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Post-Contractual Non-Competes – a never ending story

April 30, 2018

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There are few clauses in employment contracts more heavily debated than Non-Competition Clauses (post-contractual non-competes). While employers tend to include them rather easily in order to protect company secrets beyond the term of an employment, strict and mandatory provisions under German law differ from those found in most other jurisdictions. For post-contractual non-competes to be enforceable, an entire catalogue of requirements must be met, including a mandatory compensation payment of at least 50% of the employee`s total earnings for the maximum term of two years – to name just the two most prominent requirements. Because of the potential financial impact on employers, it is highly advisable to carefully consider whether post-contractual non-competes are necessary at all and, if so, whether they will be enforceable.

Two recent decisions in January 2018 by the Federal Labor Court/ BAG (10 AZR 392/179) and by the Appeals Court/ LAG Düsseldorf (Az: 7 Sa 185/17)

Less than 90 days to go – are you GDPR compliant?

“GDPR – please not again …” In recent times there is hardly any other legal topic more often written and talked about than the new EU General Data Protection Regulation (“GDPR”).

In light of the severe penalties and with less than 100 days until the GDPR goes into full effect (on May 25th, 2018), it is time for U.S. companies to take steps to prepare. Below are some key points to consider and pragmatic to-dos to assist in assessing whether your organization is ready for GDPR compliance.

  • GDPR may apply to U.S.-based companies with zero employees and no offices within the boundaries of the EU territory

While the EU Data Protection Directive of 1995 did not apply to businesses outside the EU territory, this is no longer the case under GDPR.

Now any business may be subject to the new law if it processes personal data of an

Works Council Elections in Germany – Avoid mistakes and be aware of special termination protections! Final Part III

February 16, 2018

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March 2018 is getting closer and works council (re)elections will again be on the agenda in Germany. We started this three-part blog last November with an overview to this topic and the second part highlighting the election proceedings. See link to November 7, 2017 blog and link to January 11, 2018 blog. In this final Part III, we briefly address the potential risks of reruns of elections due to mistakes and provide you with an overview of the special termination protection resulting from works council elections.

Avoid mistakes – elections can be challenged or even be null and void!

German employers are well advised to closely monitor the election proceedings. In the event of substantial breaches of the election process, the elections can be null and void, i.e., if such serious mistakes occurred that no democratic process was granted, or in less obvious breaches, elections can be challenged

Employee Representation in Germany – Part 2

January 11, 2018

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Part II of III: Works Council Elections in Germany – Who Does What and How Are Election Proceedings Run?

March 2018 is getting closer and works council (re)elections will again be on the agenda in Germany. We started this three-part blog last November with Jens Peters` introduction and overview to this topic.  See November 7, 2017 article. In this Part II, we briefly concentrate on the “Who does what” during the election proceedings and provide you with an overview of how election proceedings will run in an ordinary way.

Who does what?

The election committee (“Wahlvorstand”) is in the driver’s seat, with responsiblilities for leading and executing the election. Its main tasks are to inform the work force about the election and its proceedings (“Wahlausschreiben”) and to create the list of employees eligible to vote and to be voted (“Wählerliste”). If a works council already exists, the three-member election committee

Mass Dismissal Filings in Germany – Do Leased Employees (“Leiharbeitnehmer”) Count?

November 29, 2017

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Collective redundancies and the complex issue of relevant dismissal thresholds for notification of the German Federal Employment Agency (“Bundesanstalt für Arbeit” or “the Agency”) were already addressed in an earlier June post this year.

On November 16, 2017, the Federal Labor Court of Germany (“BAG” or “the Court”) submitted a case (BAG – 2 AZR 90/17) to the European Court of Justice(“ECJ”) which dealt with so-called leased employees. The question was whether, and under what requirements, leased employees or temporary workers need to be taken into account when applying the thresholds for mass dismissal filings in accordance with Sec. 17 I (1) Nr. 2 Kündigungsschutzgesetz/ KSchG (the German Act against Unfair Dismissal). Because this German Sec. 17 KSchG is based on the European Council Directive 98/95/EC, the Court had no choice but to submit this question to the ECJ. Until the ECJ has ruled – which may easily take

How much is at stake for whistleblowers?

