and the office as company data protection officer, (2) of the BAG of 25 July 2023 on the burden of presentation and proof for the existence of an employment relationship as a result of concealed temporary employment for the defendant (potential) hirer, (3) of the LAG Baden-Württemberg of 31 May 2023 on the forfeiture of a claim for correction of an employer’s reference, (4) of the LAG Mecklenburg-Vorpommern of 13 July 2023 on the general exemption from early and late shifts and Saturday work due to childcare and (5) the Court of Justice of the European Union (ECJ) of 4 May 2023 on the (non-)existence of a claim for damages in the event of a breach of the provisions of the GDPR without consequences.
1. Works council chairman cannot be appointed as data protection officer (BAG judgement of 06.06.2023, 9 AZR 383/19)
In its judgement of 6 June 2023 (9 AZR 383/19), the German Federal Labour Court (Bundesarbeitsgericht, BAG) had the opportunity to continue its case law on possible grounds for revoking the appointment and dismissal of a data protection officer.
In the case underlying the decision, the plaintiff employee, who was also the chairman of the elected works at the time, was appointed data protection officer by the defendant employer with effect from 1 June 2015. The competent state data protection officer subsequently expressed concerns regarding the plaintiff’s reliability due to his role as works council chairman and determined shortly afterwards that the plaintiff did not have the necessary reliability for the appointment as data protection officer and that there was an incompatibility between his office as works council chairman and his office as data protection officer. For this reason, the appointment of the company data protection officer was not effective and the defendant has therefore not had a company data protection officer since 1 June 2015, so that the imposition of a fine was threatened if another data protection officer was not appointed. The defendant informed the plaintiff in a letter dated 1 December 2017 that his effective appointment as data protection officer had not taken place, or alternatively revoked the appointment and dismissed the plaintiff from this position. After the General Data Protection Regulation (Datenschutz-Grundverordnung, DSGVO) came into force, the defendant dismissed the plaintiff as data protection officer as a precautionary measure pursuant to Art. 38 (3) sentence 2 DSGVO, citing operational reasons.
The plaintiff brought an action against the dismissal and, in the alternative, the revocation of his position as data protection officer. He claimed that his appointment as data protection officer was effective and that his dismissal was not legal. The defendant replied that the plaintiff’s appointment as data protection officer was invalid due to the incompatibility with his office as chairman of the works council and that the incompatibility of his office could in any case justify good cause for his dismissal.
The BAG ruled that although the appointment of the plaintiff as data protection officer was effective, the revocation of the plaintiff’s appointment was justified for good cause within the meaning of Section 4f (3) sentence 4 of the German Federal Data Protection Act (Bundesdatenschutzgesetz, BDSG) (old version) in conjunction with Section 626 (1) of the German Civil Code (Bürgerliches Gesetzbuch, BGB). The compatibility of the offices of data protection officer and chairman of the works council is irrelevant for the validity of the appointment, as the incompatibility of the two functions does not automatically lead to the invalidity of the appointment. Instead, the irreconcilable conflict of interests would constitute good cause for revocation.
There is good cause for revocation if the employee appointed as data protection officer does not (or no longer) possess the expertise or reliability required for the fulfilment of the task within the meaning of Section 4f (2) sentence 1 DSGVO former version. Section 4f (2) sentence 1 DSGVO (former version). Reliability may be called into question if there is a risk of conflicts of interest. A conflict of interest justifying dismissal is to be assumed if the data protection officer holds a position in the company that has the purpose of determining the purposes and means of processing personal data. All circumstances of the individual case must be assessed, in particular considering the organisational structure and internal regulations.
The duties and responsibilities of a data protection officer and a works council chairperson are not compatible as they conflict with data protection requirements. The data protection officer must monitor compliance with data protection regulations, while the chairman of the works council processes data as part of his official duties with regard to the works council’s tasks under works constitution law.
