General reference to collective agreement with deviations
The employment contract referred dynamically to the DRK reform collective agreement (hereinafter: RTV). However, it regulated secondary employment, the acceptance of gifts and the limitation period in deviation from the parallel provision in the collective agreement. In some cases, the contractual provisions deviated from the collective agreement provisions to the detriment of the employee. The collective agreement was not simultaneously normative due to the lack of mutual collective bargaining coverage.
After receiving an annual bonus, the employee resigned with effect from 31 March of the following year. The employer demanded repayment of the bonus in accordance with Section 23 (5) RTV, which stipulates that employees who leave ‘through their own fault or at their own request’ by 31 March of the following year must repay the bonus.
Review of the referenced collective agreement clause under general terms and conditions?
The Federal Labour Court had to clarify whether the repayment clause in Section 23(5) RTV is subject to review under Sections 305 et seq. BGB or whether it is exempt from review due to its reference to the collective agreement.
According to Section 310(4) sentence 3 in conjunction with Section 307(3) BGB, collective agreements are treated as legal provisions and are generally exempt from content review. This privilege is based on the legislator’s assumption that collective agreements are appropriate due to the parity of bargaining power between the social partners and that they strike a fair balance between the interests of both sides.
Collective agreement only exempt from review if fully applicable
The Federal Labour Court (BAG) takes a very restrictive stance: if the collective agreement only applies on the basis of a reference in the employment contract, the collective agreement standards are only subject to review if the collective agreement ‘applies without restriction and in principle in its entirety to the employment relationship’.
Any deviation from the collective agreement, even within the framework of a general reference, eliminates the control privilege
The accuracy of collective agreements is based on balancing the advantages and disadvantages for the parties to the agreement. Collective agreements represent a negotiated compromise: advantages in individual provisions are often achieved at the expense of disadvantages in other provisions.
The Federal Labour Court (BAG) has always carried out a review of general terms and conditions if the employment contract only referred to individual provisions or individual sets of provisions.
What is new is the BAG’s finding that the control privilege also ceases to apply in the case of a general reference to a collective agreement if the employment contract contains provisions that deviate from the collective agreement in specific areas to the detriment of the employee.
In the case decided by the BAG, the employment contract contained deviating provisions on secondary employment and the acceptance of gifts, as well as a deviating exclusion clause.
Reference only to complete collective agreements, not to the full set of collective agreements required
The BAG ultimately leaves it to the parties to the collective agreement to determine the extent to which collective bargaining provisions must be referred to without restriction: the control privilege merely requires an unrestricted reference to a collective agreement concluded by the parties to the collective agreement. A reference to all collective agreements of the parties to collective bargaining that apply to the industry within a geographical area is not necessary. By concluding a self-contained collective agreement, the parties to collective bargaining demonstrate that the provisions are appropriate and balanced overall.
If the parties to the collective agreement have agreed on a large number of individual collective agreements, as is the case in the metal and electrical industry, for example, an unrestricted reference to each of these collective agreements is sufficient to exclude the review of general terms and conditions in this respect.
Unresolved issues
As far as can be seen, the Federal Labour Court has not yet decided whether employers may deviate from collective bargaining agreements if the collective agreement itself contains opening clauses. At least in the case of openings in favour of employment contracts, deviations should also be permissible in the case of reference clauses.
No decision has yet been made on the effects of an agreed partial termination right: if the parties to the collective agreement agree that individual parts of the collective agreement can be terminated separately, this should mean that the control privilege can be retained: the parties to the employment contract would only have to leave the part of the collective agreement to be terminated separately unchanged in order to exclude a review of general terms and conditions.
What we can do for you
If collective agreements are to be applied to employment relationships, that are not already bound by mutual collective agreement, without the risk of being subject to review as general terms and conditions, then the employment contract must not fall short of the collective agreement in any way to the detriment of the employee.
To ensure this, employment contracts must be checked thoroughly for any deviations from the collective agreement and adjusted if necessary. We compare your employment contracts with the relevant collective agreements and adjust the templates accordingly.
The most important points summarised briefly
- Employment contracts may refer to collective agreements.
- The collective agreements referred to are only exempt from review under the law governing standard terms and conditions if they apply without restriction and in their entirety to the employment relationship.
- Any deviation in the employment contract from a provision in the collective agreement to the detriment of the employee leads to a review of the standard terms and conditions of the collective agreement provisions referred to.
