Labor relations between employers and employees are regulated in the
Federal Republic of Germany by legislation, collective agreements and
contracts of employment. The so-called "freedom of coalition"
is guaranteed to employers and employees alike under the Basic Law (Germany's
constitution). For the social partners, this ensures the freedom to negotiate
collective agreements, i.e. autonomy in collective bargaining.
The overwhelming majority of collective agreements are restricted to
particular regions. There are also so-called in-house collective agreements
for individual companies.
The legal relationship between an employee and his (her) employer is
established through the finalization of a contract of employment. This
procedure is generally informal and, therefore, need not be made in writing.
Since the contract of employment is a special type of contract for the
rendering of services, it is subject to the provisions of the Civil Code.
In particular, industrial safety regulations and the arrangements entered
into in favor of employees in collective agreements and company agreements
must also be observed when filling in the general framework of employment
The Federal Holiday with Pay Act stipulates a minimum of 20 working days
leave per annum for all employees. However, there are also other collectively
agreed rules regarding leave which go beyond the statutory minimum period
in the old and new federal states.
Employees are entitled to wages/salaries during their leave. An additional
payment (holiday bonus) is also made. There is, however, no legal right
to this payment unless it is stipulated in a collective agreement or individual
In Germany employees have a legal right to the continued payment of 80%
of wages or salaries in the event of sickness. This right extends to a
period of six weeks.
The employer-employee relationship comes to an end by:
-- termination of the contract by mutual agreement
-- end of the term of the contract of employment
-- notice of termination of the contract of employment
According to the Law on Periods of Notice, standard periods of notice
apply to salaried employees and wage-earners in the old and new federal
states. The basic period of notice to be observed by the employee and
employer is four weeks on the 15th or the end of a calendar month. In
companies with up to 20 employees, a basic period of notice of four weeks
without a fixed date can be agreed on in an individual contract. Depending
on the length of service in the company, the periods of notice to be observed
by employers when terminating employment are extended. They are increased
to seven months at the end of the month for a length of service amounting
to 20 years. The length of service is calculated from the age of 25 of
The parties to a collective agreement are also free to decide on different
periods of notice. Employees and employers not bound by a collective agreement
may stipulate collectively agreed periods of notice in an individual contract.
Statutory protection against dismissal is not influenced by the Law on
Periods of Notice. Irrespective of the individual periods, a notice of
termination of the contract of employment may only be issued if it is
corroborated by the facts and appears socially justified. In other words,
the circumstances of the individual case must be taken into account. In
case of large-scale dismissals, the employment office in charge must be
notified. The notices of termination of employment do not become valid
until they are authorized by the employment office or alternatively until
one month has elapsed since receipt of the above-mentioned information.
Exceptional dismissal without notice is only possible if there is a reasonable
cause due to the behavior of the employee.
Labor cooperation between employers and employees in a company is dealt
with by the Works Act. According to this Act, every company with at least
five employees must have a works council, whose number depends on the
size of the work force. The works council has the right of co-determination
in certain social matters, the right of co- determination or participation
in certain personnel decisions and the right to information on specific
In companies with more than 100 employees, an economic committee is set
up to report to the works council on economic matters. In the case of
joint stock companies, limited liability companies and cooperatives with
more than 500 employees, one third of the members of the supervisory board
must be employees. In the case of companies in the iron, coal and steel
industry, provision is made for equal representation on the supervisory
board by shareholders and representatives of the work force. A director
representing the employees with responsibility for social affairs is also
appointed (qualified co-determination).
Following the introduction of the Co-determination Act, co-determination
was extended on a company basis to other sectors of industry. The law
mainly applies to limited liability companies, joint stock companies,
partnerships limited by shares and companies which have a controlling
interest in another firm (group), providing the company employs more than
2,000 people. This number may be less for group companies if all controlling
companies together have a total work force of more than 2,000 employees.
Exceptions to the Co- determination Act are those companies which have
a political, religious, educational or charitable purpose.
SOURCE: GERMANY INFO