Changing the Terms of an Employment Contract in Germany: What to Do When Conditions Get Worse

"To live is to work. Labor is the life of man."

Voltaire

Since we spend the greater part of our time at work, building a working relationship that is well-ordered and fair to both sides is the key to a harmonious working life. Yet satisfying both the employer's and the employee's interests at the same time is quite a challenge, since the two sides pursue opposing goals: the employer wants lower costs and greater efficiency from its staff, while the employee seeks higher pay without extra workload. The employment contract, then, serves as a kind of compromise between employer and employee, who, after negotiating its essential terms, agree to begin working together on specifically defined conditions.

An employment contract differs from other service contracts in that an employee working under it stands in what is known as a state of "social dependency" on the employer.

Social Dependency Can Be Said to Exist When the Employee:

— is integrated into the employer's overall organization, meaning they cannot work without the employer's operational resources and the cooperation of colleagues;

— must follow instructions given by the employer (these instructions may concern the content of the work itself, as well as its place or time);

— bears no entrepreneurial risk of their own.

Where most of the factors listed above are present when assessing the legal relationship between the parties, one can say with confidence that an employment relationship exists.

Naturally, someone who sends out job applications, attends interviews, and eventually signs an employment contract with an employer will be well aware of the employment relationship and the rights that flow from it. But an employment relationship is not always put down in writing. Under German law, such a contract may also be concluded orally — though in that case, disputes become far harder for the parties to resolve.

It is precisely in situations like this that the above assessment of the legal relationship can be of great value to an employee, since once an employment relationship with the employer is established, the employee automatically gains the right to continued pay during illness and on public holidays, the right to paid leave, maternity protection, and protection against dismissal.

Our client Igor (name changed), a native of Kazakhstan who had moved to Germany with his parents as a child, had never had trouble having his employment properly documented, even though he often took on unskilled work. This time, having taken a job with a cleaning company as a groundskeeper, Igor did his work reliably and received the corresponding pay. But after two years of working together, his employer suddenly decided to change the terms of the employment contract to our client's disadvantage: reducing his working hours, and with them, his salary. A corresponding agreement to amend the employment contract was sent to Igor by post, with a request to sign and return one copy.

Our client did not agree to the new terms, and told his employer so verbally. The employer, however, kept insisting on the change and informed Igor that he was not to show up for work outside the hours set out in the new version of the contract, since only those hours would be recorded on the timesheet regardless. Our client nonetheless kept working his old schedule, reasoning that, since he had not signed the amendment agreement, the terms of the original contract still applied. A month later, however, Igor received a lower paycheck, reflecting the changes the employer had unilaterally introduced. He demanded the corresponding back pay from the company, but was refused on the grounds that his demand was supposedly unfounded. Igor kept working for another two months, but, unable to resolve the dispute with his employer on his own, he turned to our law firm for legal help.

Igor's first question was whether an employer has the right to unilaterally change the terms of a contract, and whether an employee is obliged to sign a new version of it. Our lawyer explained that an employer is entitled to make insignificant changes to an employment contract, within the terms already agreed with the employee, without needing further consent. But a change to working hours, and consequently to pay, counts as a material change to the employment contract — meaning that, for such a change to take effect, the employer needs the employee's explicit consent to amend the contract. Igor would have given that consent by signing the amendment agreement sent to him. Since our client did not agree to the new terms, however, he never signed that document, and it therefore has no legal effect. As things stood, the original version of the employment contract, signed by both parties, was still the one in force. For that reason, the lawyer advised Igor to send his employer a formal demand for payment of the wages the employer had withheld.

The lawyer also explained that, in cases like this, employers typically respond quite firmly — by sending an employee who refuses to accept the amended terms a notice of termination coupled with an offer to sign a new contract (Änderungskündigung). Once such a notice is received, the employee has three possible courses of action:

1. Sign the agreement amending the original contract. From the date specified in that agreement, the employee simply carries on working — but now under the new terms.

2. Accept the change to the employment contract, but under protest, reserving the right to argue that the change is not socially justified (§2 of the German Dismissal Protection Act, Kündigungsschutz- gesetz). The employee must notify the employer of this reservation within three weeks of receiving the notice. In that case, the dispute goes before the labor court, which examines the grounds for the proposed change and the other circumstances of the case. If the court finds the change socially justified, the employee continues working for the employer on the new terms. If the court rules in the employee's favor instead, the employer must leave the employment contract in its original form.

3. Refuse to sign the amendment agreement altogether, and file a claim with the labor court to test the lawfulness of the threatened dismissal. If the claim succeeds, the employee keeps working under the original terms; but if the court finds the dismissal socially justified (§1(1) of the German Dismissal Protection Act), the employee will be dismissed.

Igor told the lawyer that, whatever happened, he had no intention of working under the new terms, and that he was already actively job hunting and prepared to resign as soon as he found something more suitable. It was therefore decided to send the employer a written demand for payment of the missing wages.

The lawyer drafted the corresponding demand letter, stating that under the employment contract signed between the employer and our client, Igor was obliged to work 12 hours a week on a fixed schedule, and the employer was to pay him a monthly salary of 417.00 euros. For two years and three months, our client had properly carried out his duties, as confirmed by the corresponding timesheets, signed by an authorized representative of the employer. Over the previous three months, however, Igor had received only part of his salary — 278.00 euros instead of the agreed 417.00 euros. To resolve the dispute, the lawyer therefore asked our client's employer to transfer the outstanding amount to the corresponding account.

Some time later, our firm received a response from a representative of Igor's employer, stating that more than three months earlier, Igor had been sent an agreement to amend the employment contract, under which our client was now to work not 12 but 8 hours a week, and his salary would accordingly be 278.00 euros a month. The employer's representative also insisted that Igor still needed to return a signed copy of that agreement.

Our lawyer, in turn, informed Igor's employer that under German law, contracts — including employment contracts — are concluded voluntarily and by the free will of each party. Our client did not agree to the proposed changes to the existing employment contract, and for that reason never signed the amendment agreement sent to him. The new terms had therefore never been approved by the employee, meaning the original version of the contract remained in force. Since Igor had continued to conscientiously fulfill his duties under that contract, he was entitled to the salary the parties had originally agreed on.

Even so, the employer did not respond, and the lawyer advised our client to file a claim for payment of wages with the court. In the lawyer's assessment, the chances of a successful outcome in this case were very high.

Trusting the lawyer's experience, Igor agreed to initiate proceedings against his employer. What's more, having found another job in the meantime, Igor submitted his own notice of resignation.

After the labor court accepted the claim our lawyer had filed — laying out a thorough legal argument for Igor's position and backed by all the necessary evidence — a preliminary oral hearing was scheduled. The day before the hearing, a representative of the employer contacted our lawyer, proposing to discuss a possible settlement. Igor's employer offered to pay him the wages withheld over the last 5 months — but calculated on the basis that Igor had worked 10 hours a week, not 12.

Our lawyer promptly contacted the client and relayed the employer's offer. Igor accepted at once, since a new job awaited him and he had no interest in a drawn-out trial.

During the hearing, our lawyer informed the court that Igor agreed to settle with the employer on the terms proposed, and the court asked the parties to submit the corresponding settlement agreement for its review. The settlement was approved by the judge shortly afterward, with a corresponding ruling issued, and Igor's employer transferred the outstanding wages in the amount the parties had agreed.

This example shows how important it is, in order to resolve a dispute effectively, to bring in an experienced lawyer — one who can not only argue your position with sound legal reasoning, but also bring the case to the outcome you want, quickly.

Employment & Labor Law

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