Consequences for the practice
With the decision presented here, the BAG is changing its previous case law. In its judgement of 23 March 2011 (10 AZR 562/16), it still denied a general incompatibility of the two offices. Even if the BAG left open whether the office of data protection officer is also precluded by “simple” works council membership (= independent of the function of the chairperson), a conflict of interest is also likely to be assumed in this case. Against this background, employers are recommended to generally exclude works council members from being appointed as data protection officers in accordance with internal regulations. Against this background, the attractiveness of appointing an external data protection officer continues to increase.
2. Burden of presentation and proof for the existence of an employment relationship as a result of concealed employee leasing (BAG judgement of 25.07.2023, 9 AZR 278/22)
In its judgement of 25 July 2023 (9 AZR 278/22), the BAG had the opportunity to continue its case law on the burden of presentation and proof when distinguishing the activity of an employee in a contract for work/services performed by his employer vis-à-vis a third-party company from a (concealed) supply of temporary workers.
In the facts underlying the decision, the plaintiff was employed by his contractual employer as a systems engineer on the basis of an employment contract. His contractual employer deployed him on the basis of a corresponding agreement at the defendant third-party company, a company in the automotive industry, in order to support control units for produced vehicles within a team assigned to the SPS (Service Programming System) department. The team included both employees of the defendant and employees from external companies.
In his action, the plaintiff sought a declaration of an employment relationship with the defendant on the basis of a concealed hiring-out of employees, essentially arguing that the subject matter of the services agreed between his contractual employer and the defendant was so vague that it first had to be specified by the defendant’s instructions and that the specific tasks of all employees assigned to the team were dependent on the defendant’s instructions. The defendant replied that the plaintiff had acted as a employer for his contractual employer within the framework of the service contract concluded with the latter, which included the services to be provided. It had already previously allocated the work within the relevant team with the contractual employer by assigning the employees accordingly.
The BAG upheld the claim. It ruled that – already – due to the lack of an express agreement and designation of the plaintiff as a temporary employee between the agreement between the defendant and the contractual employer, a concealed hiring out of the plaintiff to the defendant had taken place. As a result of this concealed hiring out of employees, an employment relationship between the plaintiff and the third-party company was established by operation of law (Sections 10 (1) sentence 1, 9 (1) no. 1a of the German Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz, AÜG)).
To justify its decision, the court cited the relevant assessment criteria according to its established case law, according to which an employee is deemed to have been hired out if an employee
- is made available to the third-party company by its contractual employer to further its business purpose,
- is integrated into the work organisation of the third-party company and
- is subject to the terms and conditions of the third-party company.
On the other hand, an activity within the framework of a contract for work or a contract for services is to be assumed if
- the contractual employer works for a third-party company and
- uses the employee exclusively to fulfil his own contractual obligations under the service or work contract.
In the case of a work or service contract, the employer company is responsible for the production of the promised work or for the performance of the promised services and must decide on the necessary organisational actions of its employees (time, place and content of the work performance). Within this framework, instructions from the third-party company are only possible within certain limits (in particular, factual and result-orientated with regard to the objective of the work or service to be provided). In order to determine the legal relationship, not only the express agreement of the contracting parties, but also the practical implementation of the contract must be taken into account. The burden of presentation and proof that an employment relationship has arisen by operation of law as a result of a concealed hiring out of labour generally lies with the employee.
In the specific case, the plaintiff had fulfilled this burden of proof to a sufficient extent, even if he had only argued that the subject matter of the service contractually agreed between the contractual employer and the third-party company was so vague that it only had to be concretised by the instructions of the third-party company. In view of the vagueness of the subject matter of the service, the submission already showed reliable evidence that pointed to a transfer of employees. As the plaintiff was not in a position to present further facts because he was not aware of the specific content of the contractual agreement, a graduated burden of presentation and proof applies in favour of the employee. This is because if the employee is unable to present the necessary facts despite exhausting all possibilities to clarify the facts because he is outside the relevant course of events, the (potential) hirer – insofar as he is aware of the relevant circumstances and can reasonably be expected to provide more detailed information – is obliged to present substantiated evidence, stating the facts to the contrary, in order to fulfil his own burden of presentation and proof. It was therefore incumbent on the third-party company (by way of the secondary burden of proof) to provide specific information on the content of the contractual agreements with the employer company. However, the third party company had not provided the corresponding presentation despite being notified and instructed to do so by the competent court.
