Labour Law issues regarding Corona Virus – Labour Law and Remuneration issues

Created by Marco Stahn | |  Labor Law

In connection with the spreading Corona virus and the most recent measures taken by the German government we want to inform you – in addition to the information we have published on the Corona virus so far – about the employers’ continued payment obligations.

In the following please find an overview of the most important possible scenarios. However, in this context please note that it always depends on the individual case. Additionally, individual or collective agreements may stipulate different regulations.

1. „Voluntary“ leave from work

If employers release employees from their working duties– without being sick or on the basis of governmental measures or orders – employers are generally obliged to continue paying the contractual remuneration.

Whether this also applies to employees that have stayed in so-called risk regions (according to the Robert Koch Institute) either for private or business reasons and whether these employees shall stay at home due to the risk of infection is not been finally clarified up to know. It appears very likely that the remuneration entitlement remains unaffected due to the default of acceptance of the employer, as long as the trip to the risk region did not take place after the travel warning has been announced.

As long as employees are able to continue working from home the remuneration entitlement remains unaffected.

If employees are not able to work from home (home office) / perform mobile working a mutually agreed arrangement is recommended (for example reduction of overtime respectively build-up of negative hours, paid vacation, unpaid special leave, vacation close-down of the company).

2. Fallen ill with the Coronavirus or a suspected infection

According to Sec. 3 German Continued Remuneration Law (EFZG) an employee is entitled to continued remuneration payment due to illness for a period of six weeks.

This does not apply if an employee, who has fallen ill with the Corona virus is also banned from work under Sec. 31 sec. 2 German Infection Protection Act (IfSG) because he has already fallen ill or because there is a suspicion of infection.

Due to the ban to work (Sec. 56 sec. 1 IfSG) employees in both cases are entitled to a compensation payment from the state for the loss of earnings for a period of six weeks.

In this case the employer makes advance payments, thus operates as a kind of “paying agent” (Sec. 56 sect. 5 sent. 1 IfSG). Reimbursement of the prepayments is only made upon application by the employer. The reimbursement application has to be filed with the respective authorities within three months. If the employer, contrary to his statutory obligations, has not made any advance payments, the employee may also file the respective application (Sec. 56 sec. 5 sent. 3 IfSG). If necessary, employers are entitled to an advance payment from the authorities, which can be particularly helpful for small and medium-sized companies.

Please note: It is legally controversial whether compensation claims according to the IfSG are excluded if employers are obliged to continue to pay the contractual remuneration under Sec. 616 German Civil Code (BGB) (e.g. not excluded in the employment contract).

3. Official quarantine

In the event of an officially ordered quarantine (Sec. 30 IfSG) the facts outlined under item 2 apply accordingly. As a result of the quarantine a ban to work is issued by the authorities. According to Sec. 56 IfSG there is a claim for compensation.

A quarantined employee is not “ill” within the means of to the German Continued Remuneration Law (EFZG) so that there is no entitlement to continued remuneration in the event of illness.

Also in this case the employer generally has to make advance payments.

4. Lack of orders, missing raw materials and supplier problems

If a business is technically in the position to continue their business, however employees can’t work due to the lack of orders, missing raw materials or problems with suppliers, employers are generally obliged to continue paying the contractual wages without any restrictions (Sec. 615 sent. 3 BGB). However, under certain circumstances employers can introduce short-time work (please see below).

5. Official shut down of a company/business

If a business is shut down completely, e.g. on the basis of Sec. 28 sec. 1 sent. 1 and 2 IfSG, because there is a general risk of infection regarding the entire business or individual groups of employees, the employer may still be obliged to continue to pay the contractual remuneration based on the so-called business risk theory – as far as employees are willing and able to work.

This is down the fact, that generally employers always bear the operational risk resulting from official measures – here the shut down of a business – if the risk of the respective official measure regarding the business was caused by its special nature or had to be considered. This is particularly relevant for employees necessarily involving contact with a wide range of people or public travel such as city councils, universities, schools, nurseries/kindergartens, hospitals, doctor’s surgeries, shopping malls, event agencies etc. By nature, these businesses and institutions have a high risk of getting in contact with persons with an infectious disease.

However, this can also be assumed for other businesses.

If short time work is introduced, we recommend that in these cases a respective claim for compensation according to Sec. 56 IfSG is filed.

6. Shut down of schools and nurseries/kindergartens

In this context we refer to our publication dated 16 March 2020. As was also announced on 16 March 2020 the German Federal Government is currently intensively investigating ways and possibilities of avoiding unreasonable wage losses for employees affected by the mandatory childcare. It is to be expected that a solution is to be found until next weekend (calendar week 12).

If there is an obligation to pay remuneration based on the aforementioned circumstances, but employers are actually unable to continue to employ all or some of their staff due to official shut downs of businesses, supply stops or other similar circumstances, there is the possibility of introducing short-time work. However, it is important to notice that the respective authorities have to be informed about the introduction of short-time work in the actual month that short-time work is being introduced. Otherwise employers will get stuck with the costs.

As part of their package of measures aiming at supporting businesses coping with the Corona crisis the German government has made available €20 billion as emergency aid. Our colleagues will publish more detailed information on this topic in the coming days.

Back