Federal Labour Court, 27.09.2012, Ref.: 2 AZR 838/11
Labour law is the sum of the legal rules relating to work performed in dependent employment.
Labour law only considers those workers (employees) who are in a dependent legal relationship and provide their services at the discretion of the other party (employer).
As there is no uniform labour law, the legal relationships between employees and employers are governed by many different laws and legal norms.
In addition to the standards created by the state legislative bodies, there are also standards created between employers or employers' associations and trade unions (so-called collective agreements) or by employers and their works councils (so-called works agreements).
Company practices in the individual companies can also have an impact on the assessment of the employment relationship.
However, the most important reference point for the legal relationship of the employment relationship is the employment contract concluded between the parties.
The following diagram illustrates the legal basis of labour law:
In the above-mentioned judgement of the Federal Labour Court, the court had to deal with the concept of employer in the context of an action for protection against dismissal brought by a caretaker.
Facts of the Case:
The parties to the legal dispute were the plaintiff caretaker as well as the homeowners' association as defendant 1) and the administrator of the common property as defendant 2).
Represented by a predecessor of defendant 2), defendant 1) concluded an employment contract with the plaintiff as caretaker in September 1993. Among other things, the employment contract was worded as follows:
LABOUR CONTRACT
between
of the homeowners' association ..., represented by ... as administrator,
- hereinafter referred to as the authorised person
and
XXX
- hereinafter referred to as caretaker,
the following employment contract is concluded:
§ 1 Duration of contract
The employment relationship begins on 1 September 1993 and can be terminated by either party with one month's notice to the end of the month. ...
§ 2 Tasks of the caretaker
1. the caretaker must look after the communal property of the authorised employees, ...
§ 7 Authorisation to issue instructions
1. the administrator is authorised to issue instructions to the caretaker.
The authority to issue instructions is delegated to the head caretaker in accordance with the general objective of the tasks in the employment contract and on the basis of instructions from the administrator. Owners and committees elected by the authorised representative are not authorised to issue instructions.
2 The administrator is authorised to change the scope of duties set out in § 2 of this agreement.
§ 8 Supplementary regulations
Unless otherwise agreed, the provisions of Sections 611 to 630 of the German Civil Code (BGB) shall also apply to the relationship between the authorised employee and the caretaker."
On 30 April 2010, the defendant (2) terminated the employment relationship with the plaintiff in the name and on behalf of the defendant (1) with effect from 31 October 2010.
Plaintiff sees not the WEG, but the administrator as the employer
The plaintiff was of the opinion that, contrary to the external form of the contract, it was not the defendant 1) but the defendant 2) who was his employer.
Therefore, only the latter was authorised to demand the work performance.
All authority to issue instructions had been vested in her. The exercise of the employer function had thus been fully transferred to her.
His activities owed under the employment contract had served the defendant 2) to fulfil its own obligations towards the defendant 1) based on the management contract.
In order to avoid an abuse of rights, the splitting off of the employer's right to issue instructions must not remain without effect on the position under the law on protection against dismissal.
The cancellation of the COA therefore did not terminate the employment relationship
Otherwise, large companies could set up a large number of small companies that fall outside the scope of § 23 KSchG without giving up their position as employers and - due to the purely formal employment of employees in small companies - escape the application of the Protection against Dismissal Act.
In this respect, the plaintiff had applied,
1. declare that his employment relationship with the defendant 2) was not terminated by the written notice of termination dated 30 April 2010;
2. declare that his employment relationship with the defendant under 2) does not end due to other circumstances of termination, but continues unchanged beyond 31 October 2010;
3. order the defendant (2) to issue him with a final certificate covering behaviour and performance.
The labour court initially seized and subsequently the regional labour court dismissed the action. With his appeal, the plaintiff pursued the claims against the defendant 2) before the Federal Labour Court.
Federal Labor Court judgment:
Federal Labour Court follows the lower courts and does not consider defendant to have passive legitimacy
The BAG also followed the view of the courts previously seised and ruled that the claim was unfounded.
The defendant under 2.) had no right of defence either for the request for a declaratory judgement or for the request for the issue of a certificate, as there was no employment relationship between it and the plaintiff.
An employment relationship between the plaintiff and the defendant 2) had not been established by contractual agreement.
An employment relationship is the bilateral obligation to exchange work for remuneration between an employee and employer established by an employment contract
An employee is a person who, on the basis of a contract under private law, is obliged to perform work in the service of another person in personal dependence and subject to instructions.
The employer is the other party to the employment relationship, i.e. the party that can demand the services from the employee under the employment contract and thus has the economic and organisational power of disposition over the employee's work performance and the benefit from it.
In this respect, it depends on the recognisable will of the parties in the individual case.
Union law does not require a different understanding of this assessment. It is true that the protection afforded by Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses (OJ EC L 82 of 22 March 2001, p. 16) does not in all circumstances require a contractual relationship between the employees and the transferor.
A so-called non-contractual employer, to whom the employees are permanently transferred, could also be considered a "transferor" within the meaning of Directive 2001/23/EC.