Consequences for the practice
The judgement once again clearly shows that the contractual partners carrying out a third-party personnel assignment must already carefully and completely regulate the specific intended (third-party) personnel assignment when drafting the contract – and also when carrying out the third-party personnel assignment – in order to avoid the economic risks (= above all legal fiction of the employment relationship between the leased third-party personnel and the client) and criminal law risks (= Section 16 AÜG) resulting from a concealed employee leasing. The application of the principles on the graduated burden of presentation and proof now confirmed by the BAG also in this constellation makes it easier for employees to present the necessary facts for the establishment of an employment relationship pursuant to Section 10 para. 1 sentence 1 AÜG.
It is therefore essential to organise any form of cooperation or the deployment of employees across company boundaries in a legally compliant and legally secure manner. In particular, the service owed and the manner in which the service is provided should be contractually regulated as precisely as possible. In the practical implementation of the contracts, care should be taken to ensure that the agreements made are actually honoured or amended as necessary. The personal, process- and procedure-oriented instructions, in particular regarding the type, place, time and content of the activity, should be issued exclusively by the employer company as the subject of the classic employer’s right to issue instructions. A division of labour should be avoided wherever possible; if this is not feasible, the specific responsibilities should be clearly regulated in the contract and implemented accordingly.
3. Forfeiture of a claim to correction of an employment reference (LAG Baden-Württemberg, judgement of 31.05.2023, 4 Sa 54/22)
Claims for the issue and correction of references are not only subject to the statute of limitations, but can also be forfeited in individual cases before the expiry of the limitation period. In its decision of 31 May 2023, the Higher Labour Court (Landesarbeitsgericht, LAG) Baden-Württemberg had to assess the extent to which a claim for correction of a reference can also be forfeited after an unsuitable reference has been issued.
In the case at issue, the plaintiff was originally employed by the defendant as a sales engineer and most recently as a product & sales engineer. After several attempts by the defendant to effectively terminate the employment relationship – which were unsuccessful from a labour court perspective – the employer finally terminated the employment relationship in March 2019 after more than 14 years of employment with the defendant.
The defendant issued the plaintiff with a reference letter on 29 June 2019, which he rejected as unacceptable. The new, only slightly corrected reference subsequently issued by the defendant in September 2019 rated the plaintiff’s performance in his original role as a sales engineer as satisfactory and his performance in his last role as a product & sales engineer as “weak overall“. She described the plaintiff in his last position as “not resilient” and his relationship with colleagues and superiors as “characterised by tension“. He had “not been able to fit into the company community“. In particular, the defendant cited alleged misconduct in the reference (transmission of a customer-specific and therefore strictly confidential technical drawing to a direct competitor), which had “completely devalued” his previous performance for the defendant as a sales engineer. In October 2019, the plaintiff also rejected the corrected reference as “subterranean” on the grounds that the assessment was already contrary to accepted principles of morality and intentionally damaging to the plaintiff. The defendant rejected the accusation of immoral intent to harm. It was not until October 2021 that the plaintiff brought an action for correction of the reference before the Labour Court (Arbeitsgericht, ArbG) Stuttgart. The ArbG Stuttgart dismissed the action on the grounds that the plaintiff’s claim was forfeited.
The LAG Baden-Württemberg ruled that the claim to correction of a reference was not forfeited despite the expiry of two years. It based its decision on the relevant prerequisites for forfeiture, i.e. the fulfilment of the moment of time and the moment of circumstance.
