German Federal Labor Court, decision of October 13, 2021 - 5 AZR 211/21
"COVID-19" has shaped our everyday life for almost two years now. Short-time work, closed restaurants, lockdown in almost all industries, especially in retail; in short: many months that have clearly left their mark on education, professions, employees as well as employers. The issues surrounding COVID-19 are manifold; many blogs and newsletters document the range of topics and the development of the pandemic, cf. also the article on page X. In a recent ruling, the German Federal Labor Court (Bundesarbeitsgericht - BAG) had to decide on the problem of whether the employer must also bear the operating risk in the event of a lockdown, i.e. the officially ordered closure of the business, and against this background also owes remuneration to an employee. The Court ruled that the employer does not bear the risk of the loss of work and is therefore not obliged to pay any remuneration to the employees under the aspect of the so-called default of acceptance.
Summary of Facts
The facts underlying this decision have the peculiarity that the plaintiff was employed as a marginal employee in a sales outlet of the specialized trade, and the business was closed due to official order because of COVID-19. For this group of employees, the legislator did not provide for any entitlement to short-time allowance, so that the plaintiff could not draw any income at all, not even a statutory replacement benefit. From the circumstances described, the court of lower instance, the Lower Saxony Regional Labor Court (Landesarbeitsgericht (LAG) Niedersachsen), drew two conclusions that were fundamental to the decision: The employer generally bears the operating risk in the event of official closures. The LAG did not weigh the risks of the employer and the employee. It did not examine the question of an "interference with the basis of the transaction" and an adjustment of the contract, although this is not far-fetched. The LAG Lower Saxony also states that the defendant did not examine the possibility of employment elsewhere in a job not affected by the closure. Finally, the employer also failed to show that its existence was endangered by the payment of compensation. The LAG provides the main reasoning in the final paragraph of the decision. The LAG places the burden of a legislative deficit on the employer, which in the opinion of the LAG consists in the fact that the employer had chosen a contractual arrangement with the marginal employment which, in contrast to employment relationships subject to social insurance, was not mitigated by the use of short-time work and benefits from the statutory unemployment insurance. This contractual arrangement by the employer is advantageous for it, which is why the operating risk on its side "mirrors" the remuneration obligation.
In summary: In the absence of statutory fallback solutions, employers also bear the risk of an official closure in cases such as the COVID-19 pandemic. This argumentation appears problematic as imposing the "legal loophole" on the employer by unilaterally assigning the risk leaves the ground of the interpretation of applicable laws and would in any case require a more profound argumentation than that of the LAG as judicial interpretation of the law.
The BAG has taken a diametrically opposed view of the "legal loophole". The Court sees the legislator as having the duty to provide "adequate compensation for the financial disadvantages (...) incurred by the employees as a result of the sovereign intervention." This cannot be transferred to the employers; they would have to bear the compensation obligation, but not the risk that would arise on the employee side due to gaps in the compensation system subject to social insurance and the lack of downstream claims - such as short-time allowance.
The decision is likely to surprise large parts of literature, because - as Preis in the Erfurt Commentary (21st edition 2021, Sec. 615, marginal no. 132a et seq. with further references) - many participants in the discussion come to the conclusion that in cases of mutual "impossibility" of fulfilling their contractual obligations in the case of official measures, the employer bears the wage risk (loc. cit., marginal no. 132k). The latter is referred to claims for compensation under public law. The BAG expressly did not follow this view, but rather exonerated the employer from risks that had been realized as a result of the pandemic and referred to the legislator, who would have to provide a remedy for this case. No further argumentation can be inferred from the BAG press release available so far, so that it remains to be seen how the BAG has assessed the arguments of the lower courts in detail, in particular whether there will be an intensive discussion of the topic of "operational risk".
For practice, no major conclusions can yet be drawn from the preliminary contents of the press release; if necessary, claims for repayment against employees are conceivable, insofar as employers have paid in these constellations. The ruling is likely to have significance for legal policy above all as it can be stated that the BAG considers the legislator to be under an obligation.
By: Dr Thomas Drosdeck