No Revocation of Home Office Permission if New Place of Work is Far Away

Cologne Higher Labor Court, judgment of July 11, 2024 – 6 Sa 579/23

Now that working from home has largely become the norm during the coronavirus pandemic, a trend is emerging in which companies are increasingly ordering employees to be present in the office again (“return-to-office policy”). While in recent years it was often still left to the employees to decide on which and on how many days they wanted to work remote, employers are now increasingly specifying the number of weekly days of on-site work. Since many employees have now firmly integrated working from home into their lives (place of residence, childcare, etc.), the opposite arrangement of on-site work is also increasingly leading to corresponding legal disputes.

In this context, the Cologne Higher Labor Court (Landesarbeitsgericht Köln) recently dealt with the question under which conditions an employer can revoke a granted permission to work from home by virtue of its right to issue instructions. The court found that, in individual cases, reasons of equity play a significant role.

The Facts of the Case

The plaintiff, born in 1969, had been employed by the defendant employer, an automotive supplier with various German locations, as a project manager and branch manager since 2017. Due to the coronavirus pandemic and with the employer's consent, the plaintiff performed about 80 percent of his work from home in the last three years. His employment contract included a provision stating that his place of work refers to the entire group of companies and is based on the current projects.

Due to the closure of the claimant's office location, the employer transferred the claimant to a new office location 500 kilometers away at the end of March 2023, revoking his home office permit with effect from May 2023, and instructed him to perform his work there on-site. Alternatively – in the event that the transfer should be invalid – the employer issued a notice of dismissal with the option of altered conditions of employment. The plaintiff rejected this and filed a lawsuit against the transfer and the dismissal with the option of altered conditions of employment. He considered the measure unreasonable because, for personal reasons, it was not possible for him to relocate his center of life to such a distant location at such short notice.

The Cologne Higher Labor Court upheld the claim and ruled that the transfer and the dismissal with an option for altered conditions of employment were invalid. In doing so, the court followed the plaintiff's argument and emphasized that the employer had not observed the legal limits of the right to issue instructions. The employer then lodged an appeal with the Cologne Higher Labor Court.

Decision

The Cologne Higher Labor Court, however, upheld the judgment of the lower court and dismissed the employer's appeal.

In its reasoning, the Cologne Higher Labor Court declared the transfer invalid in its entirety because the limits of equitable discretion to be observed in the exercise of the right to issue instructions had not been observed. The employer had not sufficiently taken into account the interests of the plaintiff and had not presented a comprehensible organizational decision that could justify the revocation of the home office permit.

The Cologne Higher Labor Court ruled that the revocation of the home office permit was not justified by overriding employer interests. The plaintiff had a significant interest in maintaining the home office and in its location, as he had worked from home for years and was tied to this location for family and logistical reasons. The employer should have presented specific operational requirements that would necessitate the plaintiff's presence at the distant company location. Although the closure of one of the company’s locations would in principle justify the transfer to another location, this does not apply to the associated revocation of the home office permit.

Practical Tip

In principle, the fact that remote work has been allowed without reservation for a longer period of time does not imply that a tacit contractual amendment has been made to the effect that a restriction can no longer be imposed unilaterally. In other words, the right to issue instructions allows an employer to terminate a home office arrangement because it determines the place of work. An amendment agreement or a dismissal with an option of altered conditions of employment is not required.

Nevertheless, the decision of the Cologne Higher Labor Court makes it clear that employers would be well advised to regulate the granting of home office, its organization and also its termination in a differentiated manner by means of a home office agreement under the employment contract or, at the collective level, by means of a works agreement. Both, in order to sharpen the scope of the right to issue instructions. Otherwise, an employer can regularly only change its instruction (from a fairness perspective) and order a return to the office if operational reasons later arise that speak against remote work (see Munich Higher Labor Court, judgment of August 26, 2021 - 3 SaGa 13/21). In view of this, employers should protect their flexibility by making the granting of home office subject to agreements and reserving the right to (effectively) transfer or return clauses with regard to the place of work.