Time is of the essence if the claimant does not assert a right for a longer period of time, although he is in a position to do so. Following the case law of the BAG, the LAG Baden-Württemberg assumed the element of time with regard to the entitlement to the issue of a certificate with the expiry of a five-month period and affirmed this in the present case.
The element of circumstance is given if the obligor – taking into account the entire behaviour of the entitled party – could and did expect that the entitled party would no longer assert his right in the future. The LAG Baden-Württemberg denied this in the present case. The defendant was not allowed to rely on the fact that the plaintiff would no longer assert his claim for correction of the certificate. On the contrary, the plaintiff had objected to the reference as “subterranean” and “completely unacceptable” shortly after it was written and accused the defendant of an immoral intention to cause damage, so that the defendant could not have been surprised by a judicial claim even after two years. Moreover, the defendant had clearly intended, through the content of the reference, to deprive the reference of its suitability to serve the plaintiff as a basis for future job applications, which would also argue against the defendant’s legitimate expectations.
Consequences for the practice
Employers should always exercise caution when issuing references and ensure that all wording is correct and fair. An inadequate reference may not only lead to the employee asserting a claim for correction of the reference, but also to claims for damages in individual cases.
In order to create additional legal certainty, preclusive periods should be agreed in the employment contract so that claims arising from the employment relationship can only be asserted for a limited period of time after termination of the employment relationship. Such a preclusive period provision would also have caused the claim for the correction of references at issue here to lapse if the employee had not asserted it within this preclusive period.
4. Part time submission and working time allocation instructions – general exemption from early and late shifts and Saturday work due to childcare (LAG Mecklenburg-Vorpommern judgement of 13.07.2023, 5 Sa 139/22)
Reconciling work and family life is a balancing act for many employees. At the same time, relevant part-time requests from employees pose a challenge for employers in individual cases, especially if their own working hours and shift models do not fit in with the childcare options of individual employees. In such cases, are employees entitled to childcare-friendly working hours? The LAG Mecklenburg-Vorpommern had the opportunity to decide on this legal issue in its judgement of 13 July 2023 (5 Sa 139/22).
In the case underlying the decision, the plaintiff employee was originally employed full-time with a regular working week of 40 hours as a sales assistant in a bakery branch of the defendant employer. The employment contracts of the defendant with its employees provide for work on Sundays, public holidays and overtime to the extent permitted by law. The defendant organises the operation of its bakery branches in a three-shift operation (early, day and late shift) in a six-day week with an operating period from 5.30 a.m. to 7.30 p.m. and a rotating deployment of its employees in the individual shifts according to a shift schedule specified by the defendant.
Following the birth of twins and subsequent parental leave, the plaintiff applied for continued employment on a part-time basis (with regular working hours of 35 hours per week) with working hours only on the weekdays Monday to Friday between 7.40 am and 4.40 pm; such a shift is not provided for in the defendant’s shift plan. In her part-time request, the plaintiff argued that her children can only be cared for from Monday to Friday from 7.00 am to 5.00 pm, that she is a single parent and has no additional support. In addition, her children could not be looked after on Saturdays. It was not possible for her to work outside the childcare hours. In this respect, the defendant had to take into account her personal care obligations, in particular the increased care obligations as a single mother, when deciding on the plaintiff’s part-time request.
The defendant rejected the part-time request with the desired distribution of working hours, citing the working hours and the existing shift schedule, according to which the working hours requested by the plaintiff could not be realised for operational reasons. The defendant had chosen a rotating system in order to evenly distribute the burden of the early, late and weekend shifts among all employees. The plaintiff would disturb industrial peace if she was only assigned to the desired middle shift. In particular, it should be noted that the other three employees working in the relevant bakery branch also had small children that they had to look after.
