Survivors’ benefits - Minimum duration of marriage

Federal Labor Court (Bundesarbeitsgericht; BAG) dated February 19, 2019 – 3 AZR 150/18

A clause in a preworded pension commitment stipulating a minimum of ten years of marriage as per the date of death as a prerequisite for the disbursement of survivors’ benefits violates German general terms and conditions law and is thus void and invalid.  

Facts of the case

The plaintiff was married to the defendant’s employee for four years before said employee passed away in April 2015. The pension plan agreement entered into by and between the employee and the defendant stipulated widow’s benefits which, according to Sec. 4(2) lit. a of the agreement would not be disbursed to widows unless they had been married with the deceased employee for at least ten years prior to his death. The plaintiff’s lawsuits aims at a ruling in which the defendant is ordered to disburse the widow’s benefits. 

Neither before the labor court nor before the regional court was the plaintiff successful with her lawsuit.

Decision

The plaintiff’s appeal before the BAG, however, was successful. The BAG is of the opinion that the above-mentioned clause is in violation of Sec. 307(1) s. 1, (2) No. 2 German Civil Code (Bürgerliches Gesetzbuch; BGB) and thus void and invalid. According to the BAG, the restriction of widow’s benefits to widows married to the deceased employee for at least ten years is an unreasonable discrimination against the employee. Such restriction could not be justified by claiming that there were justified and equitable employer interests.

In principle, the employer could have a justified interest in mitigating financial risks triggered by survivors’ benefits. In this case, however, the stipulated restriction was not based on risk considerations. Corporate pension benefits are deemed remuneration paid to the employee which he/she has accrued regardless of the duration of his/her marriage. In addition, the corporate pension benefits should also be deemed consideration for years of service. Hence, there is no intrinsic connection between the employment and the duration of the marriage which is part of the personal lifestyle. 

Neither does the employer have a justified interest in this case in respect of preventing so-called marriage for maintenance (Versorgungsehe). While such interest was basically legitimate and would have to be recognized, a period of ten years was deemed too long. This could in particular be derived from a comparison with the legal regulations regarding the statutory pension insurance (Sec. 46(2a) Vol. VI of the German Social Security Code (Sozialgesetzbuch; SGB). According to said regulation, the minimum period of marriage is at least one year. In addition, the law deems it permissible to rebuke the legal assumption on a case-by-case basis when assessing a marriage lasting less than one year. Furthermore, the respective provision regarding a minimum period of marriage was in no way, shape or form related to the defendant’s interest to mitigate a new, high benefit risk which only manifests in a rather late stage of the employment. Indeed, the minimum period requirement stipulated in the pension plan agreement did not only apply to marriages entered into at a later age, but also to those marriages entered into while performing work or in younger years, respectively.

Practical tip

The BAG’s decision shows that clauses to mitigate risks relating to survivors’ benefits should be reviewed thoroughly and comprehensively. If an exemption clause is based on randomly selected time periods without any intrinsic relation to the employment relationship and the intended purpose, there would be unreasonable discrimination against the survivor entitled to the benefits due to the fact that the objective of the survivors’ benefits is at risk as a result of such ten-year minimum period of marriage. When preparing a risk mitigation clause, the employer should first consider which specific risks should be mitigated. It must be taken into account that, according to the BAG, there are meanwhile a number of legally safe options to mitigate the risk of any financial burden as a result of survivors’ benefits. Given these facts, it is recommended that existing clauses be reviewed and controversial or doubtful risk mitigation clauses, if possible, be replaced by effective clauses. The same applies when employment contracts must be renewed on a regular basis, for example those with members of the board of directors and managing directors.