However, the concept of the transferor within the meaning of the Transfer of Undertakings Directive is to be distinguished from that of the employer with whom an employment relationship is established.
Whether such a right exists is to be assessed according to national law.
The employer was the WEG and not the administrator
Applying these principles, no employment relationship had been established between the plaintiff and the defendant 2) or its predecessor. According to the contractual agreements and the recognisable will of the parties, the employer was not the latter, but the defendant 1).
The written employment contract of 1 September 1993 had been concluded between the plaintiff and the defendant 1) - represented by the predecessor of the defendant 2) as administrator.
Defendant 1) is expressly referred to therein as the "authorised employee". According to § 8, the legal relationship established by the contract exists between the latter and the plaintiff. The administrator had signed this "for the authorised employee".
The administrator had not been granted the exercise of the employer powers arising from the employment relationship in her own right, but derived from the legal position of the defendant 1).
Insofar as the administrator was authorised to issue instructions to the plaintiff in accordance with § 7 (1) and (2) of the employment contract of 1 September 1993 and was entitled to change the plaintiff's area of responsibility set out in § 2 of the contract, she was only entitled to these powers as the representative of the defendant 1) according to the unobjectionable interpretation of the Regional Labour Court.
In this respect, it can be left open whether the provisions in the employment contract are general terms and conditions whose interpretation by the Regional Labour Court is subject to comprehensive review in appeal proceedings, or whether atypical declarations of intent exist whose interpretation can only be reviewed on appeal as to whether the Court of Appeal violated rules of interpretation, infringed principles of reasoning and experience or disregarded material facts.
The interpretation by the Regional Labour Court would also stand up to an unrestricted review.
It is true that the wording of the provisions in § 7 of the employment contract is not clear with regard to the right under which the administrator should be authorised to issue instructions to the plaintiff.
However, it is clear from the structure of the contract that the latter should exercise the right of direction on behalf of the homeowners' association.
Thus, the administrator was designated both at the beginning and in the signature line of the contract text as the representative of the defendant 1).
According to Section 7 (1) (2) sentence 1 of the employment contract, the authority to issue instructions can also be delegated to the head caretaker.
This makes it clear that the contract only regulates the administrator's authority to issue instructions, but does not stipulate that the administrator or, if applicable, the authorised head caretaker should exercise the associated powers by virtue of their own rights.
The purpose of the employment contract, as it was recognisable both for the parties and for an average contractual partner of the defendant 1), also spoke against the administrator or the head caretaker being authorised to issue instructions in their own right.
Pursuant to § 2 no. 1, the employment contract serves the purpose of managing the joint property of the defendant 1) by the plaintiff. For this purpose, the defendant 1) utilises the respective administrator as its representative both in the establishment of the employment relationship and in its implementation.
The appointed administrator is the executive body of a homeowners' association.
Pursuant to § 20 para. 1 WEG, he is responsible for the administration of the common property in accordance with §§ 26 to 28 of the law.
He can conclude contracts both in his own name and in the name of the homeowners' association.
The administrator expressly concluded the employment contract in the name and on behalf of the WEG
In the case in dispute, however, the former administrator of the joint property of defendant 1) had expressly concluded the employment contract with the plaintiff in the name of and thus as the representative of defendant 1); her power of representation as such was not in dispute between the parties.
Nor had the defendant 1)'s authority to issue instructions to the plaintiff been excluded in the employment contract.
The defendant 1) would rather be represented by the appointed administrator. According to § 7 no. 1 para. 2 sentence 2 of the employment contract, the individual "owners" and the "committees elected by the condominium owners' association" were not authorised to issue instructions.
However, this exclusion does not affect them - the defendant 1) - itself as a community of homeowners.
Only the contracting parties, i.e. the plaintiff and the defendant (1), were entitled to terminate the employment contract in accordance with § 1 sentence 2 of the contract.
Accordingly, the defendant 2) expressly declared the termination of 30 April 2010 in the name of and on behalf of the defendant 1).
Defendant 1), as the owner of the joint property, was itself the beneficiary of the claim to the plaintiff's labour.
There is neither any indication from the Condominium Act nor any other evidence that the defendant 2), as the administrator of the common property of the defendant 1), should have had the caretaker tasks carried out by its own employees.
Contrary to the plaintiff's opinion, the contract design does not lead to an abusive circumvention of the Dismissal Protection Act.
Defendant 2) therefore did not have to be treated as an employer for this reason.
The employment contract was not only formally concluded with the defendant 1). Rather, the homeowners' association remained the owner of the employer's rights, which the administrator merely had to exercise on its behalf, and was the economic beneficiary of the plaintiff's work performance.
The interposition of an administrator to exercise the employer's rights on its behalf clearly pursues the purpose of ensuring or facilitating the defendant 1)'s ability to act as an employer.
The exclusion of the individual owners and the committees from exercising the authority to issue instructions serves to avoid conflicts of interest.
If several persons on the employer's side could theoretically be considered as contractual partners, an interpretation of Sections 1, 23 (1) KSchG in conformity with the constitution or general legal principles would not require the employment relationship to be regarded as being established with the party employing the larger number of employees.
Source: Federal Labor Court
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
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