Germany Update: No operational risk in the event of a state-mandated “lockdown”

“If the employer has to temporarily close his business due to a government-mandated general “lockdown” to combat the corona pandemic, he does not bear the risk of loss of work and is not obliged to pay compensation to employees from the point of view of default of acceptance.”

This was established by the Federal Labour Court (BAG) according to the press release of 13 October 2021 in a judgment of the same day (Az. 5 AZR 211/21). In the event of a plant closure caused by the corona pandemic and ordered by the authorities, the BAG has thus decided that there is no operational risk to be blamed on the employer.

Circumstance

The employer operates a sewing machine trade. Due to a pandemic-related general decree of the city of Bremen, its branch in Bremen had to be temporarily closed in April 2020. A marginally employed worker there, who was unable to work for the period of closure and therefore did not receive a salary, brought an action for payment of the remuneration from the point of view of late acceptance.

Decision

Unlike the lower instances, the BAG denies the employee’s entitlement to payment of wages for the period of the closure ordered by the authorities. Because of this, it was impossible for the employer to employ the employee. In the event of a pandemic-related closure ordered by the authorities, no operational risk is realised in a particular company. Rather, the impossibility of work management is the result of a sovereign intervention to combat a dangerous situation affecting society as a whole. It is for the State to ensure, if necessary, adequate compensation for the financial disadvantages suffered by the employees as a result of the sovereign intervention, as was done in part with the facilitated access to short-time working allowance. In so far as such compensation is not guaranteed – as in the case of the applicant due to her marginal employment – this is based on gaps in the statutory social security system. However, no employer’s obligation to pay under labour law can be inferred from the absence of downstream claims.

Conclusion and outlook

The BAG allocates risks in favour of employers by denying entitlement to default wages in the event of an officially ordered plant closure in the course of the corona pandemic and an impossibility of work performance caused by this.

The judgment of the BAG came as a surprise to many employers – in particular due to the contrary decisions of the lower courts. In this respect, it remains to be seen whether employers will increasingly take on the burden of reclaiming overpaid remuneration, insofar as this is still legally possible (keyword: exclusion periods). For details on the FOPH’s decision, see the press release of 13 October 2021.

By Miriam Wolf-Kovacevic, MELCHERS, Germany, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact germany@transatlanticlaw.com

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