The LAG Mecklenburg-Vorpommern dismissed the action brought by the plaintiff in response to the request for part-time work with the desired distribution of working hours. It stated that the defendant was able to counter the claim asserted by the plaintiff with its organisational concept as a rotating shift system and its implementation in the predetermined shift plan as an operational reason within the meaning of Section 8 (4) sentence 2 of the German Act on Part-Time Work and Temporary Employment Contracts (Teilzeit- und Befristungsgesetz, TzBfG). The court considered it decisive that the organisational concept was limited by the opening hours of the relevant bakery branch. The working hours requested by the plaintiff were contrary to this organisational concept, as the shifts requested by the plaintiff did not exist in the organisation. If the plaintiff’s request was granted and the shifts were reallocated, this would lead to a fundamental restructuring of the organisational concept. However, the defendant was not obliged to do so.
The LAG also stated that the employer must take into account any personal duties of care of the employees when weighing up their interests. However, the employer was not obliged to review the personal circumstances of each individual employee. Furthermore, it should also be noted that the organisation of working hours and childcare for individual employees should not lead to disadvantages for other employees covered by the organisational concept. If the defendant were to comply with the plaintiff’s request in this respect, in particular with regard to the distribution of working hours, the other employees of the relevant bakery branch, who also have children in the present case, would have to work more frequently at weekends or in the early or late shifts. However, these employees also have a right to spend time with their families, which is on a par with the plaintiff’s corresponding right.
Consequences for the practice
The judgement of the LAG Mecklenburg-Vorpommern is in line with the established case law of the BAG on the balancing of interests to be carried out by the employer in the decision on the specific request for part-time work and the specific allocation of working hours in accordance with Section 8 (4) TzBfG. It clearly demonstrates that the specific balancing of interests must be carried out on the basis of the specific circumstances of the individual case. It makes employers aware of the need to implement appropriate and needs-based organisational concepts that (ideally) take into account corresponding part-time requests and working time requests in individual cases, especially from employees with children requiring care, and therefore promote the compatibility of family and career for the relevant employees – or otherwise enable a legally sound argument for the rejection of the specific part-time request.
5. No GDPR claim for damages under Art. 82 GDPR in the event of a mere inconsequential breach of the provisions of the GDPR (ECJ judgement of 04.05.2023, C-300/21, Österreichische Post)
In its judgement of 4 May 2023 (C-300/21), the European Court of Justice (ECJ) had the opportunity to further specify the substantive requirements for the claim for damages under Art. 82 GDPR for breach of the data protection provisions of the GDPR.
The defendant in the case underlying the decision was Österreichische Post AG, which, among other things, holds a business licence as an “address publisher and direct marketing company” (pursuant to Section 151 of the Austrian Trade, Commerce and Industry Regulation Act) and, in this context, operated and operates address trading, whereby it sells target group addresses that it has purchased and received from other address dealers as well as data that it has collected itself. It carried out anonymised opinion surveys, anonymously asking interviewees about social demographic criteria such as gender, age, place of residence, type of residence (detached house, urban apartment building, etc.), formal education, etc., as well as their interest in political party election advertising. Based on these criteria, Österreichische Post AG formed marketing groups, which usually comprised several hundred people or more per group, but at least ten people per group. For these marketing groups, the defendant then calculated average probabilities in the form of percentages and used these to develop an algorithm to calculate, among other things, the probability that people with certain socio-demographic characteristics in certain regions would have an advertising interest in certain political parties. The defendant labelled the result of these calculations (marketing analysis procedure) as the “party affinities” of the respective marketing group. In the same way, she determined probability values for bioaffinities, investment affinities, donation affinities, distance trading affinities, life phases etc. of marketing groups. Finally, it assigned individuals to the marketing groups and thus to the “party affinities” and other affinities calculated by it on the basis of their regional and socio-demographic characteristics. In