Foreign Investment Commission

58th UIA Congress Florence

Is my country attractive for foreign investment

„Labour law aspects in Germany“

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Conference of the Foreign Investment Commission at the 58th UIA Congress

I. Labour Regulations in Germany

Fundamentals

Under German labor and employment law, a distinction must be made between the relationships between employees and employers and the relationships between works councils, trade unions and employers.

German labour and employment law is not laid down in one uniform act; there is a multitude of sources of law which determine the rights and obligations of the employee and the employer. Furthermore, European Law is playing an increasingly important role in German labour and employment law.

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Conference of the Foreign Investment Commission at the 58th UIA Congress

II. Labour Regulations in Germany

Employment Agreement

German employment contract law is dominated by many statutory regulations for the protection of employees, i.e.

• mandatory minimum leave,

• continued remuneration in the event of sickness,

• maximum working hours,

• protection against dismissal.

From January 2015 there is a statutory minimum wage law in Germany (hourly wage of 8,50 Euros).

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Conference of the Foreign Investment Commission at the 58th UIA Congress

III. Labour Regulations in Germany

Works Council

The works council is the main employee representative body.

It is elected by all of the establishment`s employees every four years; the formation of a works council is not mandatory for employees, but it is relatively easy for employees or unions to initiate and an employer may not prevent the formation of a works council.

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Conference of the Foreign Investment Commission at the 58th UIA Congress

IV. Labour Regulations in Germany

Shop Agreements

Shop agreements are special contracts concluded between a works council and an employer which contain general regulations concerning working conditions.

Shop agreements have direct and binding effect on the individual employment relationships of all employees in the business establishment.

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Conference of the Foreign Investment Commission at the 58th UIA Congress

V. Labour Regulations in Germany

Trade Unions

Trade unions are associations of individual employees organized to represent the interests of the employees vis-à-vis the employers and employers’ associations.

They must be independent and organized on supra-company level and may not have members from the opposing side, i.e. employers.

Approximately one quarter of all German employees belong to a union, but the degree of organization is much higher in some traditional areas, such as the metal industry.

The counterpart are the employers’ associations.

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Conference of the Foreign Investment Commission at the 58th UIA Congress

VI. Labour Regulations in Germany

Collective Bargaining Agreements

Collective bargaining agreements are contracts concluded between a single employer or an employers’ association on the one hand and a trade union on the other. Collective bargaining agreements generally regulate a large number of key working conditions such as

• working time,

• remuneration

• notice periods for termination,

• number of vacation days,

• overtime bonuses.

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Conference of the Foreign Investment Commission at the 58th UIA Congress

VII. Labour Regulations in Germany

Transfer of Business

Requirements for and legal consequences of a transfer of business are largely based on EU directives whose purpose is to protect employees by retaining employment relationships unchanged.

Under the provision that a business or part of a business passes over to an proprietor by virtue of a legal transaction, as a legal consequence the employment relationships will pass over to the acquirer automatically.

In other words, in the case of an asset deal there is a substitution of the contractual party on the employer’s side.

In the case of a share deal there is no protective legislation as the employment relationships remain unchanged.

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Conference of the Foreign Investment Commission at the 58th UIA Congress

My contact details

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Conference of the Foreign Investment Commission at the 58th UIA Congress

Many thanks for your attention!