Germany: Employers beware: Claim for damages in case of violation of the NachweisG

Damages for delay due to missing reference to exclusion period

In its ruling of 22 September 2022 — 8 AZR 4/2, the Federal Labour Court ("BAG") decided that employees can assert a claim for damages against employers pursuant to sec. 280 para. 1 and 2 in conjunction with sec. 286 of the German Civil Code (Bürgerliches Gesetzbuch — “BGB”), provided that there has been a breach of the duty to inform pursuant to sec. 2 para.1 cl. 1 of the NachweisG old version and employees can prove an adequate-causal damage.

In the case in question, an employee working as a sexton sued the church congregation for compensation for damage caused by delay as a result of insufficient documentation on the exclusion period.

The employment contract referred to the Church Work and Remuneration Ordinance (“KAVO”) in its currently valid version including annexes. Thus, sec. 57 para. 1 KAVO was also referred to, which contains an exclusion period for claims arising from the employment relationship which are not asserted within six months after their due date.

Please note: It is problematic that this exclusion period was not explicitly referred to, as is provided for in the NachweisG for essential contractual conditions (sec. 2 para. 1 cl. 1 old version.). However, information in accordance with the NachweisG is not a requirement for the effectiveness of the respective employment contract agreement. This means that even without explicit reference by the church congegation to the exclusion period, it became an effective part of the contract by referring to the KAVO.

When the remuneration system was changed in 2002, the employee was placed in the wrong remuneration group, which meant that he received lower remuneration than he was actually entitled to. He became aware of the incorrect classification 12 years later and thus at a time when the claim to the differential pay had already lapsed according to sec. 57 para. 1 KAVO.

For this reason, the employee brought an action against the church congregation for payment of damages in the amount of the differential pay pursuant to sec. 280 para. 1 and 2 in conjunction with 286 BGB. He based his claim for damages on the violation of the obligation to inform under sec. 2 para. 1 cl. 1 NachweisG (old version).

What was the BAG's ruling?

The BAG clarified that an exclusion period is an essential contractual condition to which employers must draw the attention of their employees pursuant to sec. 2 para. 1 cl. 1 NachweisG (old version).

In the case in question, the church congregation violated this obligation by not expressly informing the employee of the exclusion period under sec. 57 para. 1 KAVO in any of the written transcripts or copies of the contract provided to him.

The church congregation had to compensate its employee for the resulting damage, i.e. the difference in remuneration which the employee could no longer claim due to the forfeiture, pursuant to sec. 280 para. 1 and 2 in conjunction with sec. 286 BGB.

What does this imply for employers?

Employers must be prepared for the fact that a breach of the obligation to inform the employee under the NachweisG can result in employees being able to assert a claim for damages for default for an adequate-causal damage.

According to the case law of the BAG, employees thus benefit from an easing of the burden of proof, because it is presumed that they would have complied with the exclusion or expiry period if they had known about it. Restrictively, the BAG makes it clear that this presumption does not go so far that employees would have asserted claims of which they were unaware in due time.

It should be noted, that for employment contracts containing reference clauses to collective agreements, there is no separate obligation for employers to inform their employees that they refer to the relevant clauses of the respective collective agreement. The same applies to references to company or service agreements.

Therefore, liability for default due to violation of the NachweisG can only be considered in cases where a exclusion period has been effectively referred to (e.g. by referring to a remuneration regulation) without explicitly writing it down in the employment contract.

Does this also apply to the new NachweisG?

With the amendment of the NachweisG as of 1 August 2022, the information obligations of employers have been expanded and concretised. In the conclusion, the principles established by BAG rulings with regard to legal consequences under general civil and procedural law in the event of a breach of the obligation to inform pursuant to sec. 2 para. 1 cl. 1 of the old version of the NachweisG apply equally to sec. 2 para.1 cl. 1 of the new version of the NachweisG. Accordingly, damages for delay are conceivable under both the old and the new legal situation.

In addition, the sanctions provided for under the new NachweisG for employers who violate their information obligations must be observed. A fine of up to EUR 2,000.00 may be imposed.

Does this also apply to the new NachweisG?

We recommend that employers inform themselves about the obligations arising from the NachweisG and draft employment contracts in accordance with these requirements in order to prevent the assertion of possible claims for damages by employees and possible fines.

Experience shows that employers attach great importance to the agreement of exclusion periods. In addition to a reference in accordance with the NachweisG, employers must also observe other statutory provisions such as sec. 202 para. 1 BGB and sec. 307 and following BGB. In addition, current case law on exclusion periods should be taken into account.

We would like to thank our research assistant Sophia Sahle for her support on this paper.