doing so, it processed the data of the data subjects without their consent. The defendant did not transfer the “party affinities” and other affinities to third parties – at least not until the time of the plaintiff’s request for information. The plaintiff became aware of the personal data transmitted by the defendant in this context on the basis of a corresponding request for information. He considered the affinity to the relevant party determined by the defendant on the basis of the aforementioned procedure to be insulting, embarrassing and jeopardising his credit and sued the defendant before the Landesgericht Wien für Zivilrechtssachen (8 Cg 34/20) for damages in the amount of EUR 1,000.00, among other things. He based his claim for damages on a claim under Art. 82 GDPR and argued that he had suffered non-material damage as a result of the exposure and the perceived annoyance. The court of appeal (OLG Wien, 14 R 143/20g-24) dismissed the claim with regard to the asserted claim for damages on the grounds that for non-material damage in accordance with Art. 82 GDPR, the tangibility of the specific impairment must be required in order to distinguish it from completely irrelevant inconvenience. The Austrian Supreme Court (OGH, rs60b 35/21x), which was called upon as the court of appeal, stayed the proceedings and referred the following questions to the ECJ for a decision: (1) whether a claim for damages has further requirements in addition to a pure violation of GDPR provisions, (2) whether there are further EU law requirements for the assessment of damages in addition to the principles of effectiveness and equivalence, and (3) whether a claim for damages in the case of non-material damage requires a certain materiality threshold of the damage.
With regard to the first question, the ECJ ruled that, according to the wording of Art. 82 GDPR, a claim for damages requires, in addition to a breach of GDPR provisions, material or non-material damage that must have been caused by the breach of the GDPR provision. The allegedly injured party must demonstrate and prove these requirements. The ECJ explained that the GDPR does not refer to the respective legal systems of the EU Member States for the interpretation of the terms “damage” and “compensation”, meaning that these terms must be interpreted uniformly in all EU Member States. In contrast to the provisions of Art. 83 GDPR, which contains provisions on fines, and Art. 84 GDPR, which regulates sanctions, Art. 82 GDPR does not contain a sanctioning character, but a compensatory function, on the basis of which damage is assumed.
For the second question, the ECJ ruled that the respective law of the member states is applicable for the assessment of the amount of damages, as long as the principles of equivalence and effectiveness are observed. According to these principles, the implementation of EU law must be carried out effectively and with a comparable level of protection in all Member States with regard to the protective purpose of the provision to protect individuals from damage caused by unwanted data collection.
With regard to the third question, the ECJ ruled that a materiality threshold may not be a prerequisite for a claim for damages under Art. 82 GDPR. This is because the criterion of materiality is so vague that different courts could assess the necessary extent of the difference in damages in individual cases. This would run counter to the uniform and consistent application of Art. 82 GDPR within the EU. Recital 146 of the GDPR also provides for an extensive interpretation of the concept of damage.
Consequences for practice
The decision of the ECJ provides partial clarity on the previously controversial question of the requirements for a claim for damages under Art. 82 GDPR, insofar as a mere breach of the law is not sufficient, but rather material or at least non-material damage must have been caused by the breach of the law. However, it remains unclear which requirements define immaterial damage and how the amount of compensation is to be assessed.
For employers, the ECJ’s decision is relevant in the context of employees’ rights to information about the processing of personal data in accordance with Art. 15 GDPR. In this context, it was previously disputed in German labour court case law in particular whether the delayed provision of information can give rise to a claim for damages pursuant to Art. 82 GDPR. The ECJ’s decision has not brought any legal certainty in this respect. In particular, if the plaintiff in question succeeds in sufficiently demonstrating and proving immaterial damage caused by a delay in the right to information, a claim for damages cannot be ruled out. Employers must take this decision into account in the next regular review of their data processing concept. If employers are affected in individual cases with corresponding claims for damages from specific employees, it is advisable to dispute the existence of compensable non-material damage, so that the employee must substantiate the relevant detrimental effect of the delayed and/or incomplete provision of information on his legal interests.
