No risk of loss of working hours on the part of the employer in the event of a plant closure in the course of the Corona lockdown

Press release of the Federal Labour Court dated 13.10.2021 - 5 AZR 211/21

If the employer has to temporarily close his business due to a government-imposed general "lockdown" to combat the Corona pandemic, he does not bear the risk of the loss of work and is not obliged to pay remuneration to the employees under the aspect of default of acceptance. This press release of the Federal Labour Court of 13 October 2021 must have gone through the German economy like a drumbeat. 

This is because in German labour law the principle of "no pay without work" applies. However, this is broken by numerous exceptions. These include, among other things, that the employer bears the operational risk and owes his employees, whom he cannot deploy in the event that this risk materialises, continued payment of remuneration in accordance with the principles of default of acceptance. Therefore, when many companies had to cease operations in the spring of 2020 due to the Corona pandemic as a result of official closure orders, the question arose for many employers who were subsequently unable to employ all or part of their workforce as to whether or not the pandemic-related closures constituted a case of the risk of loss of work. 

The Federal Labour Court had to deal with this very question in the case underlying the press release and came to the - admittedly surprising - conclusion that there was no case of an operational risk to be borne by the employer.

Facts

Since October 2019, the plaintiff had been working as a marginal employee against a monthly remuneration of EUR 432.00 in the sales department of a branch of the defendant in Bremen, which operates a trade in sewing machines and accessories. In April 2020, the store was closed due to the "General Decree on the Prohibition of Events, Meetings and the Opening of Certain Establishments for the Containment of Coronavirus" of the Free Hanseatic City of Bremen of 23 March 2020. Therefore, the plaintiff could not work and did not receive any remuneration. In her action, she sought payment of her remuneration for the month of April 2020 on the grounds of default of acceptance. The plaintiff was of the opinion that the closure of the business due to an official order was a case of operational risk to be borne by the defendant as employer. The defendant opposed this and claimed that the measures ordered by the Free Hanseatic City of Bremen to combat the pandemic concerned the general risk of life which could not be controlled and had to be borne equally by everyone.

The lower courts granted the action. The revision of the defendant, which was allowed by the Lower Saxony Regional Labour Court (judgment of 23 March 2021 - 11 Sa 1062/20), was successful.

Content of the press release

According to its press release, the Federal Labour Court follows the view of the defendant and states that the employer does not bear the risk of loss of work if - as in the present case - in order to protect the population from severe and fatal courses of disease as a result of SARS-CoV-2 infections, social contacts are reduced to a minimum by order of the authorities in a federal state and all establishments which are not necessary for the care of the population are closed almost nationwide. In such a case, an operational risk inherent in a particular business did not materialize. Rather, the impossibility of work performance was the consequence of a sovereign intervention to combat a dangerous situation affecting society as a whole. 

It was. therefore, up to the state to ensure, where appropriate, adequate compensation for the financial disadvantages suffered by employees as a result of the sovereign intervention - as was partly the case with the facilitated access to short-time allowance. Insofar as such compensation was not guaranteed - as in the case of the plaintiff as a marginally employed person - this was based on gaps in the regulatory system under social security law. However, the employer's payment obligation under employment law could not be derived from the absence of downstream claims.

Significance of the decision for practice

Notwithstanding the fact that a final assessment of the decision is not possible without reading the reasons for the decision - which are not yet available - the significance of the present decision is likely to be immense. 

At first glance, the Federal Labour Court's argumentation that in the case of the Corona pandemic no risk specific to the respective company materialises seems plausible. Less comprehensible, on the other hand, is the consideration that it is a matter for the state to compensate for the resulting disadvantages for the employees by - as happened - facilitating access to short-time allowance. For, notwithstanding the fact that it was not possible in the plaintiff's case to submit an application for short-time allowance, it is the employer's responsibility to notify the loss of work and to apply for short-time allowance for the employees concerned. Thus, the employees are dependent on the employer's cooperation. It is also usually the employer who takes the initiative in arranging for short-time work by means of contractual arrangements, as this enables the employer to protect himself more efficiently than the employees against the consequences of a pandemic-related work stoppage. However, the extent to which this consideration played a role in the Federal Labour Court's decision cannot be assessed here and, thus, remains to be seen.

Practical advice

If employers have continued to pay wages during the lockdowns caused by the pandemic - for example, because they did not meet the requirements for short-time allowance - the Federal Labour Court has ruled that it is generally possible to reclaim these payments. In addition to the requirements under collective and individual law in the individual case, the aspect of company peace must also be taken into account when making this decision.