How flexible do workers need to be in the international and globalised environment in which they work? Under certain conditions, they must even be prepared to move abroad. This is what the Federal Labour Court (FLC) decided on 30 November 2022 in four parallel cases.
An international airline with headquarters in another European country employed a pilot at Nuremberg Airport. The pilot’s employment contract provided that he could also be stationed at other locations. The company decided to give up the home base at Nuremberg airport and transferred the pilot to Bologna in Italy with a notice period of about three months. The pilot considered this transfer to be invalid and took legal action against it before the labour court. His complaint was unsuccessful.
II. How does a transfer work?
In order to understand the FLC’s decision, it makes sense to first consider the legal background of a transfer.
Right of direction under statute
The key provision regarding the legality of a transfer is section 106 of the Trade, Commerce and Industry Code, which regulates the employer’s so-called right of direction. It follows from this that the employer can determine the content, place and time of the work performance in detail at its reasonable discretion. The term “transfer” or “redeployment” describes a way of implementing this right of direction, i.e. a unilateral change of the working conditions related to the place, time, scope and/or content of the activity by the employer.
In most cases, the employment contract additionally specifies under which conditions and to what extent the employer can unilaterally transfer the employee (so-called transfer clause). Depending on the extent of the respective transfer clause, the employer can unilaterally make changes to the working conditions by virtue of its right of direction without having to amend the employment contract. It can, for example, transfer the employee to a company in another city. However, it is important that the change must be reasonable forthe employee. This is always a case-by-case decision. If a change is not covered by the right of direction and a transfer clause, only a notice of termination or a consensual amendment of the employment contract with the employee will help.
Transfer clauses can be designed in such a way that the employee can be transferred company-wide. In the case of international companies, the question therefore arises whether this right stops at the German border or whether a transfer abroad is also possible. This has been controversial until now.
III. The decision
In the specific case, the FLC considered a transfer abroad to be possible. The pilot therefore has to work from Bologna in the future.
- The pilot’s employment contract contained a company-wide transfer clause that was not limited to domestic German locations.
- The place of work Nuremberg was not contractually guaranteed, but a transfer was reserved.
- In the case of a company-wide transfer clause, a transfer abroad is also possible, as the law does not limit the right to issue instructions to workplaces in the Federal Republic of Germany.
- The transfer was also reasonable in the specific case.
It is interesting to note that the FLC already casually commented on this question in 1989. In such old case, the FLC had emphasised that the employer cannot demand within the scope of his right of direction that an employee work in Lyon (France) instead of Berlin, as this would be a substantial change in the place of performance. However, this is different if there is a contractual agreement to the contrary.
The FLC press release on the recent judgment suggests a similar line of argument. A transfer abroad would then not be covered per se by the law, but only if there is a corresponding transfer clause in the employment contract. The full judgment will hopefully provide further information.
The decision can make it easier for internationally operating companies to flexibly deploy employees across borders. The Nuremberg Higher Labour Court even indicated that a transfer could also be conceivable outside the E European Union . It can therefore be helpful to include an international transfer clause in the employment contracts. This possibility should now be open.
However, it must not be forgotten that a transfer must always be reasonable in the specific case. This should normally only be the case if the need for employment in Germany is completely eliminated and there are no other vacancies in Germany to which the employee can be transferred.
It should also be borne in mind that in the case of redundancy, vacancies must be offered instead of a termination notice and the termination is otherwise socially unjustified. Up to now, due to the principle of territoriality, vacancies offered will usually only have been within Germany. Due to the new FLC ruling, the question will now have to be asked whether jobs abroad should not also be offered if the company has locations abroad and there are suitable vacancies there. The often-used argument of relocating jobs abroad would also no longer be valid in this situation. If one wants to avoid such a risk, a company with foreign locations should probably limit a contractual transfer clause explicitly to German locations.
Furthermore, in the case of a transfer abroad, it is interesting to ask under which law the employee is employed in a foreign state if the employment abroad takes place due to a transfer and not due to a (consensual) change of contract. This is because the original employment contract then remains unchanged. Even if the contract contains a choice-of-law clause on the applicability of German law , in the European area at least, mandatory employee protection provisions of the country to which the employee is transferred also apply. In practice, this could lead to various different sources of law applying to the employment relationship. In addition, there are questions of immigration law, social security law and tax law. In the international context, reliable cross-border legal advice is therefore becoming increasingly important.