Collective Agreements for temporary with weak employee representations bodies
11. February 2014
In a ruling of 14 December 2010 (German Federal Labour Court, decision of 14.12.2010 – 1 ABR 19/10) the Federal Labour Court established that CGZP (Christian Unions) is not a central organisation which can enter into collective agreements in its own name. It does not satisfy the collectively agreed conditions for this.
The decision has serious consequences in practice. In recent years, CGZP has entered into a number of collective agreements in the temporary employee supply sector. It is estimated that between 200,000 and 280,000 temporary employees are subject to these nationwide. All of them provide for substantially lower payment than temporary employees are given by law under the equal pay principle. The collective agreements are invalid because the CGZP was not entitled to enter into them. The employers who made payments on the basis of these collective agreements now face claims for back pay from their employees. Under section 10 (4) of the German Temporary Employees Act (AÜG), the employees are entitled to claim the difference between the wages paid and the wages owed under the equal pay principle for the whole period of their temporary employment. In addition, there is also the threat of back claims from the social security authorities.
The temporary employers also risk liability because the collective agreements are void. Under section 28 e (2) sentence 1 Social Security Code IV they are liable as guarantors under a directly enforceable guarantee for the obligation of the supplier of employees to pay the total insurance contribution. If the supplier becomes insolvent, the collection agency will turn to the temporary employer.
The risks for the supplier of temporary employees and the temporary employer cannot be excluded. However, they can be minimised by adaptation of the contracts. In future, every contract for temporary employment must contain cut-off periods. The temporary employers are advised to reserve a contractual right of indemnity and to have this suitably guaranteed by the supplier.