The Most Important Terms and Rules of German Labor Law – Information from a Lawyer

Attorney Dimitrov explains the most important terms and rules in German labor law in the following article. If you have any questions regarding labor law, Attorney Dimitrov and Attorney Filippatos are available for consultation at their law firm in Munich, via email, phone, or video conference. Legal advice and representation in labor law are available throughout Germany. Attorney Dimitrov and Attorney Filippatos are also available for labor law cases with international aspects.

Labor Law Attorney – The Most Important Terms and Information

Labor law regulates the relationship between employers and employees and is divided into individual labor law and collective labor law.

Individual Labor Law

Individual labor law governs the legal relationships between an employee and an employer. It covers all contractual and legal provisions that define the rights and obligations of both parties in the employment relationship.

The most important areas of individual labor law:

  • Establishment of the Employment Relationship
    • Formation of the employment contract
    • Formal requirements and documentation obligations
    • Freedom of contract and legal restrictions
  • Content of the Employment Relationship
    • Rights and obligations of employees and employers
    • Working hours regulations, remuneration, vacation entitlement
    • Employer’s right to issue instructions
  • Changes and Disruptions in the Employment Relationship
    • Transfer and modification termination
    • Maternity protection, parental leave, illness
    • Incapacity to work and continued remuneration
  • Termination of the Employment Relationship
    • Termination (ordinary, extraordinary)
    • Protection against dismissal under the Dismissal Protection Act (KSchG)
    • Severance pay, termination agreements, settlement agreements
    • Right to a certificate under § 109 of the Trade Regulation Act (GewO)

Individual labor law ensures that employees are protected while preserving the rights of employers. A labor law attorney can best examine and enforce your rights.

Collective Labor Law

Collective labor law governs the relationships between labor unions and workforce representations and their members.

Important Legal Foundations in Labor Law

Labor law is primarily based on the provisions of §§ 611 ff. of the German Civil Code (BGB) and includes regulations from various other laws, including:

  • Dismissal Protection Act (KSchG)
  • Continued Remuneration Act (EFZG)
  • Federal Vacation Act (BUrlG)
  • Works Constitution Act (BetrVG)
  • Collective Bargaining Act (TVerfG)

Formation of an Employment Relationship

In principle, contractual freedom prevails. An employment relationship is established by concluding an employment contract. However, contractual freedom is restricted by statutory provisions, collective agreements, or company agreements. A labor law attorney can provide clarity in case of uncertainties and questions.

Employment Contract

An employment contract is a mutual agreement in which the employee commits to providing work services, while the employer commits to paying the agreed remuneration (§§ 611, 612 BGB).

During contract negotiations, both parties have special obligations, such as duties of information, diligence, and confidentiality.

Although an employment contract can generally be concluded informally, employees are entitled to a written record of essential working conditions under the Documentation Act (NachwG).

Employee

An employee commits to providing work services at a specified time and place under a private-law contract (§ 611 BGB). The work is performed dependently and under directive authority. For questions, consulting a labor law attorney is advisable. Attorney Dimitrov offers a free initial consultation.

Characteristics of an Employee:

  • Work based on a private-law contract (distinction from civil servants, judges, soldiers)
  • Performance of work for remuneration
  • Non-independent activity (place, duration, manner are determined)
  • Integration into the employer’s business
  • Obligation to follow employer’s instructions

Distinction: Workers and Employees

All employees fall into two categories:

  • Employees: Those engaged in commercial, administrative, or intellectual activities.
  • Workers: Those whose work primarily involves physical labor.

Employee-like Persons

These include self-employed individuals and home-based workers who are economically dependent on a principal but are not fully integrated into the company structure.

Freelancers

Freelancers are self-employed entrepreneurs working for a company based on a service or contract agreement.

Senior Employees

Senior employees hold a special position as they assume some employer functions. Therefore, special legal provisions apply to them (§§ 18 para. 1 nos. 1 & 2 ArbZG, 14 para. 2 KSchG).

Employer

An employer is any natural or legal person who employs at least one employee. According to §§ 611, 612 BGB, they are obligated to pay the agreed remuneration.

Deficiencies in the Conclusion of an Employment Contract

Besides termination, an employment relationship can also be dissolved through annulment due to:

  • Error in content or declaration (§ 119 para. 1 BGB)
  • Error regarding essential characteristics (§ 119 para. 2 BGB)
  • Fraudulent misrepresentation (§ 123 BGB)

Prohibited Questions in Job Interviews

Applicants are not required to truthfully answer certain questions, including:

  • Pregnancy
  • Illnesses
  • HIV infection
  • Severe disability
  • Financial circumstances (except for trust positions)
  • Criminal records (except for trust positions)
  • Marriage intentions
  • Religious affiliation

Rights and Duties During the Employment Relationship

Remuneration

Wages arise upon contract conclusion (§ 611 para. 1 BGB). If no specific provision exists, § 612 para. 2 BGB applies.

Types of Wages:

  • Time-based wage: Payment based on working hours, independent of results
  • Piecework wage: Payment based on performance (e.g., number of units produced)
  • Performance-based remuneration: Bonuses, commissions, or premiums
  • Capital-forming benefits
  • Special payments: Christmas bonus, anniversary bonuses

Vacation Entitlement

Under the Federal Vacation Act (BUrlG), every employee is entitled to at least 24 working days of vacation per year, with a six-month waiting period.

During vacation, wages continue to be paid. If vacation is not taken, compensation may be granted (§§ 7, 8 BUrlG).

Termination of Employment Relationship

Methods:

  • Termination Agreement (mutual termination)
  • Death of the Employee
  • Expiration of a Fixed-term Contract (§ 620 BGB)
  • Unilateral Withdrawal from a De Facto Employment Relationship
  • Dismissal (ordinary or extraordinary)

Protection Against Dismissal

A dismissal protection lawsuit must be filed within three weeks of receiving the dismissal notice at the labor court (§ 4 KSchG). This lawsuit aims to establish the invalidity of the dismissal.

Employment Reference

Types:

  • Simple Reference: Contains only information about the type and duration of employment.
  • Qualified Reference: Includes an evaluation of work performance and social behavior.

Formal Requirements:

  • Must be written (no email or scan)
  • Must be on company letterhead with complete employer details
  • Must not contain creases, stains, or corrections
  • Must be neutral and free of hidden negative codes
  • Must be benevolent but truthful