Even years of salary increases in line with the increase in collective wages do not justify a claim for the future continuation of this practice. This has been decided by the Federal Labor Court (judgment of March 13, 2002 – 5 AZR 755/00). It thus dismissed the complaint of an employee who had sought to enforce a salary increase.
For seven years, the employer had regularly increased the plaintiff's salary, aligning it with the wage increases of the public sector, although the employment relationship was not subject to the collective agreement. In the eighth year, the plaintiff's salary increase was lower than the general wage increase. The aim of the lawsuit was to oblige the employer to adjust the plaintiff's current and future salary increases to the wage increases. However, the lawsuit was unsuccessful at all instances.
The plaintiff had based his claim on the principles of "company practice". These principles have been established by labor courts over many years of case law. Accordingly, "company practice" is to be understood as the regular repetition of certain behaviors on the part of the employer, from which employees can conclude that they are to be granted a benefit or a discount on a permanent basis. As a result, employees acquire a claim against the employer to receive such a benefit or discount in the future as well. The Christmas bonus serves as a prime example. If an employer voluntarily grants its employees a Christmas bonus in an unchanging amount for at least three consecutive years, the employees can demand this Christmas bonus in subsequent years as well. This only does not apply if the employer explicitly points out when paying the Christmas bonus that the payment is voluntary and that he reserves the right not to pay a Christmas bonus or to pay less in the future.
Once a company practice has been established, the employer can only free themselves from their future obligations by terminating the contract or by establishing a conflicting company practice. This is subject to the same conditions as usual. An employer can thus free themselves from the company practice of paying a Christmas bonus by only paying the Christmas bonus under reserve in three consecutive years without the employees objecting.
In the case that has now been decided, however, the Federal Labor Court assumes that a company practice of granting salary increases in line with the collective wage increases in the public sector did not arise in the first place. Specifically, there was no pattern of behavior on the part of the employer that led the employees to believe that the employer intended to continue such practice in the future. An employer who is not subject to a collective agreement cannot automatically be assumed to want to subject himself to the regulatory power of employers' and employees' associations for all time to come. Specific indications are required to justify such an interpretation of his behavior. These are not present, however, merely because the employer has used public collective agreements as a benchmark for salary increases in his own company for a few years.
According to the Federal Labor Court, the plaintiff naturally retains his claim to the salary that has been increased in line with the collective agreements, but he cannot demand that his salary be adjusted in the future like a collectively agreed salary. According to the case law of the Federal Labor Court, an employer's freedom of collective bargaining is not affected by the fact that it has been guided by individual provisions of a collective agreement for a few years.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.