September 29, 2017

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Whistleblowing and the ongoing compliance debate keep the media and the wider press busy and readers alert. And yet these days, executives of reputed global companies are finding themselves imprisoned for fraud and other compliance violations like never before. Enormous fines and even jail penalties were recently imposed upon global players inside and outside the U.S. and hardly a day goes by without new details being reported. Solid facts about who knew what and gave orders to whom remain nevertheless in a grey zone or even completely unknown. Besides the question of who should be fined or sentenced by public prosecutors, one could ask whether some or all scandals could have been avoided by whistleblowers.

What if employees or line managers had disclosed and reported the ongoing scandals early on — either internally, using whistleblowing hotlines or other compliance schemes, or even, in extreme cases, going public by filing criminal

ECHR Ruling: Dismissal Based on Monitoring of Employee’s Communications Illegal

September 6, 2017

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Be aware!  Today’s decision of the European Court of Human Rights (“ECHR”) may force companies to rethink their policies on private internet use of their employees at work (No. 61496/08).

The Straßburg court held a termination for private internet use is illegal. What’s new and striking is that the Rumanian employee chatted with family friends using his business email account.

Over the past few years employers took various measures de-linking private from business internet use to follow urgent compliance needs. In many instances, they introduced strictly separated internet access to allow legitimate monitoring of pure business accounts to follow, among other things, the increasing demands of their own e-discovery officers.

Does today’s decision of the ECHR put an end to all practical and legitimate chat and email monitoring of business accounts for compliance needs? The answer is no.  But the ECHR stressed that employers must take appropriate measures when monitoring

German Co-Determination Laws are Compliant With EU Law

July 19, 2017

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July 18, the European Court of Justice (ECJ) followed the Advocate General`s motions to hold German laws on Employee Representation on Board Level do not violate EU law. See our detailed article of May 11, 2017, linked here.  Thus, the exclusion of all employees of global group entities employed outside of Germany in participating in employee representatives elections is not discrimination based on nationality. The freedom of movement for workers does not grant employees’ rights outside Germany, which only exist within, and under the national laws of, Germany. Co-determination laws and rules regarding the Employee Representation on Board Level belong to German corporate and collective employment law and, therefore, may legitimately be restricted to employees employed in Germany.

Today`s decision of the ECJ is the right decision. It brings clarity and transparency to the boards of global entities. It also eliminates time-consuming and costly court procedures, not to mention

One year after the Brexit vote – Scotland Yard (still) drives BMW (Aston Martin being reserved for Hollywood)

July 14, 2017

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This is why Theresa May`s Secretary of State for Business visited BMW´s headquarters in Munich to lobby for BMW`s plant in Oxford.

Exactly one year after the Brexit vote, on June 22, 2017, a group of renowned employment lawyers from leading law firms met in Frankfurt to discuss recent developments and trends in German and EU labor and employment law (WoltersKluwer` Round Table Arbeitsrecht).  Brexit and its potential employment consequences in Germany and the EU were (of course) among the key topics. Even if it is still too early to detail the consequences, the exit procedures are officially underway.  What is clear is Brexit will substantially impact the freedom of movement for workers and the freedom of establishment.

There is little doubt a so-called “Hard Brexit” will result in thousands of job losses in the German Automotive industry, with every 5th exported German car currently being shipped to the UK.

Mass Dismissal Filings in Germany – Be Aware

June 8, 2017

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Successful restructuring measures in Germany, the more so if they result in RIF (reduction in force) proceedings, require very careful preparation, close observation of strict deadlines as well as very diligent processes with regard to works council information and consultation procedures.

In the event that the number of affected staff exceeds the collective dismissal filing requirements, extra care is essential in particular for larger entities and globally operating employers: any formal mistakes by them will result in the terminations being null and void. To make things worse, by the end of last year the German Federal Employment Agency (Bundesagentur für Arbeit/ the Agency) introduced new forms and spreadsheets for German employers to fill in and file with the Agency prior to implementing any terminations in the course of mass dismissal.

The relevant dismissal/ termination thresholds for notification of the Agency in the event of mass dismissals – within 30 calendar

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